For health plans across the U.S., Star Ratings are more than just a score, they’re a lifeline. These ratings, published annually by the Centers for Medicare and Medicaid Services (CMS), help beneficiaries compare the quality of Medicare Advantage (MA) and Part D plans. But for health plans, they’re a direct link to financial reimbursement, market competitiveness and even survival.
How Star Ratings Work
Each year, CMS evaluates health plans on up to 40 measures, ranging from readmissions and transitions of care to follow-up after emergency visits. These measures are scored on a 1–5 star scale, with “cut points” set by CMS to determine performance thresholds. Plans that fall below 3 stars risk being dismissed from the Medicare Advantage program altogether, while those above 4 stars gain access to special enrollment periods and quality bonus payments.
The Financial Impact
The stakes are high. In 2025, top health plans saw a 0.23% decline in their total Star Ratings, with only 62% of plans at 4 stars or above, down from 79% the previous year. A jump from 3 to 4 stars can mean an 8-12% increase in enrollment and up to 17.6% more revenue. Quality bonus payments are also at risk, with plans above 4 stars receiving an additional 5% adjustment for the following year.
Why Ratings Are Dropping
With CMS aiming for 100% of Medicare patients enrolled in value-based care plans by 2030, health plans must adapt quickly. But there’s a more fundamental shift underway: CMS is changing what it prioritizes. Patient experience measure weightings are declining while clinical outcomes measures are rising. This means the traditional approaches that worked for Star Ratings in the past won’t protect performance going forward.
The challenge? If you’re still relying on claims data to manage care, you’re already too late. Understanding how ratings are calculated and addressing the barriers that prevent improvement. Collaboration between health plans, hospitals and providers is more important than ever, especially as HEDIS measures become increasingly time-bound.
What Goes Into a Star Rating?
Star Ratings are not just about clinical outcomes. They encompass patient satisfaction, plan administration and management of chronic conditions. Member satisfaction, measured by customer service response, complaints and retention, is weighted alongside proactive case management and timely response to changes in patient status. Not all measures hold equal weight, but together, they paint a comprehensive picture of plan quality.
The Bottom Line
Star Ratings impact everything from consumer choice to financial viability. Even a single star drop can mean losing out on millions in bonus payments and thousands of new members. For health plans, the message is clear: understanding and improving Star Ratings is not optional, it’s essential.
What’s causing these ratings to slip and how can health plans close the gaps? In Part 2, we’ll explore the race against time to address care gaps and the challenges that stand in the way.
Learn how PointClickCare helps health plans close care gaps and protect their Star Ratings. Visit pointclickcare.com.
