Following Yonder Stars: CMS Makes Changes to MA and Part D Quality Ratings

On November 25, 2025, the Centers for Medicare and Medicaid Services (CMS) released a new proposed rule for the 2027 Medicare Advantage (MA) and Part D contract year. This proposed rule aims to streamline various measurements for the MA and Part D Star Ratings program. The Star Ratings program is used to help communicate plan quality to enrollees and determine quality bonus payments (QBPs) and rebates to plans for enrollee benefits.

While the Star Ratings system is meant to incentivize increases in quality, critics (including the Medicare Payment Advisory Commission and Paragon) point out that this has not translated into meaningful improvements. With QBPs resulting in $12.8 billion in additional payments for MA plan benefits annually, we have argued that policymakers should end QBPs based on Star Ratings and reform the Star Ratings system to be more indicative of quality measures meaningful to enrollees. This reform should be one part of a unified package of MA reforms that ties some net savings to policy reforms that increase competition and access. This Prognosis will take a look at the new changes, what they mean for the Star Ratings system, and what more policymakers can do to improve quality in MA and Part D.

Background on Star Ratings and Their Impact on MA benefits

MA plans are paid to provide benefits on a per-enrollee basis, with the amount largely determined by a CMS benchmark premium reflecting the government’s costs for traditional Medicare. The government adjusts the payment amounts to plans for enrollee benefits by a few factors, including a plan’s Star Rating. Star Ratings are determined by the average of assigned scores based on criteria established by CMS. Each criterion is given a specific weighting, reflecting how CMS determines its relative importance to the agency’s desired quality improvement outcomes. Contracts are awarded between 1 and 5 stars, with 5 being the highest. The higher the Star Rating, the higher the QBP.

Star Ratings are applied to an entire MA contract, which can contain many different plans with different benefit designs and enrollee experiences in different parts of the country. Each plan in that contract will receive the same Star Rating, regardless of individual differences. This makes Star Ratings less informative for enrollees than they might otherwise appear.  While assigning ratings at the level of individual plans with enrollees in a single geographic area and with the same benefit design would remedy that, doing so would also create new problems related to sample sizes and statistical validity of the ratings.

QBPs impact payments to MA and combination MA-Part D (MA-PD) plans in two ways:

• Plans with higher Star Ratings have higher rebates (of the difference between the benchmark and a plan’s bid) to provide enrollees with benefits beyond traditional Medicare.
• Plans with Star Ratings above 4 are given a higher benchmark premium. This is advantageous for plans for a few reasons:
  • If a plan’s bid was below the initial CMS benchmark, this increases the amount of the rebate and thus the amount plans spend to add supplemental benefits for enrollees.
  • If a plan’s bid was above the initial CMS benchmark, this adjustment narrows the gap and reduces the enrollee’s premium amount.

CMS’ Proposed Changes

CMS is proposing to remove 12 different quality measures from the Star Ratings calculations starting in 2029, while adding a measure for depression screening. The 12 measures were chosen because they were either:

• Related to operational and administrative performance instead of outcomes or enrollee experience, or
• Are outcome and experience measures that are no longer useful in helping enrollees distinguish between plans because plans have functionally maxed out their performance in these measures and there was little variation between plans.

CMS is correctly trying to ensure that Star Ratings and the resulting QBPs do not result in a distribution of plan benefits that relies on duplicative or irrational government definitions of quality, rather than on what enrollees value. With these proposed changes, CMS is also attempting to help enrollees understand differences between plans that might otherwise be hidden in averaged ratings (though, as noted above, this remains difficult due to the contract-wide nature of Star Ratings).

Lastly, CMS proposed not to implement the Health Equity Index (HEI, also known as Excellent Health Outcomes for All)—which aimed to reward plans for improvements made among enrollees with specified social risk factors.

As an example of the removed measures and why CMS chose them, consider an administrative measure that looked at plans’ ability to make timely decisions on appeals and reviewing appeals decisions. From 2015 to 2025, average performance on making timely decisions on appeals increased from 90 to 96 percent, and from 88 to 95 percent for making timely reviews of appeal decisions. CMS notes there is little variation “across the vast majority of contracts” on both measures. CMS plans on continuing to monitor contract performance and compliance in this space, relying on enforcement mechanisms that it has long been using. These enforcement mechanisms do not have the time lag of an annual rating assigned to plans long after the associated compliance issues have been addressed.

Another example is a clinical measure that looked at the use of statin therapy for patients with cardiovascular disease. CMS states that there was little variation in performance across contracts and that other measures focused directly on medication adherence for statins can serve as effective substitutes. As with the other eliminated measures, CMS also plans on continuing to monitor contract performance in this area.

Under the proposed changes, CMS expects overall ratings will increase by half a star for 13 percent of contracts and decrease by half a star for 25 percent of contracts. CMS estimates that five percent of contracts would gain QBPs, while four percent would lose QBPs. CMS also estimates that the changes would increase spending on QBPs to MA benefits by $13.2 billion over 10 years.

Star Ratings Aren’t Shining Bright

The proposed changes by CMS help address some of the critiques of QBPs that Paragon has raised, though we ultimately argue that policymakers should end QBPs altogether as part of a unified package of MA reforms. Specifically, the CMS proposals highlight and help address the central issue with the current Star Ratings: they increase costs and distort plan and consumer behavior. If they are to remain, focusing Star Ratings on core metrics identifying health outcomes and objective measures of patient experience is a positive change.

As numerous others have pointed out, there is a questionable correlation between Star Ratings and actual quality. Additionally, they are expensive for taxpayers. In 2018, the Congressional Budget Office estimated that eliminating all QBPs would save $94.2 billion over 10 years. More recently, Paragon has estimated that given the growth in payments ($10 billion in 2022 to $12.7 billion in 2025), the savings would likely be around $170 billion over the next 10 years. This amount and distribution of spending for a tenuous connection to plan quality defined by the government and not the enrollee is unsustainable and unnecessary. Congress should eliminate QBPs as part of a broader unified package of MA reforms that, if adopted as a unified package, will strengthen both MA and traditional Medicare.