Following is part of a series on B2B healthcare where we break down some complicated concepts for marketers who are new to this industry, or those simply looking to expand their knowledge in order to advance their career. This post focuses on understanding Medicare Star Ratings and their impact and importance for key B2B healthcare stakeholders.

According to Healthcare Finance News, 21 Medicare Advantage plans earned 5 stars this year with the release of CMS’s new annual Star Ratings. The article also states that the vast majority of Medicare members will now be enrolled in plans with 4 stars or more. And many plans are not just improving in 2021, but also year over year. Research from McKinsey shows that on average, participating health plans’ scores have risen substantially over time, both overall and on the individual quality metrics that influence Star Ratings. Based on this data, it’s clear that the increased visibility of the program among Medicare beneficiaries, and the enrollment growth that comes from a higher rating, have motivated health insurers to invest in efforts to improve their rankings.

Given the program’s success, understanding Medicare Star Ratings from the plan’s perspective is more important than ever, including what this program tracks, why it matters, and what factors have the most impact on plans looking for the highly coveted “five star” rank. There are plenty of websites out there that will explain this program from a consumer’s perspective, which can be useful if you’re trying to pick a Medicare plan. But if you’re new to healthcare marketing, the consumer impact is probably not as helpful in better understanding Medicare Star Ratings and the B2B healthcare landscape.

That’s why we’ve put together quick highlights from the program that every savvy marketer—either at a health insurer or selling to one—needs to know. And if you want broader knowledge of this B2B landscape, we’d encourage you to check out our quick-hit guide to everything B2B healthcare.

What is a Star Rating and what type of plans participate?
The Star Ratings system began in 2007 as a way for CMS and Medicare beneficiaries to assess and compare Medicare Advantage and Part D plans from consistent and quantifiable data. CMS publishes information about Star Ratings on the plan finder at and updates these rankings annually.

For those not well-versed in the Medicare landscape, Medicare Advantage plans are offered to Medicare members as an alternative to traditional Medicare Part A & B coverage for both doctor and hospital services, while Part D plans offer prescription drug coverage. (While CMS has also launched a ratings program for exchange-based plans, for the purposes of this article and understanding Medicare Star Ratings, we’re zeroing in on the Medicare space given its longer history and traction). Both types of plans more closely resemble commercial coverage in that they are a combination of copays and coinsurance for many services, and are offered to Medicare members from private insurers like Aetna, Human and regional Blue Cross Blue Shield organizations.

Is plan participation required?
Yes. Private health insurers contracted to provide Medicare Advantage or Part D coverage receive capitated payments from CMS based on the health status of each individual enrollee (this is referred to as risk adjustment). But since CMS controls these purse strings, it maintains regular involvement in regulating and monitoring the services being provided by all plans, and that includes mandating participation in Star Ratings.

That may sound like a negative since health plans spend an inordinate amount of time collecting this data, tracking and analyzing it, and then trying to improve on specific metrics, which costs them both time and money. However, there is an upside. There are also important financial incentives that encourage plans to participate in the Star Ratings program, which are covered below.

Understanding Medicare Star Ratings from the plan’s perspective.
Given that the Medicare space is both highly competitive and lucrative, any edge that can drive better plan enrollment is key. And that’s where Star Ratings come in, because beneficiaries and their brokers frequently use these ratings to assess plan performance. (This is especially true when two Medicare Advantage plans offer similar networks with comparable programs and/or value-adds, which is frequently the case.)

Since 2012, CMS has also directly tied plan revenue, via bonuses and other incentives, to Star Ratings. Given this vast potential upside, insurers are willing to invest in programs, systems and services that enhance their ability to improve these ratings. These include new clinical programs designed to improve quality—for example, by identifying gaps in care—and new technologies that help them track and report these efforts. This, in turn, has prompted an influx of health information technology companies selling analytics and population health services to Medicare Advantage plans designed to do just that.

Which metrics matter?
Of course, reimbursement isn’t the only factor that comes into play when you look at the value of this program. Understanding Medicare Star Ratings are designed with the consumer’s perspective in mind is important; i.e. they provide an easy “cheat sheet” for assessing a plan’s performance across specific quality and outcomes metrics within several categories. These include metrics related to staying healthy (screenings, tests and vaccines), member experience, managing chronic conditions and customer service among others—as well as some specific categories exclusive to Part D drug plans like drug safety.

Looking at these categories, you can see why health plans today may be so focused on better serving their at-risk members (those with, or at risk for, chronic conditions like diabetes) and ensuring that their Medicare populations are getting important screenings like mammograms and colonoscopies.

Within these categories, plans are assessed on a variety of data points from the previous year. (That’s also why new Medicare Advantage or Part D plans won’t be rated during their very first year.) These include compliance with flu vaccines and colorectal screenings, blood sugar control and drug adherence, especially for statins and diabetes medications, among many others.

Where does this data come from?
There are four “buckets” of data sources used by CMS to assess a Medicare plan’s Star Rating, including the data provided by the plan itself (largely from HEDIS quality data), surveys conducted of enrollees (like CAHPS), data collected by CMS contractors and CMS administrative data.

Who usually comes out on top?
According to research firm Milliman, plans with more Medicare experience tend to have higher Star Ratings, which shows that experience goes a long way. More than half of plans with 10+ years of experience have ratings of 4.0 or higher.

According to the same source, following are some of the other characteristics of plans that have found the most success in terms of achieving 5 stars:

  • A strong implementation foundation (in other words, investing in a “culture of quality” which extends across their operations and receives support from a multi-department team)
  • An established change plan
  • Data-driven processes
  • Investments in member outreach
  • Effective training, education and communication to all team members, partners, providers and vendors about these efforts

Who are the Star Rating standouts this year?
The 21 health plans earning 5 stars include KelseyCare Advantage, Kaiser Permanente, UnitedHealthcare, CarePlus by Humana, Tufts Health Plan, Health Partners, Capital District Physicians’ Health Plan, Quartz Medicare Advantage of Wisconsin, Cigna, Health Sun – Anthem, BCBS – Health Now New York and Martins Point.

How has COVID-19 impacted the program?
CMS previously announced its intent to provide temporary relief from paperwork, reporting, and audit requirements for healthcare providers and organizations, including Medicare Advantage and Part D plans, as a result of COVID-19. This includes Star Ratings, so plans got some relief from certain aspects of reporting this year. CMS used last year’s HEDIS measures scores and ratings from the 2020 Star Ratings and CAHPS data scores from last year, as well, for its 2021 Star Ratings. 

If you need more help understanding Medicare Star Ratings and the wide variety of other complex issues impacting B2B marketing, it helps to have the right agency on your side. To learn more about how Activate Health can hit the ground running to assist you in your B2B healthcare marketing efforts, contact us today.