MA star ratings, which were introduced in 2008, range from two to five stars and aim to rank plans based on quality. The Centers for Medicare and Medicaid Services uses star ratings to assess bonuses and penalties, as well as to share with the general public.
Since 2012, CMS has tied payment bonuses to star rating to bonuses, with MA contracts that are rated four or more stars eligible for an up to 5% bonus on their payments for each enrollee in the plan. Nearly three-quarters of enrollee-weighted contracts were rated four stars or higher in 2019. CMS pays roughly $6 billion in bonus payments annually, which indicates that star ratings work as a measure of care quality, the agency suggests.
Until now, not much had been known about the reliability of star ratings as indicators of quality, since “many of the measures in the star ratings are correlated with sociodemographic characteristics and geography,” wrote first author David J. Meyers, assistant professor in the Department of Health Services, Policy and Practice at the Brown University School of Public Health, and colleagues. “Therefore, the rating of a contract may reflect the composition of its enrollees rather than the quality of its care.”
Further, contract consolidation previously enabled MA insurers to consolidate higher-rated contracts to increase bonuses. The practice allowed MA insurers to move all enrollees from one contract to another if the cost-sharing structure didn’t differ greatly.
These combined factors meant star ratings were questionable as a method for measuring quality. Meyers and co-authors looked into the association between star ratings and enrollees’ use of higher-quality hospitals and nursing homes, contract switching and quality of care, using a sample of more than 16 million MA enrollees across 515 contracts. Of this group, more than 1.3 million enrollees in 42 contracts were involved in a consolidation.
Researchers found that enrollees within the higher-rate MA plans did have some indications of better quality care, including a 3.4% increase in use of higher-rated hospitals, 2.6% reduction in 90-day readmissions and a 20.8% decrease in disenrollment to traditional Medicare and switching MA contracts.
They also found that higher-rated contracts are more likely to have networks with higher-rated hospitals. Even when consolidation occurred, enrollees were unlikely to be admitted to lower-quality facilities, the study found. The reduction in readmissions rate could also be related to this network of higher-quality hospitals in higher-rated contracts, the researchers noted. However, more study is needed to fully understand this relationship, as the reduction could also be a result of care management by the MA contract providers.
Bonus payments may also help MA contracts improve or maintain higher quality care or better enable these plans to retain their members. The findings come at a time when the Medicare Payment Advisory Commission (MedPAC) is considering adding penalties for MA plans with lower star ratings.
“Overall, our study provides evidence that MA contract star ratings capture some important measures of quality and outcomes for enrollees,” Meyers et al concluded. “However, it is unclear whether all of the differences they indicate are clinically meaningful.”