CMS to Recalculate 2024 Medicare Advantage Star Ratings

The Centers for Medicare and Medicaid Services (CMS) have decided to recalculate the 2024 Medicare Advantage (MA) star ratings and allow plans to resubmit bids for 2025 if their scores increase. Insurers are thrilled.

Two federal courts recently determined that CMS improperly calculated MA star ratings for 2024 after applying a calculation tool that was not properly passed through rulemaking channels prior to its implementation. According to Healthcare Dive, if all MA plans had their ratings recalculated in response to this ruling, 76 contracts with 44 insurers would gain at least one half of a star, which could result in $1 billion in additional bonuses being awarded to those insurers.

Wall Street Journal explains that a federal judge initially ruled that SCAN Health Plan, a nonprofit plan, was owed its own recalculation after the Medicare program failed to implement changes to the quality ratings properly, which SCAN said would raise its bonus by $250 million. Then, a second federal judge made a similar finding in a case brought by Elevance, which expects $310 million for the miscalculation of its bonus. While CMS has not yet said which plans it would be recalculating, it could still appeal both of these rulings.

CMS will also not recoup bonuses from insurers that were granted high star ratings erroneously and pledged that those companies “will be held harmless,” STAT News reports. Several companies have threatened to exit the MA market or roll back benefits for beneficiaries on 2025 due to the loss of bonus payments, but some plans may now stay since they will be allowed to account for the influx of new bonuses. Plans will have until June 28 to reapply.

Insurers were predictably thrilled, Inside Health Policy reports, The Association of Community Plans had initially flagged an issue with the calculations over a year ago, and anticipates that more work will need to be done to fix the issue moving forward:

We look forward to continuing our advocacy on this issue, and stand ready to work with CMS to assure more accurate, more equitable Star Rating measurements in the years to come.