Changes to The Centers for Medicare and Medicaid Services (CMS) Five-Star Quality Rating System Have Far-Reaching Impact

There is a change coming to the Centers for Medicare and Medicaid Services’ (CMS) Five-Star Quality Rating System. The changes place greater importance on patient experience measures and de-emphasize the importance of process measures. While this will have a huge impact on health insurance organizations, other Federal agencies should take note and prepare to follow suit.

 The current rating system for Medicare Advantage and Part D prescription drug programs measures yearly performance and quality, and follows a five-star scale, with five stars being the highest rating. A 5% bonus on CMS payment benchmarks is awarded to plans that earn four or more stars, along with earning higher rebates that are used toward improving member benefits. McKinsey & Company estimate that in 2020, Medicare Advantage plans earned a total of $12.2 billion in payments related to star ratings.

Bonus payments are meant to serve a dual purpose:

1. Plans are rewarded with higher bonus payments for procuring high star ratings.
2. CMS program cost are reduced by eliminating payments to plans who exceed projected spending.

Underperforming plans risk penalties, such as contract loss, if their low ratings persist. And, during enrollment periods, customers benefit from the ease that a simple star rating system provides while shopping for and comparing plans.

What Will Change?

In a 2020 effort to “put patients first and to empower patients to work with their doctors to make healthcare decisions that are best for them,” CMS announced that metrics measuring patient experience would gradually increase and weigh more heavily when determining the star rating of a Medicare Advantage plan.

Over 40 measures make up the star rating score, and each are given a weight of one to five. The measures are divided into categories, such as:

• Patient experience and complaint measures
• Measures capturing access
• Process measures

With the new system, the weight of patient-centered categories will increase gradually over the next few years. For example, the patient experience/complaint and patient access categories will increase from their 2020 weight of 1.5 stars to 2 stars in 2021. These categories are set to weigh in at a hefty 4 stars by 2023, which will bring the categories up to represent approximately 57% of the total star rating score.

By 2023, the weight of process measures will have decrease by 25% to represent just 17% of the overall star rating. This will hugely impact plan administrators who consistently give preference to sales processes over customer relationships, not only cutting into their star rating, but also their profits. 

Time to Take Action

Preparations and adjustments need to start now for plan administrators. Even top-rated plans won’t be able to simply maintain their current performance standards and expect to retain five-star ratings. Per McKinsey & Company, “As other plans improve their performance on customer experience metrics, the threshold performance required to earn high stars ratings on customer experience measures could increase since stars measures are scored on a curve.”

In order to move to the top of the new star rating program, plans will need to focus on more comprehensive quality improvements. An approach which focuses solely on improving the measures affecting patient experience will not work. Administrators need to make improvements at all levels of their plan, covering the full member life cycle.

There are many reasons plan ratings can decrease, and some are easier to stabilize than others. Persuading members to receive their yearly flu vaccination can be a relatively easy fix, while maintaining prescription medication compliance can be difficult with some patients.

The overall rating that a member gives a plan is comprised of many factors, and is highly influenced by multiple touchpoints that have occurred over the previous year. Each interaction can be interpreted differently by a member, and members may have different expectations across the various touchpoints.

For example, an 80-year-old member living in an assisted living facility has very different expectations and requirements of a plan than a 65-year-old member who is still actively working and living in their own home. Healthier members, who only need routine checkups and screenings, require much less assistance than a high-touch member suffering from chronic illness.

The key to gaining high plan ratings from members is to customize your interactions with them, meeting their needs at every level and across touchpoints. In order to succeed at this, the member life cycle must be broken down into parts, such as values, needs, and behaviors, and thoroughly analyzed.

Approaching plan improvements holistically can help to guarantee that member needs are being met at each touchpoint, creating a sense of satisfaction for the member. Members who feel a plan is fulfilling their needs are more likely to stick with the plan long-term, instead of making the switch to a different plan during open enrollment.

The Centers for Medicare and Medicaid Services’ three-part goal is to provide and promote:

1. Better care
2. Healthier people and communities
3. Lower-cost care through improvement

The CMS has structured its five-star rating system around these goals and makes annual updates for improvements to the rating system. Plans that utilize a holistic approach to internal improvements will benefit greatly by looking at the full member life cycle and evaluating how each member experience will affect their rating. On the other hand, plans that approach rating improvements from a limited scope may achieve short-term gains, but will miss the mark when the sum of their member ratings are complied.

A Step in the Right Direction

The importance of customer experience (CX) has been brought to the forefront of customer service for many industries in recent years and competition has become fierce. While the healthcare industry has lagged behind the growing CX initiative, the changes that the CMS is making to their customer experience rating system may prove to be a jumping-off point for other Federal agencies.

Agencies across the board that choose to follow the CMS’ example for CX improvement can look forward to improvements of their own. Enhancing customer satisfaction will naturally lead to other benefits, such as higher operational efficiency, employee satisfaction, and overall cost savings.