Pandemic helps quadruple portion of Medicare Advantage plans with five stars

Nearly four times as many Medicare Advantage plans scored the highest quality rating possible for 2022 as compared with the year before, according to data released by the Centers for Medicare and Medicaid Services on Friday.

Seventy-four Medicare Advantage plans with prescription drug coverage earned five out of five stars, up from 21 in 2021, CMS said. Plans with a five-star rating are allowed to market their product all year, giving them a leg-up on competitors limited to advertising their product during open enrollment, which runs from Oct. 15 to Dec. 7. By earning a rating of four stars or higher, these highly ranked health insurers also receive a 5% quality bonus increase to their benchmark payment, which is the maximum amount the federal government will pay plans and accounts for about $6 billion in Medicare expenditures each year, according to the Medicare Payment Advisory Commission.

Of the 471 Medicare Advantage plans with Part D coverage that received a rating, 68% earned four stars or higher, up from just 49% the year prior. In 2022, 90% of Advantage members will be in plans with four stars or higher, compared with just 77% for 2021, CMS said. Those weighted enrollment figures are subject to change as CMS reviews the data.

Health plans' increase in quality was likely due to regulatory allowances offered during the public health emergency, said John Gorman, former assistant director of CMS.

"CMS made it considerably easier for the plans last year given some of the allowances they made under the public health emergency," Gorman said. "They handled scoring on many measures with a much lighter touch and even tabled a few of the more troublesome measures that were holding some plans back."

When calculating star ratings for the plans for 2022, CMS relied on insurers' 2020 information with regard to the Healthcare Effectiveness Data and Information Set and the Consumer Assessment for Healthcare Providers and Systems "because data collection was unsafe and would divert resources from patients" during the pandemic, according to a court opinion on the matter. Three Medicare Advantage insurers unsuccessfully sued CMS over the announcement it would rely on old data collection, arguing the move made it impossible for them to improve their star ratings.

They also offered a lighter touch when crunching measures numbers, Gorman said. CMS has not announced how it plans to deal with quality and safety data during the pandemic this year.

"It's a bit like comparing an apple and pear," Gorman said. "It's not as bad as comparing an apple and an orange, but there is definitely a thumb on the scale for the plans in this year's ratings."

In addition to regulatory tailwinds, health plans also significantly improved their Part D means, many of which are triple weighted and helped drive their scores up, said Gorman, who is now chairman of Nightingale Partners. The average star rating for standalone prescription drug plans is 3.7 in 2022, improved from 3.58 stars the year prior. Forty-two percent of enrollees in prescription drug plans are now in contracts with four or more stars, more than double the 17% of beneficiaries who enrolled in plans with the same rating in 2021.

The Medicare Advantage star ratings, born out of the Affordable Care Act, are meant to measure the quality of services that seniors receive. CMS says the ratings also reflect seniors' experience with their plans and can be used to help them shop, although a very small portion of seniors actually rely on them when shopping for plans, Gorman said. More critical are the bonuses—which for a plan with 50,000 members can translate to an additional $50 million, Gorman said.

"Against the backdrop of the Medicare trust fund running out of money in a couple of years, and what Congress allocates for these payments, the important thing to know is stars are graded on a curve. The public health emergency forced that grading to push the median to the right," Gorman said. "When the public health emergency ends, there's going to be a reckoning there, as the regression to the mean occurs, and that could mean a whole lot of plans lose that four star in the year that follows the public health emergency."

Anthem said that more than 72% of its Medicare Advantage members will be enrolled in plans with four stars or higher, with two of the Indianapolis-based insurer's plans reaching five stars.

Humana noted that 97% of its Medicare Advantage members will be enrolled in four-star or greater plans in 2022, with five of its plans reaching five stars.

UnitedHealth Group said 95% of its members are enrolled in four-star plans or higher for the 2022 contract year, and 38% of its members will be in five star plans. At least one of UnitedHealthcare's plans that received a high ranking will be barred from enrolling new members in 2022 because the Minnetonka, Minnesota-based healthcare giant charged too much in premiums and failed to spend enough on patient care.

"They have to initiate premium refunds to their members when they do that, which is a huge pain," Gorman said. "And it can open them up to fines and penalties. Not just with CMS but with the state insurance commissioner. That's not the kind of trouble that health plans like to get into."

Because of data lags in reporting, the pandemic likely did not have a huge impact on Medicare Advantage companies' star ratings, said Adam Block, an associate professor at New York Medical College and former CMS regulator. Some of the measures regulators looked at could have been collected in 2017 and 2018, he said.

The dramatic quality increases could reflect consolidation in the health insurance, with payers looking to merge with higher-ranked plans, Block said.

"There has been continuous growth in the Medicare Advantage sector over the last 20 years, and each member leads to more potential," Block said. "If the health plan has 10,000 members in it, it's going to get some amount of money, but if it has 20,000 members, the value of the star rating has just doubled. For each contract that they have, if the membership is greater, the financial incentive for that plan to hit their metrics is even higher."