The impact of CMS' Star Rating recalculation (and 3 ways health plans should respond)

By Mallory Kirby

CMS' recalculation of 2024 Star Ratings deals a blow to the agency's efforts to increase affordability and more meaningfully delineate value in the MA program. The recalculations and potential $1.3 billion in resulting bonus payments — a direct response to successful litigation from SCAN Health Plan and Elevance Health challenging their 2024 Star calculations and payments — is likely a welcome respite for MA plans in a year defined by provider contracting disputes and financial headwinds. However, we don't expect this to be the last change CMS makes to the Star Rating calculation process.  

We know that changes to Stars are part of a broader CMS push to rein in MA spending and better align the program with CMS' definition of value. Like other controversial changes or proposals, CMS' ambition is often tempered by plan backlash or, in this case, litigation. While the two federal lawsuits and CMS' decision to recalculate this year's Star Ratings pave the way for higher payments, CMS may still appeal the decisions and will certainly consider how best to calculate and distribute future Star Ratings.  

While higher Star Ratings and increased bonus payments will surely be welcomed by the 60 MA contracts who received a recalculated increase, this move is not without issues for plans. Plans who wish to resubmit 2025 MA bids with their higher Star Ratings face increased logistical and administrative burden associated with repeat bid submission, and a potential distraction from other strategic priorities while they scramble to resubmit.  

In response to CMS' 2024 Star Rating recalculation — and in preparation for unknown moves ahead — health plans must:

• Watch how other plans respond, including through new litigation. These decisions could set the precedent for future legal decisions (such as Zing Health's ongoing lawsuit).
• Prepare for ongoing and future policy decisions. Change remains the only constant in Star Rating calculations. Plans must protect or build up their internal expertise dedicated to anticipating and interpreting new rules from CMS.
• Reground in operational excellence. Star calculations are ever-changing, but MA leaders can prepare by advocating for a year-round, institution-wide focus on quality. Now more than ever, plans need holistic quality programming that retains enough flexibility in staff and resourcing for targeted interventions. Plans should also align Star efforts with risk management and care management teams for comprehensive member support.

Advisory Board resources on Medicare Advantage

Advisory Board has a variety of resources on MA, including:

• 4 ways to boost your Medicare Advantage Star Ratings 
• Medicare Advantage Star Ratings 101
• 4 risk adjustment strategies to improve MA coding accuracy
• 4 dynamics of long-term sustainability in Medicare Advantage
• Market outlook for Medicare Advantage