All Medicare Advantage plans and Medicare Prescription Drug Plans receive an overall quality rating from the Centers for Medicare and Medicaid Services (CMS). These ratings are updated annually and are presented in the form of stars. Five stars is the highest possible score and fewer stars indicate lower quality. CMS provides the following guidance regarding the different star ratings:
You can see the overall star ratings for each plan on our Medicare Plan Comparison Tool. Plans that are brand new, or have too few members for a reliable evaluation, do not receive star ratings.
Medicare Advantage plans are evaluated on over 50 items to produce their overall star ratings. These measures include:
The fifty measures on which the evaluations are based come from five different rating systems. These include HEDIS (Healthcare Effectiveness Data and Information Set), CAHPS (Consumer Assessment of Healthcare Providers and Systems), CMS, HOS (Health Outcomes Survey), and IRE (Independent Review Entity).
Because Prescription Drug Plans only cover medications and don't offer other health services, they are evaluated on fewer items. These items include:
A 2014 HealthPocket analysis found that from 2013 to 2014 the overall star quality of Medicare Advantage plans improved. The number of plans with ratings between 4 to 4.5 stars increased from 26% to 35% while the number of plans with ratings between 2.5 and 3 stars decreased from 42% of plans to 29% of plans. Additionally, the proportion of 5-star plans increased by a percent. The following charts show the distribution of Medicare Advantage star-rated plans in 2013 and 2014.
Normally, Medicare beneficiaries can only change plans once a year during Annual Enrollment Period (October 15th and December 7th). However, if there is a 5-star plan in your area, then you can still switch to this plan between December 8th and November 30th using the 5-star plan’s Special Enrollment Period.
According to Joshua Raskin, a senior analyst for Barclays Capital, plans sold by large insurers such as UnitedHealthCare and Humana with the largest market share are the plans with the fastest growing enrollment in recent years, not plans with the highest ratings. 5-Star plan enrollment has actually increased at the slowest pace, compared to an 8% increase in the overall market. Furthermore the fastest-growing plans have been three-star plans, which experienced a 12% growth in enrollment in recent years. One factor in the slow member growth of 5-Star plans is the scarcity of such plans. In 2014 CMS awarded a 5-Star rating to only 14 health plans and 5 prescription drug plans.1
The impact of these ratings on enrollment is less than what one would expect. Price, especially the monthly premium, appears to be the primary factor for seniors deciding among Medicare Advantage plans. According to a May 2014 Kaiser Family Foundation report on how seniors are choosing and switching health insurance plans that interviewed Medicare beneficiaries living in Memphis, Tampa, Baltimore, and Seattle, most seniors are not aware of the existence Medicare star ratings or had heard of them but did not know how the rating system works. Because most seniors don’t know how the rating system was created, which criteria the ratings are based on, and how often the ratings are updated, many think ratings are solely based on the experience of members enrolled in the plan which are not necessarily relevant to them. Thus if a Medicare beneficiary’s current plan has a 3-star rating, they are not motivated solely by the rating to switch to a higher-rated plan. Interestingly the absence of a star rating due to the plan being too new or having too few members to be rated influence the selection decisions of some seniors, who consider a new plan to be a more risky choice than a plan that is established and has been rated.
Seniors also said that they found the process of switching plans to be frustrating. They reported that although the high number of options with which they are presented leads to more competition and therefore better prices and quality, the numerous options can be overwhelming. The arduous process of switching plans, among other factors such as fears that costs will increase or concerns that they will be worse off in a new plan, contribute to many seniors staying with the initial plan they chose despite the fact another plan may be currently more suitable for them due to changes in medical and drug needs. Most beneficiaries will go to considerable lengths to stay on their current plan and will look for alternative or generic versions of their drugs if a medication that they need is not covered, apply for discounts from drug manufacturers, order medications online or from other countries such as Canada, ask for samples from their doctor, and some are even willing to give up their primary care physician if necessary.
It is clear that more outreach and advertising is needed to provide seniors information regarding Medicare Star Ratings as well as information that discusses the benefits of switching plans or the cost of not switching plans. Furthermore seniors don’t want less plan choices, instead they want and need better access to user-friendly tools such as our Medicare Plan Comparison Tool to help them narrow down Medicare options in their area. Most seniors that participated in the Kaiser Family Foundation study did not consider Medicare.gov’s Medicare Compare plan finder to be helpful for comparing plans and would like the Federal government to update the website with clearer language as well as better and more tool functionalities.2
HealthPocket performed two studies to compare plan inventories on public and private exchanges. Both studies determined the number of 5-star Medicare Advantage plans on the public and private Medicare exchanges. In HealthPocket’s exchange comparison study from June 2013 comparing the public and private exchanges in eight cities, none of the 5-star Medicare Advantage plans available on the Medicare.gov plan finder were available on eHealth’s or Extend Health’s private exchanges.
When HealthPocket performed a follow-up exchange comparison study in May 2014, eleven cities were examined. Although there were still not 5-star Medicare Advantage plans available in the cities that were included in the original exchange comparison study, there were five 5-star Medicare Advantage plans available in Seattle (a city not included in the original study) on One Exchange (formerly known as Extend Health). In fact, One Exchange displayed every 5-star Medicare Advantage plan in Seattle that was available on the Medicare.gov plan finder. Overall One Exchange displayed one third as many 5-star Medicare Advantage plans as the Medicare.gov plan finder, even though One Exchange only had one city with 5-star Medicare Advantage plans among the eleven cities in the study. In the ten cities besides Seattle, the Medicare.gov plan finder displayed a total of only ten 5-star Medicare Advantage plans.1 Do Seniors Have Too Many Medicare Plans to Choose From? (May 14, 2014) http://kaiserhealthnews.org/news/do-seniors-have-too-many-medicare-plans-to-choose-from/2 How are Seniors Choosing and Changing Health Insurance Plans? (May, 2014) http://kaiserfamilyfoundation.files.wordpress.com/2014/05/8589-how-are-seniors-choosing-and-changing-health-insurance-plans.pdf
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