The Star Ratings issued for Medicare Advantage and Part D plans by the Centers for Medicare & Medicaid Services (CMS) are sometimes plagued with their own set of myths and misunderstandings. To help debunk some of the more frequently misunderstood points, let’s look at what Star Ratings are, and the illusions and illuminations that sometimes accompany the CMS Star Ratings program.
Star Ratings is a program designed by the CMS to rate the quality of care and overall performance of Medicare Advantage and Part D plans. Several measures contribute to various domains which feed into complex scoring methodology, establishing a health plan’s Star Rating. The ratings scale runs from one to five stars, with one being the lowest-rated performance and five being the highest achievable score. Star Ratings scores are issued annually for each plan in mid-October.
Medicare Advantage Organizations (MAOs) scoring well in their Star Ratings, are issued a quality bonus payment. So, the incentives are high, and the market is competitive. The actuarial feat used to arrive at a health plan’s Star Rating, can create an illusion of undesirability when the number crunching results in a low rating. Unfortunately, there is a misconception that plans with a less than stellar rating are automatically a poor choice. Let’s unravel some of the more frequently misunderstood myths surrounding the unique Star Ratings program.
Common Misunderstandings about CMS Star Ratings
| Illusion: | “More is better! I can’t imagine selecting a plan with less than a 4-star rating!” |
| Illumination: | First impressions are lasting. Yes, a plan’s Star Ratings should be considered when making enrollment decisions. But remember, sometimes beauty is only skin-deep. Some Medicare Advantage and Part D plans are bypassed simply based on lower Star Ratings, which don’t always tell the full story. For example, contributing scores can be impacted by how well a plan’s benefits are used. If members don’t understand or realize the services available under their plan, they can inadvertently drive a downward curve when scored benefits (such as routine cancer screenings) are bypassed. |
| Illusion: | “I looked at the Star Rating for this drug plan offered by Health Plans-R-US. It had 5 stars! I’m so glad my health insurer is a 5-star company!” |
| Illumination: | Medicare Advantage and stand-alone Part D plans do not result in an overall Star Rating for the entire health insurance company. Different plans offered by the same insurer, have different benefits or service unique geographic areas, and are therefore evaluated individually based on performance to determine a Star Rating for each specific plan. There are also separate categories measured for health benefits versus prescription drug benefits. CMS pushes data through several formulas to arrive at a single Star Rating for plans offering a combination of health and drug benefits. However, CMS does not issue an overall Star Rating for MAOs, also referred to as the plan sponsor, insurance provider, or insurer. |
| Illusion: | “I learned the Star Ratings scores are viewable online, so I was checking out some plan options and saw plans with no rating at all. How on earth can some health plans be in business a whole year, and not have a Star Rating? They must have provided poor service.” |
| Illumination: | Star Ratings are based on performance data and customer satisfaction scores which need to occur over a period longer than a year. Add the need for an actuarial period to gather and process performance data, and more than a year will pass before a single plan’s Star Ratings can be established. This also means an overlap of years can be in process at the same time, for a plan’s Star Rating to be finalized. More importantly, a plan that has been operating for only one year probably hasn’t generated enough data for its Star Rating to be issued the following October. If your plan has been recently launched, check the length of time your health plan has been operational before passing judgement so quickly. You may be surprised to find that with sufficient data, the plan’s Star Rating improved the following year. |
| Illusion: | “I’m on a plan with a 4-star rating. I’m sure it’s the best around here, but my benefits are changing next year, and I need to look for a different option. I don’t think there are any other plans available with a rating of 4 stars or higher, so I might be stuck.” |
| Illumination: | If an enrollment choice is based on the highest rated plan(s) in your area, use the Medicare Plan Finder tool to find options based on Star Ratings, medications covered or the filters you apply |
CMS requires that Star Ratings be provided in a document using a standardized model template. Toppan Merrill specializes in standardized model document creation such as the Evidence of Coverage (EOC), Annual Notice of Change (ANOC), directories and formularies. We also create Summary of Benefits (SB) documents and support model letter creation and distribution for health plan enrollees.
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