Introduction
The Centers for Medicare & Medicaid Services (CMS) has recalculated the Medicare Advantage star ratings for UnitedHealth and Centene following court challenges from both insurers. The revised ratings, released this week, have significant financial and operational implications for the insurers. UnitedHealth saw improvements for 12 contracts, while Centene benefited from upgrades for seven contracts. This development underscores the importance of star ratings in shaping the competitive dynamics of the Medicare Advantage program.
Background on Medicare Advantage Star Ratings
The Medicare Advantage (MA) star ratings system is a critical benchmarking tool used by CMS to assess the quality of MA plans. Ratings range from 1 to 5 stars, with higher ratings signifying better performance. These ratings directly influence:
- Reimbursements: Plans rated 4 stars or higher are eligible for bonus payments.
- Member Attraction: Higher-rated plans attract more beneficiaries during enrollment periods.
- Operational Viability: Plans consistently rated below 3 stars face restrictions on expansion and potential termination.
In 2025, CMS tightened its evaluation criteria, causing a dip in star ratings across the board. This adjustment led to financial repercussions for many insurers, including UnitedHealth and Centene, prompting them to take legal action.
UnitedHealth and Centene’s Legal Battle
UnitedHealth and Centene, along with other insurers, filed lawsuits against CMS, alleging unfair assessments in the 2025 star ratings. A pivotal moment occurred when a federal judge ruled that CMS had improperly evaluated UnitedHealth’s customer service call center performance. This decision prompted CMS to recalculate ratings for the affected contracts.
Revised Star Ratings: Impact and Analysis
UnitedHealth’s Improved Ratings
UnitedHealth experienced significant gains in its star ratings following the recalculation:
- 12 Contracts Upgraded: Among these, three contracts crossed the 4-star threshold, and two reached the coveted 5-star rating.
- Financial Implications: Contracts rated 4 or 5 stars qualify for maximum federal rebates and bonuses, creating lucrative opportunities.
- Member Impact: An estimated 6% more members, equating to roughly 500,000 individuals, are now enrolled in higher-rated plans.
Centene’s Upgraded Ratings
Centene also benefited from the revised ratings, though on a smaller scale:
- Seven Contracts Improved: Notably, one contract achieved a 4-star rating, while two moved from 2.5 to 3 stars.
- Operational Stability: These upgrades prevent potential penalties associated with consistently low ratings.
- Member Impact: Approximately 1% more members, or 10,000 individuals, are now in higher-rated plans.
Industry Reactions and Broader Implications
Insurer Reactions
While UnitedHealth and Centene celebrated the recalibrated ratings, other insurers, such as Humana, Elevance, and Blue Cross Blue Shield of Louisiana (BCBSLA), expressed mixed reactions. Some notable observations include:
- Humana’s Challenges: The insurer saw a drastic drop in its ratings for 2025, with only 25% of its MA members in plans rated 4 stars or higher, down from 94% in 2024. This could lead to a revenue loss exceeding $1 billion in 2026.
- BCBSLA’s Concerns: One of its contracts saw a decrease in Part C ratings, despite no change in the overall score.
Regulatory Perspectives
The CMS did not provide specific comments on ongoing litigation but highlighted its commitment to fair evaluations. The revisions suggest that other insurers could potentially benefit from similar legal challenges in the future.
The Road Ahead for Medicare Advantage Ratings
Ongoing Litigation
The recalculated ratings for UnitedHealth and Centene indicate a precedent for other insurers seeking adjustments. Centene’s lawsuit is still active, and outcomes from this and other cases could lead to further revisions.
Enrollment Period Implications
The recalculated ratings arrive just as Medicare’s annual enrollment period concludes. Insurers with improved ratings are likely to see enhanced member acquisition, while those with lowered ratings may face challenges in retaining beneficiaries.
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FAQs
1. What are Medicare Advantage star ratings?
A. Medicare Advantage star ratings assess the quality of MA plans based on several factors, including customer service, health outcomes, and member satisfaction. Ratings range from 1 to 5 stars.
2. Why did UnitedHealth and Centene challenge CMS?
A. Both insurers alleged that CMS unfairly assessed their plans, particularly in areas like customer service, leading to lower star ratings for 2025.
3. How do star ratings impact insurers?
A. Star ratings influence plan reimbursements, member acquisition, and operational viability. Plans rated 4 stars or higher receive significant financial bonuses.
4. What changes occurred in UnitedHealth’s ratings?
A. UnitedHealth had 12 contracts upgraded, with three achieving 4 stars and two reaching 5 stars. This impacts roughly 500,000 members.
5. What is the significance of Centene’s revised ratings?
A. Centene’s upgrades include one contract achieving 4 stars and two moving from 2.5 to 3 stars, ensuring operational stability and preventing penalties.
