How Medicare Advantage Plans Can Prepare for the CMS Health Equity Index

As part of the 2024 Medicare Advantage (MA) and Part D Final Rule, CMS is enhancing the Star Ratings program by implementing a Health Equity Index (HEI) reward to incentivize MA and Part D contracts with 500 or more members to address disparities and improve care quality for socially at-risk beneficiaries. While this framework goes into effect in 2027, these health plans must start preparing now to have any impact on their HEI scores, as CMS is measuring their performance on a subset of Star Ratings measures using 2024 and 2025 claims data.

Understanding the CMS Health Equity Index

The HEI will replace the current reward factor for MA plans. The HEI will summarize contract-level performance on a subset of Five Star quality measures (eg, cancer screenings, medication adherence, and chronic care management) stratified by members with one or more social risk factors to analyze the outcomes of these members compared to members with no social risk factors. The social risk factors used in the initial HEI include:

• dual eligibility for Medicaid;
• low-income subsidy (LIS); and
• disabled status (defined as beneficiaries who joined Medicare under age 65 due to disability).

Plans have been addressing disparities for quite some time, but the HEI is the first time they are being incentivized to focus on closing social risk gaps, and the first time they are equipped with clear metrics to benchmark their performance. The HEI construct—which is a composite of multiple outcome measures—gives health plans the opportunity to focus their resources on areas of greatest need within their plan. Participating contracts must be measured on at least half the measures to receive an index value, and plans will be required to meet a minimum number of members with social risk factors for participation based on the median percentage across all MA contracts. Unreliable or unstable measures will be excluded from scoring, statistical reliability testing at the contract measure level will be required to determine which measures will be eligible for the HEI.

CMS will rank contract measure scores for each eligible measure across all MA contracts from best to worst, then assign HEI points based on where they fall compared to other plans. The top third of ranked contracts will receive one point, the middle third will receive zero points, and the bottom third will lose a point. The HEI is calculated by summing the scores across the eligible measures divided by the number of measures and will range from -1 to +1.

With only a -1 to 1 range in score per measure, there is little room to underperform. The reward factor remains the same at 0.4, so contracts with an HEI score of 1 stand to gain nearly half a Star in their overall rating. This can translate to hundreds of thousands or even millions of dollars in bonus payments that health plans can use to further advance their performance and member outcomes in a more equitably. Additionally, Star Ratings increasingly influence how consumers choose health plans.

Preparing With Technology and Data Analytics

HEI scores will impact Star Ratings and quality bonus payments starting in 2027 with a 2-year measurement period, which began in January 2024. This means now is the time for plans to leverage data analytics and benchmarking to understand where their largest disparities are, to focus resources on areas of greatest need for socially at-risk members, and to have the biggest impact on their HEI score.

What’s Next

Historically, health plans lack the necessary data infrastructure to identify and support at-risk members. The CMS HEI is an important step toward equitable health care for all, introducing a measurable way to assess and improve health care access and outcomes – but additional knowledge and data are needed to realize a truly equitable ecosystem. To continue making health care more equitable, it’s critical for CMS and MA plans to stratify performance on additional social risk factors like race, ethnicity, income, education, and other factors to understand the root causes of health disparities better and inform strategies that will improve care access, quality, and health equity on a larger scale.

New and better sources of data on social determinants of health can help plans understand their HEI performance – and, more importantly, for players across health care to come together in addressing health equity for our most at-risk neighbors, friends, and loved ones to ensure every person can attain their highest level of health.