Key Takeaways
- Securing a 4.0-star rating is financially imperative, as it triggers Quality Bonus Payments that can amount to billions in revenue for major carriers and ensure survival for regional plans.
In the vast and ever-changing landscape of U.S. healthcare, particularly in government-sponsored programs, few topics have garnered as much recent attention as Medicare Stars. This rating system, overseen by the Centers for Medicare & Medicaid Services (CMS), aims to assess the quality and performance of Medicare Advantage (MA) plans across the nation. Understanding what Medicare Stars is and how it impacts healthcare is crucial for both providers and beneficiaries. The concept of a star in healthcare has become increasingly important, especially when it comes to evaluating the quality of Medicare plans.
Medicare Advantage plans emerged from efforts in the early 2000s to provide seniors and eligible individuals with comprehensive coverage options beyond traditional Medicare. Over time, CMS sought a way to track the quality of these plans and incentivize continuous improvement in care. The Medicare Stars program was born out of this need, establishing a system of healthcare star ratings to evaluate plan performance.
Zach, a Director in the Business Advisory Group at Veracity Consulting, explains its fundamental purpose: "In other words, Medicare Stars is a rating system from 1 to 5 (with 5 being the highest) that considers multiple dimensions of a plan's performance. These stars ratings Medicare encompass various aspects, including:"
All these measures roll up to yield the final star rating published by CMS each October (though the data collection period for each year's rating is quite complex, stretching over an 18-month cycle). By examining data in each of these categories, CMS awards an overall star rating to each Medicare Advantage plan on an annual basis. These CMS star ratings play a crucial role in plan comparison and enrollment decisions during the Annual Enrollment Period.
Star ratings carry significant financial consequences. Plans that achieve a 4 or 5-star rating qualify for bonus payments (known as quality bonus payments) from CMS, in addition to rebates they can use to enhance benefits for their enrollees—such as reduced premiums, expanded provider networks, or added wellness perks. This is why star ratings are important to Medicare Advantage plans, as they directly impact their financial stability and ability to attract and retain members.
For large national carriers, missing the 4-star mark can mean losses in the hundreds of millions—or even billions—of dollars. Meanwhile, for smaller, regional plans, those bonuses can be critical to remaining competitive in the marketplace. A single half-star drop could be devastating for revenues and for the resources available to invest in further improvements.
One emerging theme in the Medicare Stars conversation is the rising importance of member experience. While clinical and operational excellence remain crucial, a positive experience can translate to higher engagement, better health outcomes, and ultimately, higher star ratings. Health insurance star ratings are increasingly influenced by member satisfaction and experience.
Zach notes that improved satisfaction also drives higher compliance with needed services, fewer grievances, and stronger retention. Berger's team at Veracity Consulting often focuses on CAHPS-related improvements, emphasizing that what benefits the member can cascade into better outcomes in every other metric. He explains:
This focus on member experience aligns with the broader trend of personalized engagement in healthcare, addressing care gaps and social determinants of health to improve overall health outcomes.
Because Medicare Stars can make or break a health plan's financial stability, specialized consulting has become increasingly common. Organizations like Veracity Consulting assist in dissecting performance data, identifying where a plan falls short, and creating multi-year roadmaps to improve performance—particularly in less tangible areas like member and employee experience.
In many cases, the difference between a 3.5-star rating and a 4-star rating can be the difference between no bonus and substantial bonuses. This is especially true for regional plans, where even moderate improvements in member satisfaction, medication adherence, and appeals processing can lead to significant revenue boosts that can be reinvested in the plan's offerings.
Consultants often focus on how to improve Medicare star ratings through various strategies, including:
Many consultants work towards helping plans achieve the coveted status of 5-star Medicare Advantage plans, as these are often considered the highest rated Medicare Advantage plans in the market.
Despite the clarity of its end goals (to measure and reward quality care), Medicare Stars has undergone continuous adjustments. CMS frequently tweaks weighting, measure definitions, and calculation methodologies:
Zach highlights how such uncertainty can cause market ripples: For smaller local health plans, the impact of a half-star drop can be equally crippling in proportion to their total membership and enrollment numbers.
These challenges affect both the best Medicare Part D plans and the worst Medicare Part D plans for seniors, as the ratings system applies to both Part C and Part D coverage.
An important dimension of Medicare Stars is that we will all eventually rely on systems similar to these if we are fortunate to live into our senior years. It may be easy to shrug off complex reimbursement structures until you realize that how these plans operate today will influence what healthcare looks like tomorrow.
