Did you know that, like buying on Amazon or finding accommodation on Airbnb, when you shop for Medicare Part C (Medicare Advantage plans) and Part D (prescription drug plans), there is an independent star rating system that can help you compare the features of the plans and learn the quality of their different health and drug services?
With all the medical and insurance industry terminologies and jargon, Medicare plans can be very difficult for an average person to fully understand. The Centers for Medicare & Medicaid Services (CMS) has created public star ratings to provide program participants with insights on what they can expect from the plans.
This guide will help with your understanding Medicare star ratings and how they can help you decide which plans are best for you.
Why do You Need Medicare Advantage and Prescription Drug Plans?
Medicare Parts A & B, also known as Original Medicare, are health coverage offered by the Federal Government and are mandatory for those over the age of 65. While they are available to eligible participants for free (Part A) or at a relatively affordable premium (Part B), these parts do not cover certain areas, such as dental and vision care.
Medicare Part C, or Medicare Advantage plans, on the other hand, are offered by private insurance companies and are meant as an alternative to Original Medicare. Their goal is to fill coverage left by Original Medicare by providing the same benefits and other additional coverage.
Another point to note is that since Part A covers hospital insurance and Part B medical insurance, it leaves prescription drugs as another coverage gap. Because of this, many participants require a Medicare Part D prescription drug plan to provide an extension of coverage for this area.
How Do the Star Ratings Work and What Do They Tell You?
As with other rating systems aimed at helping consumers make decisions, the goal of the CMS is to provide a comparison of the quality of Medicare health and drug plans so that program participants can find plans that can fit their healthcare needs down the road.
CMS derives its ratings by monitoring the offerings of Medicare Advantage and Drug Plans offered by insurance companies. The information gathered is then used to help participants compare the plans based on the following criteria:
How well they perform
Their quality of coverage
Member satisfaction
The plans are grouped into five ratings. Below is what each rating stands for
1 star rating – Poor service noted
2 star rating – Below average service noted
3 star rating – Average among all policies compared
4 star rating – Above average rating
5 Start – Excellent coverage, the best option for quality, performance, and service
How are Medicare Advantage Plans Star Ratings Determined?
For Medicare Advantage Plans, the CMS has a series of factors that it uses to assign ratings to different policies. The types of data that it looks at:
Member Experience: The CMS considers the qualify of benefits that members get from their health insurance plans. For example, how long is the typical waiting time if they need to see a specialist?
Plan Performance: The agency reviews the complaint history of the plans. It also takes into account whether improvements have been made after members reported complaints, or how often members leave the plans for others.
Customer Service: The CMS looks at reviews by users about the plans.
Staying Healthy: The CMS also looks at things such as whether the plans provide members with access to services they need to stay healthy, such as checkups and routine care, screening tests, and vaccinations.
Chronic Condition Care: Chronic condition management is a critical factor for seniors and those on disability in choosing the plan. The CMS looks at the information available, including the availability of testing and lab work for various conditions, as well as treatment options.
Most Medicare Advantage Plans will have a prescription drug coverage component. CMS rates the Medicare Advantage Plan based on all components of the coverage it provides.
As the CMS rates Medicare Advantage Plans based on all components of the coverage it provides, it would also assign the same rating system to their prescription drug coverage component, if there is any.
How are Medicare Part D Drug Plan Star Ratings Determined?
As with buying a Medicare Advantage plan, you will also benefit from a reliable rating system that can offer unbiased comparisons between different Medicare Part D drug plans. There are, however, some differences between the two rating systems:
Member Experience: This area is actually similar between the two. The CMS looks at how members who have the plan rate it.
Plan Performance: Similar between the two in that the CMS looks at what happens with the plan over time. For example, is there a history of complaints members filed against the plan? Has the ratings for the plan improved over time? How often and why do members leave the plan?
Customer Service: The CMS considers how members rate the quality of service they receive from the plan, including how member requests are handled and how many appeals occur (also how they are treated).
Drug Safety and Pricing: The final component of pricing is unique for Part D. It looks at factors such as how accurate is the plan’s pricing. Do the plans help those with specific medication needs get the necessary care and the drug prescription appropriately?
Note that a summary rating is assigned to every Medicare Part D plan. It is derived from the overall weighted average based on all of the factors that Medicare Part D measures.
How Should I Use the Medicare Star Rating System?
When you are choosing a Medicare Advantage or Part D Drug plan, either during your open enrollment period or if you are making an enrollment request, you can refer to the star ratings compiled by the CMS.
The first thing you should do is to look at all of the health plans to determine what their overall star rating is. The summary rating is usually a good benchmark for you to make a decision — in general you should try to go for a plan with a five-star rating.
If you need more information to make a decision, such as what star ratings most people are choosing, here is some other useful data: for the 2023 enrollment period, about 72% of all beneficiaries enrolled in a health plan with an overall star rating of at least a 4 when they enrolled in Medicare Advantage Plans.
For Medicare Part D, the percentage was 9% – meaning that only 9% of those who signed up chose a plan with at least a 4 star rating.
There are other factors you can take into consideration. An example is how well the plan meets the individual needs of people with the same type of conditions as you do.
To do this, check the data on the plan’s performance based on those with the same health needs as you do. You can even choose which type of chronic health conditions, such as heart disease or diabetes, to look at based on the plan ratings.
You can do this using the Medicare Plan-Finding Tool. There, go under the “plan details” table, where you can select the chronic conditions you are facing.
Choose the Plan That is Best for You, Not Because of the Rating
To be clear, while this system is a useful guide, you shouldn’t let the star ratings dictate your decision in choosing which provider or policies. Your priority should be to make sure the coverage aligns with your specific needs and goals. In other words, don’t buy a Medicare healthcare plan that does not meet your individual needs just because it has 5 stars.
On the other hand, finding that balance between affordability and quality Medicare insurance is as important. Most people want a low cost for the health insurance they select, but there is no point in purchasing health insurance that does not meet your needs.
