Half of Medicare Advantage Stars Thresholds Harder to Reach in 2027
Medicare Advantage insurers could see their star ratings fall next year — and lose out on the lucrative bonuses the ratings represent — after regulators boosted many of the thresholds for achieving the quality scores.
Earlier this week, the CMS released draft cutpoints, the thresholds the agency uses to convert MA plans’ quality and performance scores into a 1 to 5 star rating, as part of the preview process before regulators announce official results in early October.
About 50% of cutpoints got harder, 33% were unchanged and 17% actually got easier, according to analysis by the Newton Smith Group, an MA consultancy.
alf of the cutpoints tightening doesn’t mean the CMS is purposefully making things harder for insurers. The cutpoints are based on the relative performance of plans participating in the privatized Medicare program, so the industry improving performance automatically shifts the thresholds up.
Still, tougher cutpoints don’t bode well for most plans — a worrying sign for the market, given the volume of money at stake as insurers hustle to resuscitate MA earnings. Changes in star ratings can have significant implications on payment, as even a single half-star change can equate to hundreds of millions of dollars for a plan.
“The average payer leader should be very worried. Very worried,” said Melissa Newton Smith, the founder of the NSG. “There are very few tailwinds sitting in stars right now.”
Insurers jockey aggressively for higher stars, which are tied directly to lucrative bonuses and competitive advantages in the MA program. It’s particularly important to payers that their MA contracts reach the 4-star cutoff, given that it translates to higher bonus payments. Higher scores also result in larger rebates if plans submit bids below the CMS’ benchmark for the coming year.