As Zach emphatically states:
"In other words, improving healthcare quality, efficiency, and satisfaction now sets the stage for more sustainable, responsive Medicare Advantage plans in the years to come. This includes addressing emerging trends such as advocate empowerment and the use of AI-driven knowledge bases to enhance member support and plan performance"
Medicare Stars is more than just a performance metric—it is a key driver of financial viability and quality in Medicare Advantage plans across the country. Understanding what Medicare Stars is and how it impacts the healthcare landscape is crucial for both providers and beneficiaries. Plans that leverage these star ratings effectively can channel more resources into patient care, enhance member satisfaction, and strengthen their competitive edge. Conversely, falling short can cost organizations millions—or billions—of dollars and put them at a distinct disadvantage in attracting and retaining members.
Until our next episode, keep in mind that healthcare is not just policy or numbers—it's about real people receiving and delivering care, and the Medicare Stars program plays a critical role in shaping both the present and future of that care. As we look towards the future of healthcare star ratings, it's clear that continuous quality improvement, personalized engagement, and a focus on addressing social determinants of health will be key to achieving and maintaining those coveted 5-star Medicare Advantage plans.
It's worth noting that while we've focused primarily on Medicare Stars, similar quality rating systems exist for other government healthcare programs. For instance, Medicaid Quality ratings are becoming increasingly important in evaluating the performance of Medicaid managed care plans, further emphasizing the trend towards quality-based healthcare evaluation across all sectors.
<p>especially you know the next 30 40 years when we're all going to be in there and we kind of want the healthcare the healthcare industry to be fixed by then right because if not then we're [Music] screwed hello everyone this is Cole from the American Journal of healthc care strategy and this is the first in a series of special episodes surrounding an important topic right now in the industry which is Medicare Stars a lot of the audience might not know this but I actually work for an insurance company uh as my day job and my focus is on Medicare stars with the recent news that's come out we've seen a lot of organizations that have had a downgrade in their star ratings and lost billions of dollars in some of these payments so we're having some experts in the Stars industry come on to explain and this first episode is just going to cover kind of the basics of Medicare Stars I reached out to uh Zachary of the veracity Consulting Group uh Zachary please introduce yourself and your experience in the industry thanks Cole yeah so Zachary Berger Zach Burgers is uh is what I go by only my my wife and uh my mom called me Zachary and that I know I'm really in trouble so uh I I'm a director in our business Advisory Group for veracity consulting which is a subsidiary of rgp uh in that group there we we are focused on a lot on health plans and a lot on strategy execution project management process Improvement and basically fixing problem so um I've been in the Consulting world for a little bit over 15 years now and with the last I'd say 10 or 12 years being solely focused on plans and government programs so you know I I I worked for a previous company out here in in Pittsburgh and uh really focused and honed in on my government program side of the business understanding all the issues and challenges that are that they have and then moved over to vassy a little over two and a half years ago to to help them start a Medicare Stars offering um and use their strengths to really bring it to the market thank you so much for coming on Zach I really appreciate your time uh can you just first start because even myself I've only been in the Stars space for almost 11 months now and I still don't really know what it is and of course you can read on the internet articles and things but from your perspective what is Medicare stars and and why do we care about it yeah I mean there's there's a couple things right know I'm not going to bore you with all the jargon and the technical factors of it but really what it comes down to if you look at Medicare Stars it's a it's a quality assurance program for for health plans right so you know this all started back when uh Medicare Advantage plans you know they they spun up I think back in 20 2007 right um basically looking to find what everybody's looking to is Affordable Health Care and being able to be covered by you know fully and not have any type of doughnut holes or any type of gaps in care right so you had these Medicare Advantage plans that came together and they started these um these these health plans to you know to service their members uh obviously grow some of the population and and you know make Revenue off it and run it almost like a commercial plan and then with that being said you know you had CMS coming in and say Hey you know we we're the kings of and queens of Medicare right we're going to tell you what we need to do and how we're going to check this so really all Medicare stars is it's the rating of one to five right five being the best one being the worst um and with that rating there's different types of measures that are and I believe it's 40 measures now that are um that are measured in these health plans and there's different circumstances for how you're eligible for th for those and um different health plans might have less measures but at the end of the day it's really looking at how you can basically improve the outcomes of your your members um and and keep them healthy and keep them a healthier population so these measures are all focused on things like color rectal screenings or breast cancer screenings uh you know things like customer service and how do you rate your health plan and and medication adherence for diabetes measures all those things that you know you're really looking to manage as you you know are in that Medicare population to keep that population healthy and keep your risk level lower so you know if you if you get that four or plus star rating right you there's some incentives tied to it based on how many members you have and really those incentives are come on two forms uh one being quality bonus payments which you they're received by the actual plan