CMS Updates Medicare Advantage Star Ratings: New Standards for 2027
The Centers for Medicare & Medicaid Services (CMS) has announced revisions to the Medicare Advantage (MA) star ratings system through a finalized rule. These updates are projected to increase federal expenditure by $18.6 billion over the next ten years, consequently enhancing quality bonus payments for insurers offering MA plans.
The modifications, set to take effect in 2027, will eliminate 11 administrative measures deemed excessive by CMS and the planned Health Equity Index. The focus will now shift towards clinical outcomes. Currently, the star ratings system assesses Medicare Advantage Part D contracts on up to 43 measures, while MA-only plans are evaluated on 33 measures, and Part D plans on up to 12.
Two significant changes include the removal of the Excellent Health Outcomes for All reward, formerly known as the Health Equity Index reward, which was initially intended to boost performance for a specific enrollee group. The CMS has decided to maintain the historical reward factor for consistently high performance across all enrollees and quality measures. Additionally, CMS is eliminating measures that emphasize administrative processes, citing an inability for beneficiaries to discern performance differences due to uniformly high performance with minimal variation.
This updated approach aims to prioritize clinical care, outcomes, and patient experiences, emphasizing areas with considerable performance variances across contracts. CMS continues to position MA plans as an alternative to traditional Medicare, with potential policy considerations for automatically enrolling seniors into Medicare Advantage plans.
These revisions come at a time when MA insurers are navigating challenges from rising medical costs, lower federal reimbursements, and stricter star ratings. Several major insurance providers have been compelled to either reduce MA benefits or discontinue plans altogether.
Despite anticipated stable reimbursement rates for 2027, the final rule provides critical financial support for MA insurers. Plans achieving four or more stars in the annual Part C and D ratings are eligible for government bonus payments.
In the broader context, the CMS final rule also includes changes to the Medicare Prescription Drug Program and Medicare Cost Plan Program. Notably, a new measure—Part C Depression Screening and Follow-Up—will be introduced to address behavioral health concerns, commencing in the 2027 measurement year and affecting the 2029 Star Ratings. Further details are documented in the Federal Register.