New MA Star Ratings Rule – CMS Estimates Changes Will Cost Taxpayers $18.6 billion

Last Thursday, the Centers for Medicare and Medicaid Services finalized a rule that overhauls the Star quality rating system for Medicare Advantage programs, cutting several measures, including the health equity index. The changes are anticipated to net insurers $18.6 billion over the next ten years.

In lieu of the health equity index, the agency added standalone behavioral health measures related to depression screening. In a Fact Sheet on the final rule, CMS explains that the new rules are meant to refocus the quality ratings program on clinical care and health outcomes. The agency justifies the elimination of the quality measures as a reduction in regulatory burden that limited beneficiary choice, such as exempting account-based plans, rescinding the requirement that plans send mid-year notices about unused supplemental benefits, and eliminating the agency’s requirement that plans include programs that reduce health disparities.

The reduction in metrics means that there will be fewer barriers to higher quality bonus payments, STAT explains. Under the new system, 4% would gain while 3% would lose bonuses. The higher bonuses are expected to buffer insurers from concerns related to final payment rates for 2027 and the higher rates of medical claims troubling Medicare Advantage plans.

Modern Healthcare notes that when CMS released the proposed revisions to the Star Ratings system, 42,000 comments were submitted by stakeholders, with insurers arguing that removing the metrics could destabilize the program or favor certain companies. In fact, CMS’s analysis found that general enrollment plans will benefit at the expense of special needs plans (SNPs).

Nearly a quarter of MA members are covered under SNPs, and no SNP contracts will gain bonus payments under the finalized changes.