Navigating the Decline of Medicare Advantage Star Ratings in 2025: Six Need-to-Knows
The 2025 Medicare Advantage (MA) Star Ratings have marked a substantial shift, with far fewer plans achieving high ratings compared to prior years. This year's industry-wide rating decline results from changes in methodology, increased performance thresholds, and evolving utilization patterns. Below, we explore these key factors, consider the strategic implications of ongoing litigation from health plans challenging Centers for Medicare & Medicaid Services (CMS) on rating methodologies, and examine the potential impacts of recent election outcomes on MA Star's policy.
1. Implementing the Tukey Outlier Deletion Methodology
A notable regulatory shift for 2025 was CMS’s adoption of the Tukey outlier deletion methodology. This statistical approach removes extreme outliers from performance data to yield a balanced view of quality. The intent is to prevent unusual data points from disproportionately skewing a plan’s rating. However, plans previously bolstered by these outliers saw their ratings drop as high scores on certain measures were excluded from final calculations. This methodology highlights CMS’s focus on ensuring consistency in MA plans’ quality, as success increasingly depends on uniform performance across all measures rather than excelling in a few isolated areas.
2. Performance Trends and Utilization Patterns in Key Measures
Shifts in member behavior and utilization patterns are also influencing Star Ratings. With utilization rebounding post-pandemic, demand has increased across services critical to ratings, such as medication adherence and chronic disease management. However, this rebound has strained the health care system, affecting both access and quality, which are key Star Rating metrics. For 2025, prescription drug plans are particularly impacted, with just 40% achieving 4 stars or higher, compared to 43% in 2024. These trends emphasize the challenge for plans in maintaining high scores under increased member demand and operational constraints.
3. Mastering “HEDIS Math”: The Art and Science Behind Star Ratings
Achieving and maintaining high Star Ratings requires a nuanced understanding of “Healthcare Effectiveness Data and Information Set (HEDIS) math.” The complexity lies in the interplay between measures, weights, and thresholds, with certain measures like the Consumer Assessment of Healthcare Providers and Systems (CAHPS) carrying more influence on overall ratings. Plans must closely track HEDIS data to meet benchmarks for clinical care, member engagement, and adherence measures, which are central to CMS’s evaluation criteria.
For example, HEDIS measures use specific numerators and denominators to calculate compliance. In diabetes management, for instance, plans are evaluated on how well they ensure that members with diabetes receive recommended screenings, with the measure’s calculation affecting the overall star score. Mastering this “math” involves integrating predictive analytics, effective member outreach, and strategic adjustments to enhance compliance across the board. MA plans that excel often leverage technology to monitor and optimize compliance in real time, ultimately driving up Star Ratings.
4. Lessons from the 2015 Rating Cycle and the Shifting Competitive Landscape
This year’s downward trend reflects an echo of 2015, when CMS’s recalibrations forced MA plans to overhaul quality improvement strategies. Both cycles brought heightened competition as lower ratings led many plans to revise their approaches to member care, engagement, and service quality. Today, as in 2015, plans are re-examining their strategies for staying competitive in an industry where high Star Ratings are essential to attracting beneficiaries and securing financial bonuses.
5. Legal Actions: Health Plans Challenge CMS on Star Ratings
In response to the recent methodology changes, several MA plans are pursuing legal action against CMS. These lawsuits allege that CMS’s new methodologies—particularly the Tukey outlier deletion—unfairly reduced ratings, potentially resulting in substantial financial losses for the affected plans. Star Ratings determine MA plan bonus payments, which directly impact funding for supplemental benefits, services, and member engagement efforts. Health plans contend that abrupt methodological shifts without adequate transition periods introduce instability and undermine CMS’s commitment to predictability in ratings.
Historically, the Star Rating program aimed to encourage consistent quality improvements across MA plans. By incentivizing higher performance, CMS intends to elevate care standards industry-wide. As the litigation proceeds, its outcome could set a precedent for how CMS introduces and manages rating methodologies in the future. Should CMS lose, it may prompt a reevaluation of its approach to methodological changes, potentially leading to phased implementations or more extensive public comment periods for adjustments.
6. The Potential Impact of Recent Election Outcomes
The recent elections could play a decisive role in shaping MA policy and, consequently, the future of the Star Rating program. Changes in legislative priorities often impact CMS policies, with MA traditionally experiencing shifts depending on the regulatory preferences of newly elected officials. Should the new administration prioritize stricter healthcare regulations, plans may see tighter controls and possibly even more rigorous Star Rating methodologies. Alternatively, a focus on supporting MA growth might lead to stabilizing or easing rating methodologies to support plan sustainability and beneficiary choice. In 2025, we can expect the Trump Administration to encourage privatization of Medicare making MA the default option for new enrollees. This policy could signal growth for many MA organizations.
Setting the Stage for the Future
The 2025 MA Star Ratings reflect the challenges of a dynamic regulatory landscape, heightened quality expectations, and new methodologies that require strategic adaptation from MA plans. The regulatory shifts, coupled with legal challenges and a changing political environment, underscore the importance of flexibility and preparation in maintaining high Star Ratings. As MA plans continue to navigate this complex environment, the strategies adopted now will be instrumental in shaping both their financial stability and competitive positioning in the years ahead.