to you know as as part of the revenue right and they're able to uh really use that as as their you know as revenue and and and that's dependent on if you're a fourstar above and it you know it can go up a little bit in percentage on how much you get paid in that quality bonus payment and I think you know just the other year I forget it was last year or 2022 I think CMS awarded around1 billion doar across uh the industry for those bonus payments so you can imagine imine you know what that looks like if you have a good market share of members and the second piece is rebates right and rebates are really to put back into the plan and and really help bolster things like you know uh secondary benefits or supplemental benefits um lower premiums and really help improve the the members outcome through giving them more tools and capabilities within the plan um so you know the the tricky thing is is that you have Medicare stars there there's measures right there's there's five different categories and there those categories really run through um heus which is more of the clinical measurers and they're maintained by the ncqa you have hos which is really looking at the Improvement of things like you know if you improved your uh Falls right if you didn't have a fall incontinence looking that through a cohort and looking how they improve Pharmacy which are things like medication inherence operations which appeals and grievances um and then the last thing which we'll mainly talk about today is really around caps and and member experience it's it's directly tied to um how members perceive the plan and and how the plan's actually managing those members to um have those better outcomes so so those five different categories make up the overall All Star score and each one of those categories they're not weight at the same or the measures aren't way at the same so you kind of have to look at them and you know if you don't have a really good star strategy uh then you're you might be trying to like you know punch holes in in some things and and put Band-Aids on other right but uh you know having a comprehensive strategy and really looking at what drives each indiv idual measure and focusing on a lot on the the higher weighted measures are going to get you you know halfway there and then there's other things that you get the other half but uh yeah I mean in a in a nutshell that's that's stars and I will say it's a little bit of a weird calendar right so um we just finished up the 2024 star cycle which was or was for 2025 star ratings so they just came out uh I think a week or two ago right yeah that's when all those new the news headlines started to break yeah you saw the news and everybody starts you know trying to see CMS and uh talks about their calculations being off but really what that what made that up of of that is it's a it was the 2023 from January 1st to December 31st of 2023 that whole calendar year which they were measuring things like hus clinical me meur es operational measures and then as you get into 2024 and you get into the the Q2 that's when they start doing medical chart review to help increase some of those heus measures and the most one of the most important parts is the cap survey which comes out uh in Q2 of 2024 and then they compile that data over a year and a half and they come out with these star scores uh in October but they're actually for 2025 so it's that weird weird leap system right it's a weird leap and then to summarize just before we get into the the Caps portion it's a one to five star and it seems like when you get up to the four and the fives you start getting these rebates you get these bonuses and then it becomes easier to grow your membership easier to make more money of course which then you could use that money to fund programs which benefit your members and so s and you said there's 40 measures so strategizing is is important but it's seems like strategizing is especially important if you are a lower star plan because you're going to have less bonuses less resources and you need to increase the star rating that seems to be a challenge out of those 40 measures you say that you you at your organization focus on caps why is that because it seems like a lot of organizations focus on things like hedis or focus on Pharmacy they invest a lot of money on these um you know quality things and not saying that that you don't but you say that the focus really is on caps in that experience why is that the case yeah and you know I just want to make it uh make it clear you know it's not just caps that we focus on uh with our organization the way that veracity and where our strengths are is really around experience right so um although caps is is pretty much tied to directed to member experience if you were to peel back the layers and look at heus or at operations um those things also contribute back to member experience what my organization you know what we're not really focused on too much is kind of getting real deep into the weeds and trying to really you know look at things data and Predictive Analytics you know that's that's great stuff and I know there's some great platforms out there we just don't we don't have that capability right now and you know instead of trying to the market right now for for Medicare stars is so saturated especially in these last few years that everybody's trying to get a piece and you know I see a lot of companies trying to do everything and and you know get the full market share rather than know really looking at the overall goal of helping out the members and helping out the the health plan industry um so with us really it's it's really focusing on what we're good at and our strengths and part partnering with other people or trying to partner with other uh companies to to bring the whole issues or the whole solution to to ahead and provide solutions that are right for the client so when we talk about star scores and we talk about you know what we do at veracity it's really focused on member experience and there's a science behind it right so the the group that we work with right so I I work in our brand advisor practice and we have a lot of smart people there and uh we we focus on advisory strategy execution like I said before well we also have another practice that's our brand experience practice and you know with these folks here they are dedicated to their career these people have phds and and they they love their they love their jobs and they're very good at it and you know I I was able to uh partner with