Medicare Advantage star ratings show insurers' performance hasn't improved

Story​ updated​ Oct.​ 13,​ 2017.

The CMS' release of its Medicare star ratings reveals that performance among insurers overall in Medicare Advantage remains largely unchanged year-over-year.

The latest data, released Wednesday, show that the number of 2018 Medicare Advantage plans that performed well in the CMS' star-ratings program dropped slightly from 2017. At the same time, the number of insurers that receive certain ratings hasn't changed significantly in recent years.

The CMS said about 44% of the 384 active Medicare Advantage contracts for 2018 that also have Part D prescription drug coverage earned four stars or higher for their overall rating. This is a drop from 2017, when about 49% of the 363 active Medicare Advantage plans earned four stars or higher.

Although the overall number of four-star or higher plans dropped slightly, more beneficiaries will be covered by the highest performing Medicare Advantage plans in 2018, the CMS said. Nearly 73% of Medicare Advantage enrollees are in contracts with four or more stars, compared to about 69% of enrollees in such plans in 2017.

The data also reveal that the number of insurers designated certain stars hasn't changed much in the last few years. In 2015, 136 Medicare Advantage contracts with Part D prescription drug coverage earned a 3½-star rating. For 2018, 139 contracts had the same star rating. The number of contracts in 2015 with a four-star rating was 86 and for 2018 the figure rose to 98.

The CMS bases the 2018 ratings on quality data reported in 2017 and 2016.

The gold star performers — contracts that have earned five stars — remained unchanged from 2017 at 23.

Another consistent trend is that higher performers tend to be companies that have the most experience in Medicare Advantage. Contracts with more than 10 years in a Medicare Advantage program accounted for about 21% of 4½-star ratings and 31% of four- and 3½-star ratings.

The CMS began its star-rating system for Medicare's private insurance coverage about a decade ago as a way to encourage insurance companies to provide high quality care to Medicare beneficiaries. Companies are assigned a star rating on a scale of one to five. Many measures determine the composite score, including those involving the care process.

Richard Lieberman, chief data scientist at Mile High Healthcare Analytics, said it's not surprising that the figures have remained largely stagnant in recent years. Insurers that invested in the infrastructure and culture to improve quality of care did so years ago and continue to perform at four stars or higher, he said. On the other hand, some insurers still haven't made the investments needed to achieve higher performance.

"There are those plans that focus on it … and there are others that can't do it," he said. "I think 73% on an enrollment-weighted basis is probably where it is going to be."

The CMS also makes it harder every year to perform well on the various measures, which pushes out bad performers from the program, Lieberman said. Just 12 contracts for 2018 have 2½ stars while 61 have three.

Plans that earn at least four stars receive a 5% boost to their monthly per-member payments from Medicare, while those with lower scores receive nothing extra. The CMS bonus for a lot of plans is the "difference between profitability and not," Lieberman said.

The bonuses have allowed insurers to foster plans with additional benefits that are appealing to beneficiaries.

In addition, the CMS found that the number of Medicare Advantage contracts with dual Part D prescription drug coverage rose by 21 from 2017 to 2018. Medicare Advantage contracts have become a lucrative revenue opportunity for insurers with many increasing enrollees in such plans.

"More high-quality choices mean improved quality care and better customer service at lower cost. Medicare open enrollment begins soon and the star ratings help people with Medicare shop to find the best choice possible," CMS Administrator Seema Verma said in a news release.

Unlike the dual Medicare Advantage and Part D contracts, the number of Part D plans declined from 59 in 2017 to 55 for 2018. For enrollees in Part D plans, 47% will be in contracts with four or more stars in 2018.

For the first time, no insurers were labeled consistently low performers. Low performers—contracts with ratings of 2½ or fewer stars for three years in a row—can be terminated from the CMS program. Only two contracts—Phoenix Health Plans and GHS Managed Health Care Plans—were low performers in 2017.

Anthem touted its high star ratings Wednesday. The Indianapolis-based insurer said in a news release that more than 60% of its Medicare Advantage members will be in enrolled in plans with four stars or higher.

Humana, which saw its plans with four stars or higher drop in 2017, said its number of four-star plans increased for 2018. Humana has 12 contracts with a rating of four stars or higher, representing 74% of its 3.3 million Medicare Advantage members.

St. Louis-based Centene saw a drop in its star rating from four stars to 3½ for 2018. The insurer said that its Medicare Advantage plan, Health Net of California, saw its star rating drop because of a penalty stemming from a 2015 performance audit. The penalty will only affect the 2018 star rating, and it intends to appeal the decision, according to a news release.

An​ edited​ version​ of​ this​ story​ can​ also​ be​ found​ in​ Modern​ Healthcare's​ Oct.​ 16​ print​ edition.