Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes

Quality Ratings

For many years, the CMS has posted quality ratings of Medicare Advantage plans to provide Medicare beneficiaries with additional information about plans offered in their area. All Medicare Advantage plans are rated on a 1 to 5 star scale, with 1 star representing poor performance, 3 stars representing average performance, and 5 stars representing excellent performance. CMS assigns quality ratings at the contract level, rather than for each individual plan. This means that every Medicare Advantage plan covered under the same contract receives the same quality rating, and most contracts cover multiple plans.

Since 2012, Medicare Advantage plans have received bonus payments based on the quality ratings, and plans with higher ratings also receive higher rebate amounts. In 2016, plans with 4 or more stars will receive bonuses of 5 percent, and new plans and plans with low enrollment will receive bonuses of 3.5 percent; these bonus percentages are doubled in some counties.¹ Additionally, beneficiaries can enroll in a plan with 5 stars at any time during the year, not just during the annual open enrollment period.

In 2016, the majority (40%) of Medicare Advantage contracts will have ratings of four or more stars – an increase from 33 percent in 2015 (Figure 11). In 2016, as in prior years, few contracts (4%) receive the top star rating (5 stars), a slight increase from 2 percent of contracts in 2015. The vast majority of Medicare beneficiaries (94%) will have access to at least one plan with four or more stars in 2016, including one-quarter (24%) of beneficiaries who will have access to a plan with five stars (data not shown).

Slightly more than one-third (35%) of contracts will have average ratings (3 or 3.5 stars), and 3 percent of contracts will have below average ratings (2 or 2.5 stars) in 2015; 23 percent of contracts will be too new or have too few enrollees to be rated.