What the Medicare Quality Rating Change Means for Healthcare Companies — and Patient Health

Centers for Medicare and Medicaid Service (CMS)’s decision to recalculate its quality ratings for private Medicare Advantage health plans is making headlines, as first reported by The Wall Street Journal. The higher the CMS Star Rating (one to five stars), the higher the health plan scores on CMS quality measures, which results in bonus payments from the agency.

CMS Star Ratings have been the gold standard for payers for nearly two decades — so, what is causing the agency to reevaluate its quality ratings? CMS implemented a new statistical process in the calendar year 2023 to calculate scores. In the recent cases settled by SCAN and Elevance, the companies identified errors in CMS’ application of the new statistical process to their guardrails, leading to inaccurate Star Ratings.  

Not only do health plans stand to benefit from the new calculations — all healthcare companies and millions of patients will reap the rewards.

CMS Star Ratings set the bar for the quality of care health plans are providing patients. Health plans are incentivized to score as high as possible among the CMS Star Ratings, which means the company needs to offer solutions that meet Healthcare Effectiveness Data and Information Set (HEDIS) measures, close care gaps, and improve quality of care and care coordination for patients. Thus, benefiting patients with access to better benefits, better care, and ultimately, better health. Take SCAN for example, the company’s successful challenge of the CMS scoring process won them $250 million which saved member benefits from being cut. 

From digital health and diagnostics to pharmaceuticals and medtech, health plans will be looked at for how they are using their payouts in a time of rising healthcare costs. Are they partnering with a diagnostics company to offer cancer screening? Are they covering higher portions of prescription drug costs for patients? Are they investing in remote care and monitoring for chronic diseases?

CMS has not revealed if we can expect recalculations to also apply to this year, but now that everyone knows of the changes, will they go into effect again in 2024? Will CMS be gun-shy and look for new ways to push the quality bar higher? 

As health plans pivot strategies in light of the recalculations, companies across the healthcare industry need to do the same. With more budget comes opportunities for partnerships and innovation that better patients’ health. 

Health plans are looking for solutions that not only improve health outcomes, but also increase Star Ratings. No matter what area of healthcare you’re in, ensure that your services and products align with the quality metrics that CMS Star Ratings evaluate, such as HEDIS measures, patient satisfaction, and care coordination — and prove your impact. Maintain accurate and transparent reporting processes to avoid discrepancies that could negatively impact ratings. The key is to invest in advanced data analytics and reporting systems to monitor and improve performance continuously.

Invest in innovation that can improve patient outcomes, and that means going beyond internal capabilities. Consider partnerships with diagnostics companies, digital health platforms, and telehealth services to offer comprehensive and accessible care — as add-on to your existing solutions. One of the biggest areas of unmet need remains preventive and chronic care services. Investments in preventive care, such as cancer screening, will help close care gaps and improve patient health, positively influencing CMS Star Ratings.

Don’t only look for partnerships with other healthcare companies, form strategic alliances with a variety of providers, including hospitals, clinics, and specialty care providers to create integrated care networks. This is crucial to delivering high-quality, coordinated care, which helps meet CMS quality measures and improves patient satisfaction. 

My last piece of advice is to use additional funds to really get to know your patient population. Engage with patients and communities to better understand their needs and preferences. Use these insights to implement patient-centric care models and leverage community resources to address social determinants of health, enhancing patient outcomes and satisfaction.

As a practicing physician and healthcare executive who sits at the cross-section of healthcare’s key players — pioneers, providers, patients, payers, and policymakers — I’ll be watching to see how the industry adapts and shifts, for the better.

Photo: Feodora Chiosea, Getty Images

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.