CMS is recalculating 2024 Medicare Advantage Star Ratings

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Based on two lawsuits in favor of insurers, the Centers for Medicare and Medicaid Services is recalculating the 2024 Medicare Advantage Star Ratings for quality bonus payment purposes.

CMS made the announcement on Thursday.

“In light of the rulings issued in SCAN Health Plan v. Department of Health and Human Services and Elevance Health v. Department of Health and Human Services, CMS will recalculate and update the Star Ratings for Contract Year 2024 (CY 2024) used for Contract Year 2025 (CY 2025) Quality Bonus Payments for impacted contracts as required by the court remedy,” CMS said in a statement. “CMS will recalculate the Star Ratings for CY 2024 using the actual cut points established for the CY 2023 Star Ratings, not the CY 2023 Star Ratings cut points calculated after removal of Tukey outliers, as the basis for guardrails for the CY 2024 calculations.”

Additionally, CMS said it would recalculate the star ratings of contracts offered by other Medicare Advantage Organizations that would have benefited from a recalculation of the CY 2024 star ratings used for the CY 2025 quality bonus payments applying the methodology as described in the court’s decisions to ensure consistent treatment across the program. 

Under the new methodology, star ratings will not decrease. If the recalculation would result in a contract’s QBP Rating decreasing compared to the ratings previously assigned, CMS is not implementing the change, and those contracts will be held harmless in this recalculation, CMS said. A contract’s QBP Rating will not be decreased by CMS as a result of this recalculation.

MA contracts with increases in their quality bonus-payment ratings – those increasing from 3 to 3.5 stars to 4 stars and from 4 stars to 4.5 stars – will have a limited opportunity to resubmit their contract year 2025 bids, including bid-pricing tools, plan benefit packages and formularies. Plans must contact CMS by June 18 with a deadline to submit revised bids by June 28. CMS will open the gates in the HPMS on June 26.

The actuarial certification for any bid resubmission must be completed by July 3.

All MA contracts can view their updated 2025 QBP Ratings and Total Beneficiary Cost (TBC) data in the Health Plan Management System (HPMS).

The Medicare Plan Finder for consumers to review plans will be updated in the coming weeks.
 
WHY THIS MATTERS

CMS has not made a decision on whether to appeal those judgments. Its decision, CMS said, to recalculate 2024 star ratings has no bearing on CMS’ potential exercise of its right to appeal those decisions.

The decisions in SCAN Health Plan v. Department of Health & Human Services and Elevance Health, Inc. v. Becerra were issued on June 3 and June 7 respectively.  

On June 7, a federal court granted in part, and denied in part, Elevance’s motion for summary judgment, and denied the Department of Health and Human Services’ cross-motion for summary judgment. 

The SCAN Health ruling means SCAN will get the $250 million bonus it was initially denied due to lower than expected star ratings.

CMS offers additional funding to plans with higher star ratings. These higher-rated plans can then use the funds to lower costs for their beneficiaries and attract more consumers. Star ratings are released in October.

THE LARGER TREND

Fewer Medicare Advantage plans made the 5-star rating for 2024, and many blamed the regulation changes and Tukey Outlier Rule, a change in calculating the 2024 star ratings.

The Tukey Outlier Rule represents the high and low ends of a data set. In June 2020, CMS decided to remove these outliers from the raw data before calculating the cut points. The Tukey Outlier Rule was first implemented in October 2023 for the 2024 star ratings.

A Guardrail Rule implemented in the 2023 star ratings was supposed to increase the predictability of cut points. 

But CMS waived the application of the Guardrail Rule for one year. Instead of applying the Guardrail Rule to actual cut points from the previous year, it applied the Guardrail Rule to hypothetical cut points from the previous year, which it would calculate using the previous year’s data with Tukey outliers removed.

As a result, removing Tukey outliers resulted in significant changes in some cut points, and in the star ratings.
 

 

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