2017 Medicare Star Ratings Released

Medicare Advantage Star Ratings have been released for 2017 and for some large insurers, the news isn’t pretty. The news is substantially better for smaller, regional plans which follows a historic trend. However, whether or not a 5 star plan is available to you largely depends on where you live. What does this mean for you and your wallet? Read on.

Medicare Star Ratings – Why They’re Important to You

The Centers for Medicare & Medicaid Services’ (CMS) five-star ratings of private Medicare plans are a big deal for insurance companies, as higher ratings are tied to considerable bonus payments from CMS to them. Check out my post on Star Ratings for additional background by clicking here.

Some of these payments can be kept by the insurer as pure profit, however a percentage of these must be invested back into the Medicare Advantage plan as increased (better) benefits or lower monthly premiums. That’s good for you, the consumer as this essentially makes these products more attractive. Makes sense, right? Higher star ratings generally means better benefits and lower premiums which attracts more customers.

If a MAPD or Prescription Drug Plan (PDP) achieves 5-star status in any given year, the real “win” for that company is that they can enroll members year-round, while other insurance companies can only do so during the Annual Election Period (AEP) which runs from October 15 through December 7. Essentially, achieving five stars gives the plan a huge sales and marketing advantage over their competitors.

The Medicare Advantage (MAPD) landscape across the county is largely occupied by big insurance companies like United Healthcare (AARP brand) Blue Cross and Blue Shield, Humana, Cigna and Aetna. However, there are many smaller companies who also offer MAPD plans for sale that are regional in nature. Historically, it’s the smaller companies that have been awarded high star ratings, and that trend continues for 2017.

The Large Insurers – Star Ratings Performance

#1. Let’s start with Aetna, which also operates as Coventry in many states. Looks like they were the big winner this year among the large insurance companies. For 2017, 91 percent of the insurer’s MA members will be in four-star or higher Medicare Advantage and prescription drug (MA-PD) plans. Aetna recently noted it has the highest percentage of Medicare members enrolled in four-star plans among publicly traded companies. No Aetna plans achieved a 5 star rating for 2017.

#2. Anthem, the parent company of many Blue Cross and Blue Shield plans said nearly 51 percent of their Medicare Advantage members will be enrolled in plans that achieved four stars or higher and approximately 22 percent of members enrolled in plans that achieved four stars or higher in 2016. So while the overall number of members in a highly-rated plan is high, no Anthem plans achieved a 5 star rating for 2017.

#3. United Healthcare/AARP hasn’t sent out a press release, and didn’t address their Star Ratings in their latest earnings call. However a quick review of their plans shows they achieved one 5 star rating in an HMO that serves several Texas markets.

4. Cigna and Humana (which are in the middle of merger discussions) saw a reduction in its ratings, as next year only 20 percent of its MA customers will be in plans with four stars or higher. To throw gas onto the fire, Cigna is still on a government-imposed sales and marketing ban and isn’t expected to be allowed to enroll new members into their Medicare Advantage and PDP plans until early 2017.

Smaller Insurance Companies Perform Better…Again

CMS announcement of the 2017 Medicare star quality ratings, Kaiser Permanente’s Northern and Southern California, Colorado, Northwest and Mid-Atlantic States regions received 5 out of 5 stars each, the highest overall rating. Kaiser Permanente’s Georgia and Hawaii regions earned 4.5 out of 5 stars.

In fact, you won’t find any “household name” companies other than Kaiser and the one United Healthcare plan achieved 5 stars this year.

Overall MAPD and PDP Quality Improving

According to CMS, approximately 49 percent of MAPDs in 2017 earned four stars or higher, which is up slightly from 2015.

Overall, CMS said nearly 70 percent of Medicare Advantage enrollees will still be in plans that receive at least four stars for quality in 2017.
Just over half of private Medicare customers signed up for plans that received at least four stars in 2014. But the new figure is down slightly from this year, when just over 70 percent of the 17 million-plus Medicare Advantage customers enrolled in the high-quality plans.

There has been similar improvement in quality ratings for prescription drug plans. Just over 40 percent of Medicare beneficiaries who enroll in stand-alone prescription drug plans are expected to be in plans with at least four stars next year. That’s up from just 9 percent who were enrolled in such high-performing plans in 2014.

2017 MAPD 5-Star Rated Plans

KelseyCare Plan Administrators
Enrollment: 30,769
State: Texas

Kaiser Foundation Health Plan
Enrollment: 1,086,961
State: California

Kaiser Foundation Health Plan of Colorado
Enrollment: 104,117
State: Colorado

Kaiser Foundation of the Mid-Atlantic States
Enrollment: 68,575
States: District of Columbia, 11 counties in Maryland, 9 counties in Virginia

Tufts Associated Health Maintenance Organization
Enrollment: 107,311
State: Massachusetts

Blue Cross Blue Shield of Massachusetts HMO Blue
Enrollment: 10,302
State: Massachusetts

Group Health Plan
Enrollment: 53,633
States: Minnesota, Wisconsin

United Healthcare AARP Medicare Complete Plan 1
Enrollment: 31,035
State: Texas

Physicians Health Choice of Texas
Enrollment: 31,035
State: Texas

Capital District Physicians’ Health Plan Universal Benefits
Enrollment: 3,827
State: New York

Gundersen Health Plan
Enrollment: 14,462
States: Iowa, Wisconsin

Optimum HealthCare
Enrollment: 45,153
State: Florida

Kaiser Foundation Health Plan of the Northwest
Enrollment: 84,567
States: Oregon, Washington

The Takeaway:

Almost 18.5 million individuals will be enrolled in private Medicare Advantage plans next year, representing about one-third of all beneficiaries. The higher the Star Rating, the more money the insurance company receives from CMS. A portion of that bonus money must be spent on better benefits and lower premiums, which is good for you and your wallet. If you are lucky enough to live in an area boasting a 5-star plan in 2017, you may enroll in those plans anytime during the year; you don’t have to wait until the next AEP.

