Understanding Medicare Star Ratings for Medicare Advantage Plans

What Are Medicare Star Ratings?

Medicare uses a star rating system of 1-5 stars to measure the performance of Medicare Advantage (Part C) plans and standalone prescription drug (Part D) plans. These ratings can help policyholders select the best plans and encourage insurers to improve their offerings from year to year. Each reviewed plan receives a rating ranging from 1-5 stars, or “poor” to “excellent,” respectively.

A top score of 5 stars often indicates a plan delivers optimum benefits and expanded programs, usually at no extra cost to the policyholder. The following outlines the Medicare star ratings system: 

• 5-star rating: Excellent
• 4-star rating: Above Average
• 3-star rating: Average
• 2-star rating: Below Average
• 1-star rating: Poor

Why Rate Medicare Advantage Plans?

The Centers for Medicare & Medicaid Services developed the Medicare Stars program as a quality control measure for consumers to compare Medicare services and benefits. The implementation of Medicare Advantage star ratings also helps hospitals, senior care facilities, and home health agencies determine where and how to improve their organizations. 

Medicare recipients should first consider their own basic criteria for health coverage. To start, they should decide which plans are affordable, include the prescription drugs they need, and cover in-network providers and preferred pharmacies in their area. Then they can explore the star ratings of the providers on their shortlist. 

How Do Medicare Star Ratings Work? 

Medicare star ratings help Medicare recipients select the best plan for their needs. Medicare issues financial rewards to the top-rated insurers, which means added perks for members of top-rated plans.  

Which Plans Are Rated?

Medicare uses the star ratings system to assess the quality of Medicare Advantage and Part D (prescription drugs) plans. These types of plans provide services not included under Original Medicare and must be purchased separately from a private insurer, therefore Medicare  

Stars evaluates each plan on its individual quality of care.

Medicare star ratings reflect a plan’s overall performance in a set of standard criteria. Both Part C and Part D plans are rated for their customer service, member experience, and member complaints. Medicare Advantage plans are also reviewed for their preventive care and chronic conditions management services. Medicare Part D plans are evaluated for drug safety and drug pricing accuracy.

What Do The Ratings Mean? 

The higher the Medicare star rating, the more top-quality benefits and services the plan offers. Insurers strive to achieve a 4-5-star rating to compete at the top of the market with other high-quality providers and turn their financial rewards into even more benefits for policyholders.

A 4-5-star rating commonly denotes that a plan offers expanded benefits such as vision, hearing, and/or dental care. These plans may also offer fewer out-of-pocket costs and low copays, premiums, and deductibles. Medicare also offers a special annual enrollment period exclusively for beneficiaries to upgrade to a 5-star plan.    

How Are The Ratings Compiled? 

Medicare considers the following criteria for Medicare Advantage plans:

• Health and wellness: Top-rated plans offer broad access to screenings, tests, and vaccines.
• Chronic illness management: Some plans offer long-term treatment options for chronic conditions.
• Member experience: Ratings reflect members’ overall satisfaction with their plan.
• Member complaints: This includes how many members unenrolled and whether the plan’s complaint rates improved over the last year.
• Customer service: Factors include how well the plan processes new memberships and maintains efficient call center operations.

For Part D plans, Medicare considers member experience, member complaints, customer service, and drug pricing and patient safety. This includes fair and transparent pricing and FDA-approved disclosures on all prescriptions.

Medicare releases new ratings annually in October for plans offered in the following year. 

Where To Access Star Ratings 

Policyholders can use Medicare’s online plan finder tool to access the current star ratings for that year. They may also call 1-800-MEDICARE to learn about star ratings by phone. These sources include recent and accurate information since Medicare star ratings are updated yearly.

Are There Ratings For Original Medicare? 

Medicare stars apply only to Part C and Part D plans that are purchased separately, not Original Medicare because it is federally administered. While no plans exist to extend Medicare star ratings to Part A and Part B, policyholders can make better-informed decisions about enrolling in Original Medicare by considering the star rating of add-on Part D plans.

How Do Star Ratings For Part D Plans Work? 

Medicare beneficiaries who require prescription drugs must purchase a Part D plan separately from a private insurer. Star ratings for Medicare Advantage take into consideration overall concerns such as wellness care and chronic conditions, while Part D star ratings focus on prescription drug safety and fair pricing, customer service, and the member experience.

Beneficiaries needing prescription drug coverage should first ensure their Part D plan covers the necessary medications and in-network pharmacy of their choice. Of their shortlist of Part D plans, beneficiaries can then choose from plans with the highest Medicare star rating. 

What Can I Expect From a Rated Plan? 

While individual plans vary, Medicare star ratings can help highlight the benefits or shortcomings of a Medicare Advantage or Part D plan. These are just some of the universal qualities of the five levels of the Medicare star ratings system.