a few of them on projects and just some of the outputs that they have are are absolutely amazing but really what they're doing is they're really getting the health plan to understand their member and their cohort right and where they are I mean if you look at a plan that's maybe out in Los Angeles versus a plan that's maybe in you know North Carolina right two differently total cultural differences different issues different social determinance of health issues and what health plans do is is they don't really focus on what you know what makes that member want to engage or not to engage and why can't we help change their their thought process and that really becomes because they don't understand the member and it takes a lot of time to do that right it takes a lot of time to do to understand that member and put these things in place that are going to help this member and also help you succeed in that stars world so that's what we really focus on what what result have you seen that have kind of convinced you at your organization that that is the correct path to take because I'm sure some of the audiences is skeptical a little bit about this right saying you know are we really going to invest in in experience that much you know there's certainly some hesitancy around that in the industry yeah and that's a that's a uh that's a great question and you know I I was doing I knew that question was coming up right so I had some had some research in my my back pocket but really you know if you look at the overall increasing your member experience you know if you look at a 5% increase uh of me member satisfaction within health plans and I'm talking Medicare Advantage right uh you know what that's really correlating to is about a half a star overall um so you know if you that's you know you're talking talking about going from a three and a half to a four star and that makes you eligible for this quality Bon so it's it's it's right there um and then other things you know things like preventative care if we want to talk about heus right so you know if you look at something there's 15% increase in preventative care so if you're taking care of the the members that you know need diabetes or have diabetes and medication here and all those clinical aspects of it you know they're seeing about a onear Improvement so right there if you're looking at you know understanding your member and increasing the satisfaction you could ultimately increase your score by you know one one one to one and a half points so you know that's a difference between a three or a four or three and a half or four um or even a four and a half maybe even a five right and and with that comes some of the benefits of quality bonus payments right when you're at three and a half you you're a half star away you don't you don't receive any bonus payments right you get a rebate and that's great but there's no bottom line to it so you know if you have a a bunch of members then you're missing out on that money that the the government's giving them to help you know improve your your uh Health Plan and improve your administrative areas to to help them out so that's that's really what you know know the the what what we're seeing is it's a it's a change right it's a change in the mindset of of health care right Healthcare was a lot of data a lot of you know proving outcomes through driving preventative Services and it's still is but where where we're seeing a big change and where we're trying to get out in font of it is just around the experience side and you know I talk a lot about member experience it doesn't stop there stop it's also employee experience it's also provider even you can throw even brokers in there too right um you know sometimes they're the first line of defense when they're trying to reenroll or or sign somebody new up right so um you know it really crosses the gamut of the health plan so is it possible for things like heus and um you know your your operations and your Pharmacy sections of things to be bad while customer experience is good is that ever a scenario that you've seen that's a that's another great question I I think you know it it it depends right it depends on what what's being impacted but I I think in my opinion and I don't have any statistics to back this up just because you know we're not there yet but I think if if I think the experience controls the engagement which then controls the outcomes right so if you take your health for example we take a step back and don't look at Medicare Advantage or ACA or we're just looking at hey what would make me wna go to the doctor right what what am I you know if it's going to be if it's gonna you know if it's going to take me two hours to try to get a scheduled appointment the scheduled appointment is going to be three months out so I'm going to have to fill out a ton of paperwork and not understand what's going on am I really gonna put all that effort and engage in there and if I do and it's a total disaster and then I get then you have the back office right where it's like the patient billing and the insurance and everything like that let's say you know you're getting bills that maybe aren't correct you don't understand you there's a lot of time spent to to basically figure it out yourself if if that plan doesn't have good experience measures or satisfaction and you know I'd say the one example I will give you is that we just did this with a health plan and you know a lot of this kind of starts the customer service on it starts in that uh that call center right and everybody thinks a call center is just a call center right I think we can attribute the call center to any part of our life doesn't have to be Healthcare right you call your cell phone provider or your cable provider and that if they have bad service or you're not getting where you want to be you get pretty upset it takes a while right and it decreases your your confidence in that in that company so you know what we did is is they were having some issues with member experience and we just focused on their call center and I think it was a few month assessment uh with my brand Team and we created personas and journey maps and at the end of it we had a whole execution and and strategic playbook for them to take and really increase their call center so you know they can increase their their um their membership retention and and and get new members so uh yeah I mean you know I think right now it's I think it's it's new to health PL so I don't know if they're actually measuring it