Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - This week’s deep dive looks at 2024 Star Ratings.

3. Compliance Chatter 📢 - Virginia Under 65 Med Supp requirements.

4. Sponsor Snapshot 🚀 - brought to you by Telos Actuarial.

5. Data Visual of the week 📊 - Data Visual highlighting 2024 Star Ratings.

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

2024 Medicare Star Ratings: Impact and Insights ⭐⭐⭐⭐⭐

The Centers for Medicare and Medicaid Services (CMS) releases Medicare Advantage (Part C) and Medicare Part D plan star ratings annually in October. 

This week we will dive into these star ratings, learning more about what they are, how they are measured, and how they have changed over time.

Stars - What are they and why are they important?

Each year, CMS obtains quality and performance data from Medicare Advantage and Part D plans, member satisfaction surveys and CMS administrative data. This data is then consolidated into a star rating.

Each plan for the upcoming year is assigned an overall average star rating on a scale of 1 to 5, including half-stars, with 5 being the most stars a plan can receive. 

5-star rating ⭐⭐⭐⭐⭐ - excellent performance

4-star rating ⭐⭐⭐⭐ - above-average performance

3-star rating ⭐⭐⭐- average performance

2-star rating ⭐⭐- below-average performance

1-star rating ⭐- poor performance

Medicare eligibles and their family members can utilize these star ratings when evaluating and selecting a plan to enroll in.

Special enrollment periods are available to Medicare beneficiaries depending on their plan’s star rating. 

• If available in their area, a Medicare beneficiary can switch from their current plan to a Medicare Advantage Plan, Medicare drug plan, or Medicare Cost Plan with a 5-star rating between December 8 and November 30 of the following year. 

• There are 36 plans who earned high performing contract status (5 stars) in 2024:

• If a beneficiary is enrolled in a plan that has received a star rating of 3 stars or less for three consecutive years (consistent low performer), they have a one-time option to enroll in a higher rated plan throughout the year. There are 6 plans who are considered consistent low performers in 2024.

• Regulations allow CMS with the option to terminate contracts with plans that fail to achieve at least 3 stars for three consecutive years.

With all that said, enrollment and persistency for Medicare Advantage and Part D plans can be directly impacted by star ratings.

Medicare Advantage Plan Incentives

Depending on the overall star rating, Medicare Advantage organizations can also receive bonus payments and rebates. The bonus payments and rebates lag a year, so these 2024 star ratings will impact Medicare Advantage organizations’ revenue in 2025.

Bonus payments are paid per enrollee and are calculated as a percentage of the MA benchmark, varying by county. The benchmark is the maximum amount that CMS will pay Medicare Advantage plans to provide Medicare-covered services in the plan’s operational area. Bonuses for 4-star plans or higher are 5% of the area’s benchmark. Plans with 3.5 stars or less do not receive a bonus payment. According to KFF, the federal government paid Medicare Advantage insurers around $12.8 billion in bonus payments, averaging between $374-$460 per enrollee in 2023.

Rebates are paid to Medicare Advantage plans whose estimate to provide Medicare-covered services (“bid”) is below the benchmark in that area. The rebate is calculated as a percentage of the difference between the bid and benchmark, in which the benchmark is adjusted to include any bonus payment received. Plans with a 4.5 to 5.0 star rating have a 70% rebate payment, 3.5 - 4.0 stars have a 65% rebate payment, and less than 3.5 stars receive a 50% rebate payment. Rebates are required to be returned to the enrollees in the form of reduced premiums or increased benefits. According to the Medicare Payment Advisory Commission (MedPAC), rebates to Medicare Advantage organizations averaged over $2,300 per enrollee in 2023.

A McKinsey report dated September 15, 2022 predicts an annual revenue impact of $800 million to Medicare Advantage plans in 2024 due to reduced ratings.

How are Stars measured?

For each plan, the overall star rating is broken down into individual quality and performance measures, which are defined by the plan type. Medicare Advantage plans with prescription drug coverage are rated on 40 individual measures, Medicare Advantage plans without prescription drug coverage are rated on 30 measures, and Part D plans are rated on 12 measures.

These measures weigh the quality and performance of both the plan and health care services provided by the plan. 

Plan measures include:

• care coordination

• call center and customer service

• health plan quality improvement

• member complaints

• appeal decisions

Health care service measures include:

• cancer screenings

• diabetes care

• controlling blood pressure

• medication review

• annual flu vaccines 

Two Part C measures added for 2024 were Transitions of Care and Follow-Up after Emergency Department Visit for People with Multiple High-Risk Chronic Conditions.

Each quality and performance measure is weighted and performance outliers are eliminated. Each star value has cut points, or ranges, that a plan’s score on a particular measure must fall within.

A more detailed explanation of the calculation of star ratings can be found here.

How have the Stars changed over time?

From 2021 to 2024, the overall average star rating for MAPD and Part D plans was the highest in 2022. Since 2022, the overall average star rating for MAPD plans has dropped 7.5%, while Part D plans dropped 16%.

When looking at the overall average star ratings for MAPD plans from 2021 to 2024, weighted by plan enrollment, the number of plans who received a 5-star rating has decreased, shifting to the 4 and 4.5-star rating categories.

From 2023 to 2024, the Part C measure with the largest overall decline was Reviewing Appeal Decisions, dropping from 4.4 to 3.6 stars.

The largest overall decline for Part D measures was Call Center- Foreign Language Interpreter and TTY availability, dropping from 4.1 to 3.0 stars.

Health/Drug Plan Quality Improvement was the Parts C & D measure that improved the most from 2023 to 2024.

Star Ratings of Market Leaders

Looking at the Medicare Advantage market leaders as reported in our 2023 Medicare State Enrollment Pages, Humana has the highest overall average star rating in 2024. These market leaders follow the trend of a steady decline since 2022. Most notably, both Centene and Kaiser have seen an overall average star rating decline of around 20% since 2022.

Sources:

1. CMS 2024 Star Rating Data Tables (Oct 13, 2023)

2.  https://www.cms.gov/newsroom/fact-sheets/2024-medicare-advantage-and-part-d-star-ratings

3.  Medicare Advantage in 2023: Premiums, Out-of-Pocket Limits, Cost Sharing, Supplemental Benefits, Prior Authorization, and Star Ratings | KFF

4. https://www.medpac.gov/wp-content/uploads/2023/03/Ch11_Mar23_MedPAC_Report_To_Congress_SEC.pdf#page=18

DATA VISUAL of the Week 📊

This week’s data visual comes from us (Medicare Market Insights). It combines 2024 MAPD Star Rating information into one visual.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)