“Plans Will Live or Die by Their Star Ratings”: Competing in the New Era of Medicare Advantage
“Plans will live or die by their Star Ratings from 2027 onwards.”
That’s how one health plan described the impact of CMS’s latest Star Ratings changes to us.
CMS finalized the CY2027 Medicare Advantage and Part D Final Rule earlier this year, removing eleven administrative measures from the Stars framework and shifting weight heavily toward clinical outcomes and member experience. Consequently, a single experience or quality-related failure is now far more likely to trigger a full star-level drop.
The financial stakes for plans that fail to adapt are significant.
The difference between holding a 4-star and sub-4-star rating can be worth $150–160 million per year for a mid-sized plan. The pressure on individual plans will vary depending on how much of their current Stars position was built on the measures being removed, but new analysis suggests that as many as 89% of MA contracts could see their ratings decline under the new framework, with losses of $2.2 billion in annual Quality Bonus Payments industry-wide. CMS estimates the Trust Fund impact of these Stars changes at $18.6 billion between 2027 and 2036.
Reframing Experience
Survival under the new Stars framework requires plans to fundamentally rethink how they view and act on experience data. In most plans, it gets reviewed on a survey cycle, and is handled separately from growth, strategy, operations, and network management.
Part of the problem is that experience has been framed primarily as a satisfaction outcome. The more accurate framing is that experience is a mechanism. It is the channel through which members decide how to engage with their health plan and their care, driving care plan utilization, adherence, and health outcomes.
Where PEP Health Delivers Value
PEP Health offers a unified dataset across every US healthcare location, producing insights and actions at a scale, speed, and granularity that traditional measurement approaches cannot replicate.
Image from PEP Health Validation Study: “How a Major US Health Plan Is Predicting Medicare Advantage Performance and Strengthening Value-Based Agreements”
- A predictive signal with time to act. PEP Health’s experience signals are proven to strongly align with CMS Part-C Star Ratings, providing more than twelve months of lead time. Read the validation study here.
- Precision on where to act. PEP Health’s data is classified into structured themes across the parts of experience most material to Stars performance, identifying which dimensions are driving performance up or down, at which providers, and with what degree of urgency.
- Transparency across the network. PEP Health applies the same methodology to every provider, giving plans a consistent, comparable view of how their providers are performing in the real world and where their network stands relative to the market.
- A shared language for payer-provider action. PEP Health breaks down the silo between payer and provider by giving them the same leading indicators, benchmarks, and view of where experience is falling short and where to direct interventions and resources for the greatest Stars impact.
The measurement year for 2028 is already underway, and 2029’s is six months away. Plans that act now still have time to shape their results before they are locked in.
If you’re refocusing your Stars strategy and want to understand whether your current infrastructure holds up – let’s talk.
Email us at hello@pephealth.ai or request a demo.
