How payers can optimize star ratings in the Medicare Advantage market

Jenna Phillips

By Jenna Phillips


As the US population continues to age, Medicare Advantage (MA), the commercial alternative to fee-for-service Medicare, is becoming an increasingly important source of revenue for commercial health insurers. In 2019, roughly 35 per cent of the Medicare-eligible population had enrolled in a MA plan, representing a three-fold increase over the past 15 years. Over the same period, the number of MA plan options has increased nearly 20 per cent, with almost 3,700 available nationwide.

With more plans on the market, the star ratings, created by the Centers for Medicare and Medicaid (CMS) in 2008, are increasingly important. The ratings were introduced as part of a system-wide push to improve quality of care, patient and member experience, and value-based payments. The aim was to ensure that Americans enrolled in MA plans were well informed of the quality of the care they were receiving, and to incentivize good behavior by the health plans.

So, as we review the recently-announced star ratings, it’s important to understand how payers can optimize their ratings performance to position themselves for success.

The star ratings let prospective members compare plans and make informed decisions on their health. For payers, higher scores drive recruitment and revenue – research shows a one-star improvement in quality ratings may increase enrollment by eight to 12 per cent year-on-year and can increase revenue by 17 per cent. On the other side of the coin, a half-star reduction can decrease revenue by nearly 23 per cent.

While the rating system and the accompanying reward structure continue to evolve, our experience working with payers in the MA and quality space reveals five critical success factors:

1. Improve experience through stronger collaboration

We all know that health plans are incentivized based on quality performance. By design, the star rating system includes metrics linked to health outcomes, rather than to clinical process adherence. This means plans and healthcare providers should work together to determine the most efficient and effective way to achieve the target health outcomes, which may go beyond clinical interventions. Plans must go beyond care delivery to truly engage with providers and the health of members. Providing a high level of personalized service can enhance member experience, improving star ratings.

While plans can do a lot to improve member experience and help members get the care they need, it’s critical they align their quality priorities and incentives with their networked provider partners. Health plans should work to tear down the siloes that exist between provider and insurer by streamlining the flow of information, improving access to services, and working together to meet quality objectives. Plans and providers share the same goal of providing the highest quality of care for patients and members. A goal that’s easier to reach when working together.

2. Tailor care to your members

Many of the quality measures assess how well a health plan manages care for members with chronic conditions, and how well they deliver preventive services. Using a tailored and structured approach to manage specific members and member populations will increase performance scores on quality measures because plans will be able to more appropriately and effectively deliver care, resources, and interventions. Rather than employing a one-size-fits-all strategy, plans that assess members’ needs, interests, and requirements, and its own performance, find success in both the ratings and their members’ health outcomes.

3. Prepare for a value-based future

As the healthcare system becomes more value-based, the focus of quality ratings will shift toward outcome metrics, thereby providing an intrinsic advantage to those that understand how to achieve the desired outcomes. Plans that develop the analytic capabilities that can help predict performance and outcomes are more likely to improve their star ratings as the assessments evolve.

4. Focus on getting “bang for your buck”

Plans that successfully improve their ratings often choose to capitalize on their existing strengths, rather than try to build excellence from the ground up. Plans can use data and past ratings to identify strengths and their relevance to the ratings categories. For example, a plan with a good communications platform could make relatively low-effort improvements to increase its effectiveness, using it to send member updates, organize follow-up appointments, and provide reminders about health screenings.

Another way to improve your “bang for your buck” is to focus quality efforts on measures that carry the most weight. We’ve seen that a health plan’s ability to address high-value score elements, like member complaints, managing chronic illnesses, and keeping members healthy, generally relates to higher scores.

Similarly, plans can see the measures where they only just fell short of a higher score, making relatively small changes that would impact their overall star rating. For example, plans can see how close a score of 3 was to a 3.5. Rather than trying to move a 2 to a 5 on a measure, plans can concentrate on incremental improvements that tip them into a higher rank.

5. Unpack the metrics

Plans that fully understand the methodology, sources, data, and guidelines for each quality rating find success simply due to their mastery of the content. CMS currently places more emphasis on the outcome and quality improvement measures when calculating star ratings, but frequently makes changes to the data sources and methodologies with short notice. Keeping abreast of the current and future methodologies is a full-time job, but one that’s worth it.

With mastery of the ratings and methodologies comes improved compliance with all quality rating rules and regulations. It may go without saying that compliance is crucial to success in the ratings, but it’s common for plans to be non-compliant with one or more of the detailed regulations. Poor compliance with CMS rules can lead to a plan’s downfall in the ratings, even if their performance is excellent. Highly compliant and successful plans put concerted effort into addressing appeals and complaints appropriately and in a timely manner, providing precise and accurate health information to members, and empowering consumers to become more active in their health, just to name a few compliance efforts we’ve seen succeed. Committing to one or more of these actions will help build a compliance strategy that refines quality care for members.

Commit to understanding Medicare Advantage star ratings

Healthcare quality assessment will continue as value-based payment becomes the norm and expands its reach. As consumers become more selective about their health plans, star ratings provide another opportunity to improve care quality and member experience by refining coordination, customer service, preventative care, and communications. CMS’ quality ratings have meaningful reputational and financial consequences for health plans. As such, those plans that take the ratings seriously, learn the methodology, honestly assess their performance, and make incremental improvements are the ones achieving the best outcomes, both for themselves and their members.

About the authors

Jenna Phillips
Jenna Phillips PA healthcare expert Jenna collaborates with stakeholders throughout the healthcare system to design and implement complex strategy initiatives

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