November 4, 2022
© 2022 – Don Gerdts. All rights reserved.
CVS Health and Centene have reported projected 2024 earnings reductions of 5% due to year-over-year declines quality bonus payments from the Medicare Advantage Star rating program. The declines were caused primarily by the expiry of the one-time changes to the rating system due to the COVID pandemic, which results in a sharp reduction in Centene and CVS members in plans with a 4+ Star-rating for 2023.
CVS and Centene were among the biggest decliners. Other health plans like UnitedHealth Group, Cigna, Elevance Health, Alignment Healthcare, and Humana are also impacted, absorbing revenue hits of 1%-3%.
Is Quality Going Down?
To put this in context, quality is not really dropping markedly in the program. Medicare Advantage Star ratings held about steady in 2021 and surged in 2022 because most measures were in essence “suspended” by CMS during the pandemic. Plans had the ability to take the better rating for the calculation year or default to a better previous one. With the ending of the pandemic and return to regular rules, plans must take their current calculated scores with the exception of three measures.
Revenue Headwinds and Operational Hurdles
The downward shift in Star ratings present revenue headwinds and operational hurdles for Medicare Advantage health plans in 2023 and beyond, as additional changes in the Medicare Advantage Star Ratings are implemented. These include:
- The move of certain measures – patient experience/complaints and access measures – to a weight of 4 in 2023. About one-third of the total Star score is now tied to member surveys.
- Changes in how the Star achievement cutpoints (performance in a given measure to achieve a 1, 2, 3, 4 or 5 Star rating) are calculated for non-customer survey measures. The old system tended to help plans maintain scores in many measures in the past. Cut point calculations will now be much stricter by imposition of guardrails that restrict upward and downward movement in the cut points. This will make it harder for many plans to maintain or increase measure success. Note that in 2023 there was some easing of cutpoints than planned.
- Tying to the above, in 2024, there will be the removal of performance outliers from the calculation of non-CAHPS measure rating cut points.
- Two measures (Improving Physical Health and Improving Mental Health) were suspended as Star measure during the pandemic. These are expected to return to Star in 2024 with their normal weights of 3.
- Potential introduction of health equity measures in the future.
- The conversion of certain HEDIS measures from manual medical chart review collection to analyzing encounter data.
Next Steps
We’d love to hear your thoughts on this topic! How will MA health plans respond to Star Ratings program changes like 4x weighting of CAHPS results?
TripleAim Strategy Advisors can help stakeholders in the healthcare ecosystem by providing insights and develop strategies to advance equitable, value-based care.
Contact us to discuss this important topic or see additional ways we can help!
