MA Star Rating Changes: What You Need to Know
The Centers for Medicare and Medicaid Services (CMS) has made notable changes in their Medicare Star Ratings methodology and emphasized health equity and social determinants of health (SDOH).
Milliman recently published an article outlining the full 2025 Star Rating changes and proposed plan 2025 bid recommendations. Most pointedly, Milliman noted Medicare Advantage plans must prioritize health equity in order to maintain their Star Ratings. The most recent changes signal CMS’s commitment and continued investment in health equity and member experience as well as increased marketing and risk adjustment oversight.
Here's a summary of what you need to know.
Key Impacts
• Financial Implications
Overall, the 2025 methodology changes are anticipated to reduce MA Plan revenue, especially for contracts with 3.5-, 4.0-, and 4.5-Star Ratings. CMS estimates around $2.3 billion in cost savings by 2028 with potential increases if certain rule changes are finalized. Lower Stars Rating impact Medicare Advantage bonuses limiting the funds plans are able to reinvest back into plan including supplemental benefits.
• 2024 Final Rule Changes
CMS announced changes in the 2024 Final Rule, including the removal of the 60% rule, introducing the Health Equity Index (HEI) rewards system, and reducing patient experience and access measure weights. These changes may significantly affect MA plans financially.
• Removal 60% Rule (Disaster Adjustment)
CMS removed the disaster adjustment (60% rule) applied during the COVID-19 pandemic. This change means plans can no longer apply the disaster adjustment universally and cannot take the best of their measure scores from the current or prior years. As a result, plans will need to perform well on measures during the reporting period as historic performance will no longer be taken into account.
• Tukey Outlier Removal
In 2024 CMS removed Tukey outliers in cut point calculations and will now compare every plan against each other. On the heels of Tukey outlier removal, MA Star Ratings were impacted as plans had to perform better on individual Star measures, increasing the threshold for 4 and 5 Star plans. Moreover, a Health Scape 2024 Star Rating analysis noted Tukey was a factor in plan performance and noted increases in individual measure performance did not always translate in Stars improvement, meaning plans need to perform even better to meet Stars measurements.
• Health Equity Index (HEI)
The HEI will replace the existing reward factors for Quality Bonus Payment (QBP) and reward contracts serving low-income, dual-eligible, and disabled populations, or social risk factor (SRF) populations. Failure to have enough enrollees with SRF and to sufficiently serve these populations may potentially reduce Star Ratings. The change is estimated to result in program savings of $670 million in 2028, increasing to $1.05 billion in 2033. More so, CMS expects 75% of the total 5.0-Star contracts would shift to 4.5-Stars and lose the marketing and enrollment advantages of being 5.0-Star when the reward system moves to the Health Equity Index (HEI).
More Investment in SDOH is Needed
Overall, these changes can lead to reduced revenue, possibly affecting plan profitability. MA Plans will need to reconsider their strategies, including benefit offerings, premium adjustments, and engagement with underserved populations to improve or maintain Star Ratings.
In light of these changes, it is critical MA plans score high on HEI to maximize bonus payments and, more importantly, could mean the difference between a 3.5 and 4 Star plan. Not only will it be important for plans to increase their social risk factor populations to meet HEI, it will also be important for plans to efficiently manage these underserved populations to ensure individual Star measures are maintained and total cost of care remains low. Populations with social risk factors are far more likely to have unmet social needs and plans will need to address these enrollees with additional social supplemental benefits and service supports to meet members social needs.
Yet, providing effective social supplemental benefits and supports is hard to do. Building community level SDOH programs and engaging underserved populations at scale can be administratively challenging and operationally burdensome, which is why we built Town Square—to help reduce this burden.
SDOH Made Easy with Town Square
Succeed under the new CMS requirements with Town Square. Town Square’s innovative SDOH platform, local Community Guides and community level SDOH service network makes it easy for MA plans to capitalize on new CMS requirements and improve or maintain Star Ratings. To learn more about how Town Square can support your organization, email us at [email protected].