2024 Medicare Advantage Star Ratings: Tightening performance parameters increase health plan responsibility
By: Harbinder Raina, Kashish Goyal, Akshay Mhalgi, Varun Agarwal and Pramod BSS
The Star Ratings for 2024 released in mid-October, bring with it a slew of expected and unexpected changes. Star Ratings continued to decline in the second consecutive year for Medicare Advantage contracts from 4.15 in 2023 to 4.04 in 2024 and are at the lowest level since 2017. Out of the contracts rated in both 2023 and 2024–37% retained their ratings, 42% declined and only 21% managed to improve. The number of five and 4.5-star plans has declined and as a result, enrollment in five and 4.5-rated plans is at its lowest, though it’s expected to jump back once the annual enrollment period (AEP) begins — as most enrollments occur in 4-plus rated plans. For plans rated 3.5 and lower, only a quarter of the market will likely remain for them to capture.
FIGURE 1: National average of Star Ratings from 2020 to 2024
FIGURE 2: Contracts and enrollments coverage by Star Ratings
Overall, the ratings re-emphasize a common belief held by industry leaders — that the quality of healthcare is a continuously shifting target and MA plans need continuous improvement, year after year to meet it. The recent changes and tightening performance parameters have made deriving a robust strategy tougher than ever before.
Here are five insights from our analysis of the 2024 Star Ratings that health plans should consider as they look ahead.
5 key takeaways from the 2024 Star Ratings
1. Payviders saw the highest Star Ratings decline among all payer categories, challenging assumptions about their inherent advantage in managing quality
Following two consecutive years of high ratings, payviders saw the highest decline in average ratings compared to other payer types — challenging the notion that payviders attain better ratings.
.FIGURE 3: Average rating of contracts by payer types
Payviders and Blues are the highest impacted for 2024, both losing substantial stars. Payviders are the worst hit dropping from a 4.73 to a 4.04 rating nationally. Further analysis reveals that Kaiser Permanente is the most affected plan among payviders and Blue Cross Blue Shield of Michigan is the most impacted among Blues organizations. National health plans, on the other hand, emerged as a bright spot with a marginal increase in their performance.
2. Contracts focused on growth had steeper declines in Star Ratings compared to the overall market, indicating scalability challenges
Plans striving to expand faster than the overall MA growth rate face challenges in maintaining their Star Ratings. Notably, 10 of the 14 health plans with greater than 30,000 Medicare Advantage disenrollment period enrollees and year-on-year (YoY) enrollment growth of at least 10% saw their Star Ratings decline. These plans expanded into new counties by 33% YoY but struggled to maintain performance.
These findings are particularly relevant for regional and Blues plans, which may lack the infrastructure necessary for effective execution compared to national plans with established core infrastructure in multiple states.
3. CAHPS measures played a pivotal role in determining performance
Consumer assessment of healthcare providers and systems (CAHPS) measures hold significant weight in MA Star Ratings, with eight out of nine stars measures having four times the weight. This year’s data highlights the impact of good CAHPS performance.
Contracts that had a growth of at least 0.5 in overall ratings, from 3.5 in 2023, had their CAHPS category average grow by 0.61; whereas contracts that had a decline of 0.5, from 5 in 2023, or more had a decline in CAHPS category average of 0.37.
Plans that strategically addressed consumer experience are reaping rewards this year and can hopefully continue to maintain the improved experience. It is important to ensure that improved CAHPS measures do not come at the cost of reduced focus on the healthcare effectiveness data and information set (HEDIS) since CAHPS weights will be reduced by a factor of two times in due course.
4. Reward factor continues to drive high performance across plans
The CMS uses the reward factor to encourage consistent high performance in MA-PD contracts, rewarding plans with both high average measure stars and a low spread of measure stars, offering a maximum reward factor of 0.4. This factor significantly influences overall ratings, as observed in 2024.
Half of the contracts with four-plus overall stars would have had a reduction in rating without a reward factor — further validating the high impact of the reward factor on overall rating. As the reward factor gets replaced by the health equity index (HEI), plans will need to be extra careful about absolute measure improvement across sub-populations as a balancing act.
FIGURE 4: Impact of reward factor on 4 and above rated contracts
5. Tukey outlier deletion causes issues at the lower end of the performance spectrum, making it more difficult to improve Star Ratings measures
This year, Tukey outlier deletion was introduced to stabilize cut points and the impact was significant with increased cut points across measures and star levels.
FIGURE 5: Increase in cut points by Star Ratings levels
Plans should leverage the learnings from the 2024 Star Ratings while planning for the future
There are a few specific takeaways from the 2024 Star Ratings results plans should consider for improving the quality of care and their overall Star Ratings for next year and beyond:
1. Balance growth with member experience and quality of care: MA is a high-growth space, but it serves a complex population, especially when you include the dual-eligible special needs plan (D-SNP) population. This population is also a high utilizer of health services, making it even more important to be ready for growth with the right network and operations support. The plans that grew membership by 10%-30% (minimum 30,000 members) had challenges in maintaining ratings. It appears that these plans were unable to expand their operations and network proportionately to support this growth. A key focus area for plans should be to forecast the growth correctly and plan the right level of operations expansion to support it.
2. Assessing risk as a part of improvements: A drastic shift caused by Tukey outlier deletion and other plans continuing to push performance across measures, requires the inclusion of risk assessment as a key aspect of overall strategy. Plans need to identify measures at the lower end of the cut points and create a strategy to improve this.
3. 2026 Star Ratings methodology change a key input to next year’s strategy: There are a few significant changes on the horizon including the introduction of HEI and lower weighting of key CAHPS and administrative measures that necessitate MA plans consider these changes as key inputs for next year’s planning. For example, plans that received a lift in rating because they did well on CAHPS cannot relax as the weights of CAHPS will go down in 2026 as other measures rise. Similarly, plans that received the benefit of the reward factor need to consider how to maintain this when the reward factor gets replaced by HEI in the 2027 Star Ratings.
Star Ratings or quality of care is a critical element for MA plans, for everyone involved — plan, provider, CMS and members. Learnings from this yearly exercise can help everyone involved get smarter and become more capable of improving the quality of plans. Plans just need to have the machinery and capabilities in place to uncover the right insights, contextualize them and apply them to create initiatives that lead to continuous improvement of quality.
