The Medicare Star Rating system is a quality scoring tool developed by the Centers for Medicare & Medicaid Services (CMS) to help beneficiaries evaluate and compare Medicare Advantage (Part C) and Prescription Drug Plans (Part D). These ratings range from one to five stars, with five stars representing excellent quality and performance. The system is intended to promote accountability among private insurance plans and incentivize them to maintain high-quality services and care. By providing a clear, accessible measure of quality, the Star Ratings influence a beneficiary’s choice during the annual open enrollment period.
The Five Performance Domains
The foundation of the Star Rating calculation is a comprehensive assessment of a plan’s performance across five broad domains. These domains cover different aspects of a plan’s operation, from clinical effectiveness to member satisfaction. The specific number of measures can vary, with over 40 unique measures used across both health and drug plan components.
The first domain, Staying Healthy, focuses on preventive care and screenings. Measures here assess whether members are receiving recommended services like annual flu vaccines, breast cancer screenings, and colorectal cancer screenings.
The second domain, Managing Chronic Conditions, examines the plan’s effectiveness in helping members with long-term illnesses. This includes measures such as medication adherence for conditions like diabetes and hypertension, and regular monitoring of blood sugar and cholesterol levels.
The third domain, Plan Responsiveness and Care, evaluates the member experience with the health plan itself. This category often incorporates results from the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, which captures feedback on access to care and getting appointments quickly.
The fourth domain focuses on Member Complaints, Appeals, and Customer Service, gauging the plan’s administrative efficiency and responsiveness. This includes how often members choose to leave the plan, the volume of complaints received, and the accuracy of reviewing appeals decisions.
The final domain, Drug Safety and Plan Accuracy, applies specifically to plans that include prescription drug coverage (Part D). It measures aspects like the appropriate use of high-risk medications in the elderly population and the accuracy of the plan’s pricing and formulary information.
Benchmarking and Setting Star Thresholds
The raw performance data for each quality measure must be translated into a Star Rating between one and five. This comparison is known as benchmarking, meaning a plan’s performance is judged against the performance distribution of all other national contracts from the previous year, rather than a fixed standard. This ensures that the standards for achieving a high rating adjust as the overall quality of Medicare Advantage plans improves over time.
CMS uses a statistical technique known as clustering to determine the cut points separating one Star Rating level from the next. This methodology aims to maximize the performance difference between star categories while minimizing differences within the same category. For Star Ratings issued starting in 2023, the method was refined to remove statistical outliers before clustering, which helps to stabilize the cut points.
These cut points are not static; they shift annually, reflecting the overall industry trend. For instance, a performance level that earned four stars in one year might only earn three stars in a subsequent year if the average performance of all plans has increased significantly. This dynamic threshold-setting mechanism drives continuous quality improvement across the Medicare Advantage program. CMS also employs guardrails on many measures, which limit how much the cut points can change year-over-year, typically capping the movement at five percent to provide stability for health plans.
Calculating the Overall Weighted Score
After individual quality measures are assigned a Star Rating, these scores are aggregated to determine the final overall plan rating. This aggregation is a weighted average, where CMS applies different weights to measures to reflect agency priorities, with some measures carrying significantly more influence than others.
Measures related to patient experience and outcomes are weighted more heavily than standard process measures. For example, measures derived from member experience surveys, such as the CAHPS data, often receive higher weights (up to 4x). New or process-focused measures typically start with a weight of 1x. The weighting scheme is subject to annual adjustments, often rebalancing to place greater emphasis on clinical and pharmacy outcomes.
The individual Star Ratings are combined into a weighted mean score for the Part C and Part D components separately, and then into an overall summary rating for the entire contract. The calculation includes “Improvement Measures,” which reward plans that show significant year-over-year improvement in specific areas. This improvement factor can slightly boost a contract’s overall Star Rating, incentivizing plans toward continuous quality enhancement. The final score, rounded to the nearest half-star, is the rating publicly displayed to Medicare beneficiaries.
Data Sources and Annual Publication Cycle
The Star Rating calculation relies on data sources collected by health plans and CMS throughout the year. A major source is the Healthcare Effectiveness Data and Information Set (HEDIS), which provides clinical data on preventative care and chronic disease management metrics. Feedback from beneficiaries is captured through the CAHPS survey, which measures member experience and access to care.
Administrative data collected directly by CMS is used to evaluate operational metrics, such as the speed and accuracy of handling member appeals and processing complaints. These data points are collected and measured over a full calendar year, creating a necessary time lag between the performance period and the final rating. The new Medicare Star Ratings are published annually in October, ensuring beneficiaries have the latest quality information available when making coverage decisions for the following year.