as closely as they they need to be but I can say that if you have a bad appeals and grievances process or bad customer service then I I can confidently say that your your experience maybe both on the member and the employee side and possibly even the provider side too is is probably not up to to standards of of the industry or where it should be so essentially we can funnel everything down to a root cause of experience and kind of therefore say that stars really does measure a person's overall experience in the health plan and their overall you know the Health Plan's overall ability to maintain their health right because if if a plan's a four and a half or a five star clearly their customers are probably pretty satisfied with the plan right I mean it' be hard to to be a four and a half or a five and have Angry members yeah absolutely I mean you you're you're a consumer right you go out and you buy things are you gonna go on Amazon to buy the thing that's 2.5 or you gonna go buy the thing that's five stars right so I you know and and you know sometimes if you're inquisitive like myself I'll go in and read the reviews right and you're kind of like h well these guys they didn't know how to start this thing or they you know some of the reviews you kind of you can peel back and say okay well maybe it's not the best best reviews but you know not many people are going to do that because they don't really understand it right so the first thing that consumers or members are going to do is look at the star reading or you know word mouth you see a lot of the human commercials or um out here at the UPMC right um uh and and word of mouth is is another big thing too and you're not going to promote your health plan if you don't like it right and you're not and that's not going to help you uh with your patient experience or your member experience within that health plan but it's it's the same thing if you if you kind of just take everything away and you say okay if I was gonna go buy something would I buy something that's 2.5 stars or five stars you right You' clearly buy something that's five star and then to compound that there's those bonus payment that so it's not only just a marketing issue it's also the the the bonus in the in the rebate and that as you've seen you you said it's $10 billion dollar um industrywide I mean for a lot of small Health Plans too that's substantial right I mean this can amount to millions of dollars for only you know a couple thousand members right right yeah I mean you're you're looking at uh and I I forget it it was an old it's an older number it might be for 2022 but I think on the Kaiser uh Family Foundation I I believe it it averaged out to for just overall bonus payments to know sticking average I think it was somewhere 300 to $400 per member right so if you take that and you you extrapolate it based on the membership that you have you're you're talking a good chunk of money um so so you know if you take that times that by 10,000 right it's couple million right um and you got that and and it's just you know these bigger plans like ca and and CVS and that uh now they're going through some some tough times now I mean there you know there's some changes that happened with CMS and you know there's some controversy going on if it was on purpose or if it kind of just a mistake uh but you see how uh you know between last year CMS went back and recalculated all the scores because two or three Health PL sued them in one um but then you see this year like things are coming out and I think humana's one of humana's um insurance plan holds like 90% of the members dropped uh below a four star cost them I think it was like 2% on that the market during the day it was it was crazy but even that and like you look at like CVS I think last year was expecting to lose you know two billion to a billion dollars based on just star scores so if you take that like those companies yeah that's a lot of money but you know they can recover from it but if you look at a regional or a local plan um and they're making you know they have 10 or 50 million doar and it drops below certain point and you're below that four star and you're losing that extra Revenue it's a big impact and that's not just big impact to their revenue and their bottom line but and also think things that they're not able to do or improve for their members going forward so it's um it's definitely Ever Changing you know I don't think I think CMS is is I think they're trying to focus on more of the member experience but I'm not sure anymore because they they had the a lot of the cap score and the member experience Stu was four four weight or four times weighted and now they've dropped it back to two but uh I think you know they're trying to also understand where health plans are and and how how much they have you know how much how much of the Gap they have to close to to give them to that point to prioritize member experience to drive everything else very uh complicated and and seemingly everchanging uh industry I appreciate you coming on Zach and and giving us this great overview uh we're gonna of course link to your profile so people can can find you there and get the Consulting Services we really do appreciate you coming on and we hope we can have you on again absolutely I I really enjoyed this love love coming on love love talking love meeting new people uh yeah if if you know feel free to to reach out to me even if you have questions I'm a I'm a strong believer that I I know I'm in Consulting and there's other consulting firms out there um you know I think healthcare is is broken and I'm one of the people that I don't care it's nice to make Revenue but it's also better to improve the health care and improve the industry especially you know the next 30 40 years when we're all going to be in there and we kind of want the healthcare the health care industry to be fixed by then right because if not then we're screwed I know I worry about my my you know boss and uh and them you know uh the older ones in the organization that are going to be on Medicare and a you know 10 10 years or so here it's uh yeah it's definitely something to think about you'll never you'll never be able to move up because they'll be working at Jefferson until they're you know until they die'll be taking the Jefferson health plan right the benefits right so that's how we gonna fix this we got to fix it now but now hey thanks a lot Cole I appreciate it this was fun</p>
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