Scan Health plan wins suit against CMS on Medicare Advantage star ratings

If you’re shopping for a Medicare Advantage plan, you might look at the number of stars the government has given it. Any Medicare Advantage plan with fewer than four stars should be avoided. But, a plan with four or five stars might also not meet your needs.

The government awards four and five stars to Medicare Advantage plans with high denial rates and high mortality rates. Plans with excessive rates of prior authorization requirements can also get four or five stars. And, of course, you want to avoid those plans.

Because the Medicare Advantage star ratings are terribly misleading, the star-rating program needs an overhaul. But, the insurers have so much power that it might never happen. The Centers for Medicare and Medicaid Services (CMS) tried to adjust star ratings to better capture quality, and Scan Health Plan sued, claiming that it did so inappropriately. Emily Olsen reports for Healthcare Dive on Scan’s recent legal victory, preventing the government from giving it a 3.5 star-rating and reducing payments to Scan by $250 million.

Currently, CMS awards star-ratings based on enrollee complaint rates and hospital readmission rates, among other factors. Those plans with a four or five-star rating get tens of millions of dollars in additional funding from CMS. Moreover, even if an insurers’ score drops a lot, CMS can’t change the rating significantly from one year to the next.

Scan is not the only insurer to sue CMS over the star-rating calculations. Elevance also brought a lawsuit that a judge has yet to rule on. CMS has no comment.

The best thing about the star-rating system is that it requires CMS to drop contracts with plans that have a star rating of three stars or less for three years running. It’s a non-discretionary penalty. Politics can’t get in the way.

But, unless CMS can change the star-rating program significantly and include important data in the metrics, which it currently excludes, the star-rating program is of little value. In fact, it’s terribly misleading. People mistakenly believe that if they enroll in a Medicare Advantage plan with a four or five-star rating, they will get the care they need.

Here’s more from Just Care:

• Don’t judge a Medicare Advantage plan by its stars
• 2023 Medicare Advantage star ratings fall
• Don’t assume a five-star Medicare Advantage plan will provide the care you need
• What we don’t know about Medicare Advantage
• New study finds you can’t meaningfully choose among Medicare Advantage plans