“Quality is now an absolute financial imperative for MA plans,” said Matt Eyles, executive vice president at Avalere Health. In 2014, MA plans with ratings of at least 3 stars (average) or 3.5 stars-which represent the majority of MA enrollment by Medicare beneficiaries-will receive quality bonus payments. However, in 2015, only MA plans with a rating of at least 4 stars (above average) out of 5 stars (excellent) will receive quality bonus payments.

Due to the growing impact of the CMS star ratings on how the Medicare Advantage program operates, MA plans take great interest in their star ratings.

“It’s tough for MA plans to make big improvements in stars from one year to the next, but more plans appear to be heading into 4 star territory,” said Eyles.

Looking ahead to 2015, MA plans that no longer receive quality bonuses could reduce additional benefits, increase premiums, or consider exiting some markets.

CMS’ star ratings measure the quality of care delivered through MA and Part D plans. These ratings-which rate plans on a scale from 1 to 5 stars-are posted to the Medicare Plan Finder website to aid beneficiaries and their caregivers in selecting a plan.

Under the Affordable Care Act, federal payments to MA plans are linked to plan performance as measured by the star ratings, with quality bonus payments available for high-performing plans. In addition, MA plans with higher star ratings may use a greater share of federal payments to offer additional benefits beyond original Medicare or to reduce premiums.

When CMS releases its detailed files with the 2014 stars data on all MA and Part D plans, Avalere will also be analyzing that data and issuing its findings.

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If you would like to talk with someone about the analysis, please contact Frank Walsh at (202) 745-5110 or fwalsh@gymr.com.