Medicare Advantage Star Ratings and Your Wallet

Assigning Medicare Star ratings to Medicare Advantage plans is attempt by the government to neatly rate the quality of a Medicare Advantage (MAPD) plan.   Like most attempts to aggregate lots of information into a small rating system for easy public consumption, it’s flawed. Plan Star ratings should be one aspect of your Medicare insurance coverage decision.  However, it shouldn’t overshadow other considerations like price, network, MOOP or your prescription drug coverage.  Star ratings are important to you, because ultimately if your plan is rated 3 stars or below, it generally means you’ll pay more money for your policy or your benefits won’t be as rich as plans with 4 Stars or higher.    

The Centers for Medicare and Medicaid (CMS)  established a five star rating system in order to help consumers identify and educate the consumer as to the overall quality of their Medicare Advantage (MAPD) Prescription Drug Plan (PDP) plans.  

The star rating system is numbered from 1 to 5, with 5 being the best and 1 being lowest in terms of quality of service:

5 Stars- Excellent

4 Stars- Above Average

3 Stars- Average

2 Stars- Below Average

1 Star- Poor

Medicare Advantage Star Ratings

Medicare Advantage (MAPD) health plans are rated based on the following categories:

1) Staying healthy: screenings, tests and vaccines. CMS evaluates whether members of a particular health plan got various screening tests and vaccines and whether they got other check-ups that would go a long way in keeping them healthy.

2) The management of chronic conditions: individual health plans are graded on their ability to ensure that members with long term conditions got tests and treatments that helped in managing their chronic conditions.

3) The experience of beneficiaries with the plan: the CMS routinely surveys members to elicit their experiences with different health plans, and this is factored into the STAR rating that each health plan will get.

4) Members’ complaints: beneficiaries under a certain plan can lodge complaints if they encounter problems when using their plan. Medicare also routinely evaluates the health plan of the private insurance company to plot the plan’s performance and improvement over time.

5) Customer service: this includes how often members with appeals and other problems are handled by the health plan’s customer service.

Medicare Stars Rating Flawed?

I mentioned above the ratings system is flawed. I say that, because every year, CMS changes the rules and how they score health plans.  Think about it:  There are over 54 million people on Medicare.  Can you really break down plan ratings across the country in only one way?  Can you really break down these ratings into a neat 5 star sliding scale?  The obvious answer is no, and policy professionals and insurance companies quietly (and sometimes not so quietly) let CMS know about it.  Differences in geography, access to hospitals and doctors, income and even attitudes about what it means to be healthy mean the results are suspect and imperfect.

I won’t spend any more time here on the flaws, as plenty of people smarter than me have already done so.  If you’re a policy wonk and would like to check those out, you can click here, here, or here.


Medicare Advantage Star Ratings Affect Your Wallet

Here’s what it means for you, the consumer.  In a nutshell, when you join a Medicare Advantage plan the federal government (CMS)  pays insurance companies a set dollar amount for your care every month.  Plans rated 4 Stars or higher get more money from the government for everyone enrolled in the plan.  This money really adds up, quickly.  Let’s say there are 10,000 people enrolled in the same MAPD plan.  And let’s say, for the sake of argument, that insurance company gets $1,000 per month, on average, from the government for every person’s medical and prescription drug care.  That’s $10 Million dollars per month, or $120 Million dollars per year.  Yes, that’s a big number, but remember the Medicare Advantage plan is on the hook for all the medical and prescription drug care (from the healthy to the very ill) of those 10,000 members.

So, let’s say the plan achieves a Star Rating of 4 Stars.  The insurance company will earn an additional 5% on top of the $1000 they get for all 10,000 people on that same plan.  Quick math means that’s an additional $500,000 every month MORE that insurance company makes, and $6 Million dollars more a year.  Some of that can be profit for the insurance company, but the government mandates a portion of this money MUST be spent on making the Medicare Advantage plan’s benefits better.  That’s where your pocketbook comes in.

Since Medicare Advantage plans need to take a portion of that additional 5% and put it back into the actual insurance plan, they usually do so in two ways.

  1. Lower the plan’s monthly premium
  2. Make benefits richer.  (Ex. Lowering doctor’s copay from $10 to $5, lowering hospital copays, etc.)

Medicare Advantage plans get a Star rating every year.  So if you think about it, if you’re in a 3 Star plan instead of a 4 star plan over the course of 5 years, and those Star ratings remain the same all 5 years, you’re missing out.  Why?  Because remember, a portion of the money the 4 Star plan gets over those 5 years MUST be put back into lower premiums or better benefits.  After 5 years, the Medicare Advantage plan rated 4 Stars should essentially, be cheaper (both in premium or by having better benefits) than the 3 Star plan will.

The Takeaway

Do Star ratings really matter?  Sure.  They matter because they give an overall indication as to the quality and customer experience of a given Medicare Advantage plan.  Is there a significant difference between a 3 Star plan and a 4 Star plan, from the consumer’s standpoint or experience?  No.  There are flaws, to be sure and the “rules” insurance companies must abide by change every year.  The real impact to YOU, the CONSUMER is that higher-performing MAPD plans that receive 4 Stars or higher are paid more from the federal government.  Half (or more) of that additional money MUST be put back into benefits or lower insurance policy premiums, which in the long run, is better for you and you wallet.