The Centers for Medicare & Medicaid Services (CMS) has observed a concerning trend in the star ratings of Medicare Advantage (MA) prescription drug plans for 2025.
The percentage of plans achieving a score of four stars or higher has declined for the third consecutive year, with only 40% meeting this threshold. This is a significant drop compared to 2022, when 68% of plans achieved a four-star rating. The previous year saw a slight improvement, with 42% of plans rated at least four stars. These star ratings have a direct impact on the quality bonus payments for MA plans in the 2026 fiscal year, which can have significant financial consequences.
Currently, 62% of enrollees are in contracts rated four stars or better, a decrease from 90% in 2022. The star ratings are determined based on a comprehensive evaluation of measures specific to different types of Medicare Advantage plans. While there have been minor adjustments to the calculations, the methodology for these ratings has not undergone major changes this year.
CMS has made methodological changes, including the introduction of Tukey outlier deletion to non-CAHPS measures, to reduce the influence of outlier performances on the overall ratings. This adjustment is projected to save CMS up to $1.5 billion by 2030. The increasing difficulty in achieving high star ratings is attributed to rising cut points, which are the benchmarks that plans must exceed to score within a desired range. An analysis indicates that most cut points have risen from 2024 to 2025, leading to an anticipated decrease in the average plan star rating.
The 2025 ratings show a significant disparity among MA-PD contracts, with only seven contracts earning a five-star rating, compared to 74 contracts in 2022. On the other hand, 24 contracts scored 2.5 stars or worse, highlighting the widening gap in performance among plans. The CMS has noted that contracts with higher overall star ratings tend to have more experience within the MA program.
Insurers have expressed dissatisfaction with the star ratings, with some appealing their scores and taking legal action against CMS. The star ratings not only affect financial bonuses but also influence consumer choices during the open enrollment period. The challenges in achieving favorable ratings highlight the complexities of the Medicare Advantage landscape and the pressures faced by insurers.