Five Star Plans 

5-star plans are the top-rated Medicare Advantage and Part D plans on the market. Organizations that are non-profit more frequently earn higher ratings as well as Part C/D plans that have been on the market for more than 10 years. They offer excellent customer service and benefits, including:

• Large networks: Members enjoy a wide variety of options for PCPs and specialists.
• Preventive and chronic health management: 5-star plans offer wellness services such as gym memberships and long-term treatment options for chronic conditions.
• Ease of access: Members report a high rate of satisfaction in reaching representatives and resolving issues concerning healthcare services, billing, or claims.

Four Star Plans 

4-star plans offer many of the same benefits as 5-star plans, including vision, dental, and hearing. They also offer:

• Telehealth: Members can access healthcare from the convenience of their homes through telehealth.
• Fitness: Like 5-star plans, members can take advantage of wellness services.
• Savings: Many plans offer $0 premiums premiums premiums premiums, low deductibles, and low copays and coinsurance.

Three Star Plans 

Three stars is the threshold for a plan to be flagged for poor performance over multiple consecutive years. Three-star plans may NOT offer:

• Transportation: While 4- and 5-star plans offer transportation for healthcare services, most three-star plans exclude this feature.
• Drugs: Three-star plans tend to include a higher deductible for prescription drug services if they are offered at all.

Two Star Plans 

Two-star plans do not offer most of the healthcare services available in higher-rated Medicare Advantage plans, such as:

• Vision and Dental: Members may still receive hearing services but not vision or dental.
• Telehealth: Two-star plans tend to exclude virtual healthcare options.
• Fitness: Two-star plans also eliminate wellness options such as gym memberships.

One Star Plans 

One-star plans are actually quite hard to come by since they offer even fewer benefits than the threshold of three stars. Since higher-rated plans do not necessarily cost more, you can likely find a higher-rated plan for little or no cost as a better option than a one-star plan. One-star plans offer the same limitations as two-star plans, with few healthcare quality guarantees.

Advantages and Disadvantages of Star Ratings 

Medicare created the star rating system to inform consumers and help insurers to improve their healthcare offerings.

Advantages

• Helps beneficiaries compare plans: Beneficiaries can choose the plan with the highest star rating from a broader selection of plans that meet their healthcare needs.
• Drives competition among insurers: Plans are rewarded financially for scoring a high star rating, allowing them to provide better services and programs to clients.
• Encourages more transparency: Truthful and consistent reporting of issues, including both member complaints and customer service success stories, influences the star ratings.
• Improves the quality of Medicare overall: Plans must maintain high-quality services to keep their 5-star rating and, likewise, are flagged as “low-performing” if they earn less than three stars for three years in a row.

Disadvantages

• Limited plan options: Depending on their location, some members may have only a few plans to choose from in their area, even if the plans have low star ratings.
• Disproportionate member services: Some senior advocates argue that the services provided through highly rated Part C and Part D plans disproportionately benefit non-minority groups.
• Anomalies in the rating process: Certain specialized services, such as hospice care, may not carry as much weight as traditional healthcare; furthermore, some insurers are still leveling out since the regulatory flexibilities offered during the Covid-19 pandemic have gone away, affecting ratings.

Does the Rating Affect the Cost of the Plan? 

4- and 5-star plans are not more expensive than lower-rated plans based solely on their ratings. Most large insurers offer a variety of highly rated Medicare Advantage and Part D plans for affordable rates. Affordability can play a prominent role in earning a high rating for a particular plan.

For example, plans with low monthly premiums, affordable copays, and options for reducing out-of-pocket costs tend to earn a higher rating than plans that are priced too high for most consumers. Exceptions may occur in rural areas where networks are limited to fewer options. 

How To Use Star Ratings When Enrolling in Medicare Advantage 

1. First, consider your top priorities in terms of healthcare programs and services. Make sure your plan’s network covers the doctors, hospitals, and treatment you need. Shop for affordable, effective plans the same way you would without considering star ratings, which should factor in after an initial screening of options. Medicare star ratings should only apply to plans that meet your primary healthcare requirements. 
2. You may enroll in Medicare Advantage during the annual election period, from October 15-December 7. If you decide to switch from your current plan to a 5-star plan, you may do so during a special enrollment period from December 8 through November 30. Remember, star ratings come out in October, effective for plans in the following year. Further, you can only use the SEP to switch to a 5 star plan once per calendar year.
3. Make sure to sign up for prescription drug coverage if this is something you need. You may enroll in a Medicare Advantage plan with Part D coverage during the annual election period or switch to a 5-star plan during the special enrollment period, but you must pay a penalty to add Part D at a later date. 

Putting It All Together 

Medicare created its star ratings system to inform the selection process for Medicare beneficiaries and encourage best practices among Medicare providers overall. Medicare stars apply only to separately purchased Medicare Advantage and Part D prescription plans. Members can factor in a plan’s star rating to help them choose the right Medicare coverage. 

Medicare beneficiaries often enjoy 5-star plan coverage at no additional cost. Insurers that offer highly rated plans receive financial rewards, which they are required by law to put toward expanded members’ benefits. Beneficiaries may switch to a 5-star plan outside of the annual election period during a special enrollment window.