By Marge Ciancetta, Product Manager, Cotiviti
LinkedIn: Marge Ciancetta
LinkedIn: Cotiviti
Among the most impactful changes released by the Centers for Medicare & Medicaid Services (CMS) each year in the Medicare Advantage (MA) and Part D Final Rule are adjustments to the Star Ratings program. As a result of the most recently finalized changes, CMS projects a 0.69% decline in overall quality bonus payments for 2026. What is the purpose of this shift? How will this impact plans? And how can plans prepare and succeed within this new framework?
This reduction emphasizes the increased stringency of the Star Ratings program and the need for MA plans to be adaptable. CMS is attempting to right-size the Star Ratings program with the goal of improving its solvency while also helping beneficiaries continue to distinguish between good and truly outstanding plans. Moving forward, a four-star rating may be an exception instead of the rule and many plans will likely receive three-star ratings where they previously achieved four stars, making them no longer eligible for bonus payments.
The right-sizing of the Star Ratings program may continue for several years in the new administration. As a result, plans need to adapt to a shifting and dynamic financial landscape. Additionally, the current administration may lean into interim and final rule-making to enact its “Make America Healthy Again” initiative. It is possible these changes will come rapidly and without public input or the lengthier process experienced with pre-defined rule-making cycles.
Concurrently, overall payouts to MA plans are anticipated to increase 5.06% from 2025 to 2026 after incorporating risk adjustment changes, which will provide a cushion from the revised Star Ratings. While it might be tempting for plans to take a breather and regroup after bouncing back from the COVID-19 pandemic and spike in utilization, it’s a strategic imperative to reinvest this money in infrastructure that can help plans adapt to increasingly stringent Star Ratings requirements.
Bearing in mind these market factors, MA plans and other stakeholders should consider investing resources in three key areas.
Technology and infrastructure to enhance interoperability and real-time data sharing
Now is the time to invest in an infrastructure that is nimble enough to enable a plan to adapt to changes and report quickly and accurately. The expansion of Electronic Clinical Data Systems (ECDS) and API-based reporting is becoming critical for plans. CMS is beginning to incorporate digital reporting into Star Ratings, and the National Committee for Quality Assurance (NCQA) is requiring ECDS submissions for specific Healthcare Effectiveness Data and Information Set (HEDIS) measures with the goal of transitioning to all-digital reporting by 2030. Claims-based reporting alone will no longer be enough as these changes herald a shift to real-time performance measurement. Further, plans need to have the technology in place for ECDS reporting to support compliance claims or their Star Ratings may decline. Interoperability is crucial for improving HEDIS and ECDS scores by enabling data exchange between different healthcare systems. This enables more accurate and comprehensive data collection, resulting in better quality assessments, improved care coordination, and ultimately, better patient outcomes.
Data quality and interoperability to drive success and inform innovation
Good data and interoperability can enable plans to better analyze their programs to understand ROI. Having this data in hand rapidly can help plans course correct in advance of a Star Rating decline or shift resources to programs where they are more likely to get a higher rating. Supportive data allows plans to analyze supplemental benefit usage and cost to determine ROI on outreach programs and inform payment arrangements to recognize outstanding providers. Additionally, rapid data analysis enables health plans to identify care gaps and discrepancies in treatment to respond quickly and circumvent a decline in Star Ratings and improve patient outcomes. Investing in good data will inform and guide innovation in the right areas for continued success.
Dedicated resources to stay up to date with CMS and anticipated rapid changes
The Star Ratings team should disseminate updates throughout the organization and lead coordinated efforts to maximize a plan’s chance of improving measure outcomes. Successfully navigating changes in Star Rating programs requires a proactive and data-driven approach. Having resources committed to keeping up to date on CMS developments is critical as swift and impactful changes are anticipated. It’s not enough to have information quickly—all impacted parts of the organization need to have a seat at the table to provide feedback to make informed decisions.
The next few years will likely be filled with regulatory change and uncertainty. To prepare and adapt to what the future holds, plans need to prioritize interoperability, rapid digital data exchange, and automated quality reporting. Plans must invest in platforms and partnerships that enable them to collect, integrate, and act on both clinical and claims data. Organizations need dedicated resources to monitor industry updates, stay informed about changes in methodologies, disseminate that information to impacted business functions, and adapt their strategies accordingly.
By focusing on building an infrastructure that enables plans to share and leverage data and analytics and be digitally nimble, plans can enhance their success in achieving higher Star Ratings and delivering exceptional care to members. Plans that approach Star Ratings strategically, continuously assess their performance, and make incremental improvements will achieve optimal outcomes, both for themselves and the members they serve.