Maintaining stellar Star Ratings is a chief strategy for Medicare Advantage (MA) plans looking to enhance their financial stability with revenue from broader enrollment as well as coveted quality bonuses. Although a slip in Star Ratings can hurt MA plans of every size, the effects may be especially harmful for the smallest plans with 1,000 members or less. Recent methodology changes by the Centers for Medicare & Medicaid Services (CMS) have made it more difficult for small plans to earn high Star Ratings and stand out against larger, better-resourced plans.
With the two largest payers controlling nearly 50% of the market, small MA plans cannot afford an unfavorable rating that could drive away their valued members and potential enrollees. Yet by understanding their weaknesses and capitalizing on their unique strengths, small plans can stay competitive.
Small Plans’ Star Ratings for 2024
For 2024, CMS changed how it calculates cut points, the range of scores that determine how well a plan performs on each of the 40 clinical and nonclinical Star Ratings measures. CMS eliminated the outliers, and more than half of cut points increased for the 2024 ratings.
Even though small MA plans maintained about the same level of performance for 2024 as the previous year, they still performed .04 stars worse than the overall average. With outlying payers — mostly small plans — removed by CMS, the spread between the highest and lowest performers narrowed. As a result, maintaining or raising a Star Rating has become even more challenging for MA plans of all sizes, but especially for small plans.
Figure 1. Average overall rating by plan size. (Plans divided into three equal groups: Small, 0–1,000 members, Medium, 1,001–13,000 members, Large, 13,001+ members.)
High Stakes for Small Plans
Losing a four-star rating can be devastating for small plans, stripping them of the opportunity to earn a 5% quality revenue bonus that could impact their budget by millions of dollars. Just two large payers scooped up nearly half the total bonus payments in 2023. In addition, losing a coveted five-star rating can jeopardize small plans’ ability to enroll year-round and compete against large plans with strong brand recognition and larger marketing programs.
Measures to Watch for 2025 and Beyond
Focusing on breast cancer and colorectal cancer screenings should be a top priority, as average measure scores are far lower at small MA plans versus large MA plans. Compared with other clinical measures like Plan All-Cause Readmissions, plans may be able to realize more significant gains in their scores for these measures.
Figure 2. C01-C02 measure performance by plan size.
Chronic care management for members with diabetes, high cholesterol and high blood pressure should be another focus area for small MA plans, which were outperformed by larger plans on these measures. In fact, measures related to chronic care account for more than 25% of the total weighting across all measures in the Star Ratings program, with diabetes-related measures collectively carrying a total weight of 9x.
Figure 3. C09-C11 measure performance by plan size.
Other measures, like these Part D pharmacy measures, clearly demonstrate that small plans can hold their own against large plans. The 2024 Star Ratings showed little difference between small and large MA plans across these four measures, with small plans even outperforming larger plans on one measure.
Figure 4. D09-D12 measure performance by plan size.
Standing Out Against the Competition
Even though small plans lack the resources of large plans, they can still thrive by prioritizing key measures and doing what they do best: offering high-quality care and support with a human touch. To improve their Star Ratings and stay competitive in the years ahead, leaders at small plans should consider the following strategies.
Use data to determine where to focus limited resources. Investing in digital measurement is critical, particularly as more measures move away from hybrid reporting to the National Committee for Quality Assurance’s (NCQA) electronic clinical data systems (ECDS) standard. Plans should model and predict their performance using ECDS reporting only — without the “lift” from hybrid reporting — so they can accurately prioritize areas of focus.
Track your members with social risk factors (SRF), including those with disabilities, those dually eligible for Medicare and Medicaid, and those eligible for low-income subsidies. For the upcoming 2027 Star Ratings, plans whose SRF population performs well on Star Ratings measures are eligible for a Health Equity Index (HEI) reward, which could increase a plan’s overall rating by as much as 0.4 stars.
Keep an eye on other future measures of significance. The Improving or Maintaining Physical and Mental Health measures will return to the Star Ratings program for the 2026 ratings and increase to a 3x weight for the 2027 ratings. These measures also tend to be a good proxy for how members will rate their plans on Consumer Assessment of Healthcare Providers and Systems (CAHPS®) surveys. Reviewing CMS display measures, which include some new measures tested before inclusion in the Star Ratings each year, allows small MA plans to see how they stack up against their closest competitors before the measures factor into their real Star Ratings score.
Don’t view measures in a vacuum. Plan leaders should consider member data holistically to design the most effective strategies to improve member health and plan performance. For example, is a member putting off breast cancer screening because her uncontrolled diabetes symptoms are her top priority? Drilling down to member-level data can help plan leaders get the full story and make more strategic decisions about their outreach.
Doing What Small Plans Do Best
Providing excellent care, customer service and support is what helps to differentiate many small MA plans. If these plans can maintain good relationships and continue to build trust with their members, they are more likely to score well on multiple measures — not just CAHPS — and boost their Star Ratings. By focusing on member needs and tailoring data-driven interventions to specific demographics, small MA plans can also optimize their bonus payments and stay competitive in the challenging years ahead.
CAHPS® is a registered trademark of the Agency for Healthcare Research and Quality (AHRQ).
Marge Ciancetta
Marge Ciancetta is product manager of Cotiviti’s Star Intelligence solution.
