Choosing between the many available Medicare Advantage (Part C) or Medicare-approved prescription drug plans (Part D) can be overwhelming. For example, you will first want to consider the costs associated with the plan, what the plan covers (including any prescriptions you might have) and if the plan includes your preferred doctors, hospitals and other providers in its network.
Beyond that, Medicare provides a tool through its Centers for Medicare & Medicaid Services (CMS) that can make your final choice somewhat easier.
CMS uses a 5-star rating system based on health outcomes and customer service to evaluate how well each plan has performed during the current year, applicable to the following year. For Medicare Advantage, the categories include:
Staying healthy: taking advantage of wellness services such as preventive care, screening and tests
Management of chronic conditions: helping members manage long-term chronic conditions effectively
Member experience: members’ satisfaction with the plan and its responsiveness to their needs
Member complaints: frequency and type of member complaints, plus positive or negative performance changes over the past year
Customer service: quality of call center services, plus how a plan handles disputes and appeals
And for prescription drug plans, the categories are:
Drug safety as prescribed to patients
Drug pricing accuracy and competitiveness
CMS assigns between one and five stars to each individual category and an overall rating for each plan. One star represents poor performance, and five stars represent excellent performance. Any plan with four stars or more is considered top-rated.
In 2022, about 68% of Medicare Advantage plans with prescription drug coverage have an overall rating of four or above (up from 49% in 2021). Those plans cover about 90% of the people enrolled in Medicare-Advantage-with-drug-coverage plans. 1
Here is the CMS rating:
5 Stars: Excellent
4 Stars: Above Average
3 Stars: Average
2 Stars: Below Average
1 Star: Poor
CMS publishes the Medicare star ratings each fall in time for the annual enrollment period, which typically runs from October 15 to December 7. You can enroll in, change or drop Medicare Advantage and prescription drug plans during that period.
Takeaway action step: Once you have explored your options for a new or replacement Medicare Advantage or prescription drug plan and have found those that meet your requirements, check each plan’s rating. Ratings can be found at Find a Medicare plan, by calling 1-800-MEDICARE or contacting your State Health insurance Assistance Program.
How this rating system is valuable to you
The CMS star rating system helps you compare the quality of the Medicare Advantage and prescription drug plans available to you quickly. In addition, it empowers you to make informed health care decisions that are the best for you by providing third-party, expert assessments of each plan that you might consider.
However, even though a plan has a high star rating, that does not mean it is the right plan for you. For that reason, it is best to identify the plans that meet all your other preferences and requirements—especially costs – and then prioritize the one with the highest star rating.
In short, the system allows you to compare both price and quality efficiently.
The star rating system has also created an additional enrollment opportunity for you: the Medicare 5-star “special enrollment period,” which runs from December 8 to the following November 30. During this time, if you are in a plan rated below five stars, you can switch once to one of the elite 5-star plans without any consequences.
How this rating system is valuable to insurers
How the rating system is valuable to insurers also benefits you: it lowers premiums and results in more generous benefits. Here’s how:
Medicare pays private insurance companies a fixed amount to provide beneficiaries with Medicare coverage. In addition, it pays bonuses to high-performing companies as an incentive for them to provide high-quality care and a positive experience to their members.
In turn, companies that receive these bonuses can afford to offer their customers lower premiums plus additional benefits and services. The result is companies that are even more competitive – and profitable.
Companies with low star ratings (those under three stars for three consecutive years) risk being sanctioned or even removed from the marketplace.
1 Centers for Medicare & Medicaid Services. “CMS Releases 2022 Medicare Advantage and Part D Star Ratings to Help Medicare Beneficiaries Compare Plans.” cms.gov (accessed May 13, 2022).