The Centers for Medicare & Medicaid Services (CMS) late Thursday released the 2025 Star ratings for Medicare Advantage and Part D. And fewer Medicare Advantage plans are earning the coveted gold stars.
The CMS fact sheet shows that Star ratings have dropped significantly in the last three years. In 2022, 74 of Medicare Advantage plans with prescription drug coverage earned gold stars. In 2025, only seven of the plans will receive the highest marks. A look back even further shows a deeper decline. In 2015, 11 Medicare Advantage plans with prescription drug coverage earned five stars.
Plans with 3.5 or more stars qualify for quality bonus payments and may use the additional payments to cover the cost of supplemental benefits, reduce cost sharing, or provide extra benefits not covered by traditional Medicare.
CMS said that 86 plans will receive a score of 4.5 stars in 2025 compared to 96 in 2022.
Four stars will be given to 116 plans in 2025. In 2022, 152 plans boasted those ratings.
In addition, 165 plans earned 3.5 stars in 2025 compared to 122 plans in 2022.
Weighted by enrollment, approximately 62 percent of enrollees in Medicare Advantage plans with prescription drug coverage are currently in contracts that will have four or more stars in 2025.
In the fact sheet, CMS said that changes in Star ratings year-over-year are normal, expected, and vary by measure. They are intended to capture a plan’s performance during the measurement period and cut points are recalculated each year. “Many of the measure-level cut points increased from the 2024 Star Ratings, meaning that, overall, contracts had to achieve higher performance on these measures to receive a high Star rating,” CMS wrote.
The agency attributed the changes in measure-level cut points for 2025 ratings due to the removal of extreme outliers on the lower level of performance; an increase in some measure cut points due to performance returning to pre-pandemic levels; a more compressed distribution of scores; a large number of high-scoring contracts for some measures, such as breast cancer screening; and an increase in scores for contract at the lower end of the distribution for some measures, such as colorectal cancer screening, which pushed cut points higher for those measures.
Industry reaction
Melissa Smith, founder and senior advisor of the Newton Smith Group, said she wasn’t surprised by the decrease in ratings. “We’ve been consistently warning plans throughout the last few years that this year of reckoning was coming, but it’s been hard for plans to believe until they could see it,” she told RISE. “We expect continued decreases in Star ratings in the foreseeable future, particularly for plans not yet aligned with the changed, and still-changing, program requirements and for plans lacking strong Medicare Advantage operational fundamentals.”
Smith, who along with Ana Handshuh, principal, CAT5 Strategies, will be discussing the Star rating changes for 2025 at RISEs annual Star Ratings Master Class, December 8-10 in Scottsdale, Ariz., said part of the problem for plans is misunderstandings of how cut points factor into the ratings.
“In particular, we continue to hear people mistakenly referencing CMS’ ‘arbitrary and capricious’ increases of cut points,” she said. “That is not how cut points work. Cut points are increasing because national performance is increasing. Of the 35 easily compared measures, national average performance ‘increased on 26 measures and only decreased on three measures. This increased performance is accounted for in Star ratings via increased cut points. This means that plans not keeping pace with competitors will earn lower ratings, which is precisely the goal of the Star ratings methodology.”
She said many plans rely too heavily on cut point predictions. They fail to realize that the nature of cut point methodology prevents accurate predictions because CMS wants to incentivize plans to improve as much as possible, on every measure to earn quality bonus payments. “CMS wants plans to set stretch goals on the Star ratings measures as a forcing function for industry leaders to set the bar for all the rest of the plans, not as a punitive strategy but rather to help motivate plans to connect all members with the health care they need, the medications their doctors prescribe, and the information and services they seek,” she said.
Handshuh told RISE that she was struck by the increase in cut points. “We’re seeing cut points rise by about three to12 percent compared to last year. Interestingly, almost 70 percent of the cut points went up, reflecting how some health plans are really stepping up their game and improving their performance.”
While these aren’t as dramatic as last year’s changes, Handshuh said they’re still raising lots of eyebrows, especially regarding the call center measurement process. “Similar to last year, we’re already seeing appeals and lawsuits. This could create some chaos and uncertainty, especially as the ratings continue to shift and the bar gets higher for everyone,” she said.
Smith also noted that the number of plans at 4+ stars, the enrollment-weighted average Star Rating and number of members in 4+ star plans is almost exactly equal to the levels experienced 10 years ago.
“If I look back at the industry climate in place a decade ago when we last experienced this degree of both performance and program change, 2015 performance triggered an inspirational wave of leadership, strategic investment and evolution, and as a result, Stars success,” Smithx said. “I truly believe we are about to see a wave of exciting strategic revolution and modernization as plan leaders truly embrace this new reality, though those who elect to not lead the way will undoubtedly find themselves left behind in the Stars game."
Rex Wallace, CEBS, chief executive officer of Rex Wallace Consulting, LLC, who also will speak at the Star Ratings Master Class in December about the number of lawsuits plans have taken in 2024 against CMS Star ratings decisions, told RISE Friday morning that CMS released many compelling data points in the release.
However, “what’s most compelling though might be the data point that is absent. It's the number of plans that, in this Darwinian environment that CMS has created, found themselves having to leave the MA market and stop serving our elderly and disabled in order to survive as a company. And the resulting number of Medicare beneficiaries forced to find a new home in 2025.”
