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Medicare Advantage contracts with prescription drug coverage (MA-PD) that received ratings of four or more stars have fallen to 42% in 2024, from 51% in 2023 and 68% in 2022, according to data compiled by the Centers for Medicare and Medicaid Services. (CMS).
In releasing the latest star ratings for Medicare Advantage and Medicare Part D plans on Friday, CMS said about 74% of people are currently enrolled in MA-PD contracts that earned four or more stars for the 2024 rating year. .
CMS’ annual star ratings report comes as the Medicare open enrollment period begins on October 15.
“Medicare Advantage and Part D star ratings are important tools to help people find the right option for their needs. needs and circumstancesand make informed health care decisions,” said CMS Administrator Chiquita Brooks-LaSure.
Introduced under the Affordable Care Act (ACA) in 2010, the agency’s Five Star Quality Rating System, updated annually, considers members’ experience to measure the quality of health services and medications offered by the health plans.
It rates MA and MA-PD plans on a scale of one to five, with five stars indicating the highest level of performance.
The gradual decline of plans with the highest star ratings reflects in part the adjustments CMS made to the system over the years.
In 2023, plans with the highest star ratings decreased following the elimination of a disaster provision that CMS implemented to help plans deal with the COVID-19 pandemic. That change helped the contract’s average rating reach 4.37 stars, a its highest point for the 2022 qualification year.
However, this year’s drop partly reflects a statistical adjustment that, according to the consulting firm McKinsey, could cause an $800 million hit to plans’ annual revenue in qualifying year 2024.
Digging deeper into the 2024 ratings, the number of MA-PD plans with a high-performing icon, meaning they earned five stars, dropped to 31 from 57 a year ago, and 21 plans retained the highest rating they received the last year.
The number of consistently underperforming plans has increased from one to six between 2023 and 2024. This year’s list indicates that nonprofits organizations with Four or more stars have outnumbered for-profit plans with similar ratings by 56% to 36%.
Managed Care Players UnitedHealth Group (New York Stock Exchange: UNH), Human (New York Stock Exchange: humming), Elevation Health (New York Stock Exchange:ELV), CVS health (New York Stock Exchange:CVS), Centene (CNC), Cigna (CI), and Alignment Healthcare (ALHC) operate in the Medicare Advantage market, a private alternative to the federal insurance program.
Star ratings may affect your financial performance, as MA plans with a four- or five-star rating are eligible to receive bonus payments when CMS calculates their reimbursements.
In May, CVS Health (CVS), the owner of Aetna health insurance plans, projected an $800 million to $1 billion hit to its operating income by 2024 after its Medicare Advantage members in plans with ratings of stars of at least four will fall to 21% by the end of 2022 compared to 87% a year ago.
On Friday, shares of Elevance (ELV) fell after announcing that the percentage of its MA enrollees in plans with ratings of four stars or higher dropped to 34% for the 2024 rating year from 64% a year ago.
