CMS (Centers for Medicare and Medicaid Services) created the star ratings in 2007 to make it easier for Medicare beneficiaries to compare Medicare plans and find the best healthcare coverage for their individual needs. Here’s what you need to know about star ratings and why they matter.
Understanding the 5-Star Ratings
The five star rating system is used to rate Medicare Advantage plans and Part D prescription drug plans. The ratings are released each year right before Medicare’s Fall Annual Enrollment Period so that Medicare beneficiaries can factor this information into decisions they may need to make about their Medicare coverage for the upcoming year.
CMS rates the plans on a series of 40 unique quality and performance measures to ensure they are meeting Medicare’s standards. These measure include:
- How well the plan keeps its members healthy with screenings, tests, and vaccines.
- How well the plan helps their members manage long term chronic health conditions.
- Customer Service metrics such as how often did the health plan’s customer service give their members the help and information they needed and did the plan’s customer service representative treat their members with courtesy and respect.
- The plan’s responsiveness such as how quickly did members get appointments and healthcare services when needed.
- The number of member complaints and appeals, and how many members choose to leave the plan.
The higher the star rating, the better the plan performed:
- 5 stars: Excellent
- 4 stars: Above average
- 3 stars: Average
- 2 stars: Below average
- 1 star: Poor
A high performing plan indicates a plan that is well managed, financially stable, and provides effective health care for it’s members. CMS also rewards high performing plans with annual bonus payments. This extra revenue can be used to lower their member’s out of pocket costs and to offer additional benefits such as dental, vision, hearing, and wellness benefits.
A 5 star rating is hard to achieve and maintain. There were only seven plans that achieved a five star rating for 2025. If there are no 5 star plans in your area you can rest assured that a 4 or 4.5 star plan is still a strong option.
CMS also monitors low performing plans. They will flag plans that receive less than three stars three years in a row and may block new enrollees until the plan’s ratings improve.
5 Star Special Enrollment Period
5 star plans are rewarded with a special enrollment period. This means if there is a 5 star plan in your area, you can switch to it anytime during the year.
What Else to Consider to Consider When Choosing a Plan
While the star ratings are definitely something to consider when choosing a plan, there are other factors you also need to take into account:
- The plan’s network – are your preferred doctors and hospitals in the plan’s network? Do you want an HMO plan or a PPO plan that offers out of network coverage?
- The drug formulary – are your prescription medications covered? Are there any special requirements such as quantity limits, step edits or prior authorizations? Is your preferred pharmacy in the network?
- Affordability – what are the plan’s out of pocket costs and are they affordable to you? Consider not just the monthly premium, but any deductibles, copays and coinsurances for medical services and prescriptions.
- Chronic conditions – if you receive treatment for an ongoing chronic condition, how will this be covered by the plan? Are prior authorizations or referrals needed?
- Additional benefits – do you want a plan that offers vision, dental or hearing benefits? Are wellness benefits such as a gym membership important to you? You will not find the same benefits offered with every plan.
A licensed Medicare agent or broker who is familiar with the plans in your area can be a great resource for helping you find the right plan to fit your needs. It won’t cost you anything to meet with an agent.
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