Medicare Advantage Star Ratings are Good For Business

By | January 30, 2013

To inform enrollment decisions and spur improvement in the Medicare Advantage marketplace, the U. S. Centers for Medicare & Medicaid Services (CMS) provides star ratings reflecting Medicare Advantage plan quality. A combined Part C and D overall rating was created in 2011 for Medicare Advantage and prescription drug (MAPD) plans,” according to background information in the article. The star ratings incorporate data from several sources. “In 2011, MAPD star ratings ranged from 2.5 to 5 stars. Only 3 MAPD contracts received 5 stars; some were unrated because they were too new or small,” the authors write. “While star ratings clearly matter to insurers, it is unclear whether they matter to beneficiaries.”


New evidence examining the correlation between the Centers for Medicare & Medicaid Services Star Quality Rating System for Medicare Advantage health plans and actual enrollment puts to rest some of the doubt that has lingered about whether the quality rating system really matters to beneficiaries.

A study in the Journal of the American Medical Association looked at 2011 enrollment among two groups of Medicare beneficiaries: first-time enrollees and beneficiaries who switched plans. Most beneficiaries in both groups (62.5% of first timers; 67.2% of switchers) enrolled in a plan with a 3–3.5 star rating.

Here’s the payoff: Health plans receive bonus payments beginning at the three-star rating benchmark. In 2011, those payments totaled $3 billion.

The study also found that if a plan was rated one star higher, the likelihood that a first-time beneficiary would enroll increased by 9.5%. The likelihood of enrolling in a plan with one more star also increased by 4.4% among those who switched Medicare Advantage plans.


It is reassuring to see that there is a positive correlation between the start system and enrollment. This will help keep the service level up by the Medicare Advantage Plan providers.