Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
ThinkAdvisor
5 stars on a blackboard

Life Health > Health Insurance > Medicare Planning

Why Agents Should Care About Medicare Advantage Plan Star Ratings

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Ratings can give clients an idea of how plans are performing.
  • The ratings affect how much the plans earn.
  • Only 11% of plans have 5-star ratings.

As an executive at a Medicare Advantage plan that’s received 5-star ratings for two years in a row, I’m often asked about the growing popularity of Medicare Advantage — and about the nuances of the star rating system that’s used to distinguish high levels of patient care and the quality-of-care plans deliver.

The Centers for Medicaid and Services, the federal agency that oversees Medicare, came up with the star rating system to help agents, clients and others compare Medicare Advantage plans.

Some people will tell you that the star ratings don’t matter. I, naturally, think they do matter.

There are 507 plans and the average beneficiary has 43 plans to choose from in 2023. That’s a lot of information to review.

Just as Yelp helps consumers shop for all types of consumer services, the star ratings give Medicare beneficiaries a tool they can use to pick the best of the best Medicare Advantage plans`.

Understanding the plans and how they achieve success is critical for health insurance agents advising clients.

Medicare Advantage Basics

Medicare Advantage plans are a popular option for Medicare recipients who want a simpler way to get comprehensive and lower out-of-pocket costs each month.

The Medicare program evolved over time, and federal law has created a framework with four major parts.

  1. The Original Medicare Part A plan covers hospital care.
  2. The Original Medicare Part B plan covers outpatient care and physician services.
  3. Medicare Part C allows outside entities to provide Medicare coverage arrangements.
  4. Medicare Part D provides for the sale of prescription drug coverage.

Medicare Advantage plans are the best known Medicare Part C plans: They now cover 29 million Americans, or 45% of all of the people in Medicare.

Beneficiaries with Original Medicare plans are buying medical services in an a la carte sort of way. Most beneficiaries pay no premiums for Medicare Part A coverage, but they generally will pay separate monthly premiums for Part B coverage, Part D coverage and Medicare supplemental plans, which fill in the many payment gaps left by the Original Medicare plans.

A Medicare Advantage plan issuer cuts through the billing clutter by bundling Medicare Part A coverage, Medicare Part B coverage and, usually, Medicare Part D drug coverage within the same plan.

Participants pay one Medicare Advantage plan charge each month, which allows them to strictly limit and budget the amount they pay out of pocket for medical care during the year. That’s an important protection not offered by original Medicare.

The Star Rating System

Here are answers to seven questions agents commonly receive about the Medicare Advantage star rating system.

1. What is the star rating system, and what does it tell me about a Medicare Advantage plan?

CMS summarizes the rules for the 2023 Medicare Advantage and Part D Star Ratings program in a fact sheet.

The 2023 version of the star rating system measures the value a plan is delivering to its members based on five metrics:

  • Screening tests and vaccines.
  • Management of chronic conditions.
  • Member experience with the plan.
  • Member complaints
  • Customer service.

A total of 38 different quality measures are used to make up the full five-metric scoring category.

The system is deliberately designed to proactively engage patients in evaluating and improving the quality of their own care.

In 2023, there are 5-star plans in 36 states.

2. Is it difficult to earn five stars?

Yes. Only 11% of the plans that were rated this year received 5-star ratings.

Adjusted for enrollment levels, the average star rating is 4.15, CMS reports.

3. What do star ratings tell us about Medicare Advantage plans overall?

Star ratings demonstrate that aligned financial incentives have an important effect on the quality of health care plans that deliver.

Good customer service metrics such as call center availability and timely decisions on appeals consistently rate high for these plans.

Ratings are often lower for health and drug plan quality improvement programs.

4. How do the current star ratings compare to previous years?

The average rating across all plans was 4.37 last year — .22 higher than this year.

The number of 5-star contracts decreased from 74 in 2022 to 57.

It’s important to note that this year’s lower scores may be caused by certain COVID-19 pandemic period provisions ending, or as McKinsey suggests, they may be a result of slight changes in methodology by the Centers for Medicare and Medicaid Services, the federal agency that runs Medicare and the star rating program.

5. Do star ratings make a difference financially to the insurance companies?

Star ratings can be important to payers financially.

CMS awards plans with 4-star and 5-star ratings quality bonus payments.

Some payers, including Aetna and Centene, have already announced that they have made focusing on improving ratings a top priority next year.

6. Who rates the plans?

Plans receive updated star system ratings annually based on answers from plan members to surveys and questionnaires.

That engages patients proactively in the process of improving their own care and makes the ratings a direct reflection of the quality of services provided and a key consideration when selecting a plan.

7. What do star ratings mean for your clients?

Star ratings can be helpful to clients of a life insurance agent, investment advisor or other financial professional because they provide a quick and easy way to evaluate plan performance and quality.

Choosing a plan with a higher star rating can be relevant to a client’s overall financial well-being because it can help them save money on expenses in the long run and ensure they’re getting good value.

A plan with a higher star rating may offer better coverage, lower out-of-pocket costs and a wider network of health care providers.

This can help the client save money on health care expenses such as co-pays, deductibles and prescription drugs.

In addition, a plan with a high star rating may have better quality measures, which can lead to better health outcomes and fewer medical expenses over time.


Barry Streit. Credit: LumerisBarry Streit is senior vice president of growth at Essence Healthcare. Essence is owned by Lumeris, a value-based care company. An Essence plan in the St. Louis area earned a 5-star Medicare Advantage rating in 2022 and 2023.

.

..

..

..

 

Credit: Shutterstock


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.