What's Happening?
The Centers for Medicare & Medicaid Services (CMS) released the 2026 star ratings for Medicare Advantage (MA) plans, revealing a mixed performance among major insurers. The average star ratings remained stable, rising slightly from 3.96 to 3.98, despite expectations of lower scores due to increased rating standards post-pandemic. UnitedHealthcare maintained its position with over 77% of its members in plans rated 4 stars or above, while Humana and Aetna saw declines in their highly rated plan enrollments. Elevance and Centene improved their ratings, with Elevance increasing its 4-star plan membership from 40% to 53%, and Centene from 1% to over 18%. Clover Health experienced a significant drop, with its largest contract falling below the 4-star threshold, potentially impacting its earnings significantly.
Why It's Important?
The star ratings are crucial for insurers as they directly influence bonus payments and competitive positioning within the Medicare Advantage program. Plans rated 4 stars or higher receive higher bonuses and rebates, making them more attractive to consumers. The stability in average ratings is a positive sign for the industry, which has faced challenges due to regulatory changes and increased healthcare costs. Insurers like Humana and Aetna may need to adjust their strategies to mitigate revenue losses from lower ratings, potentially affecting plan benefits and premiums. The results highlight the competitive nature of the MA market and the importance of maintaining high-quality scores to secure financial advantages.
What's Next?
Insurers are likely to explore strategies to improve their star ratings and financial outcomes. Humana plans to pursue 'contract diversification' to move members into higher-rated contracts, aiming for better revenue in 2027. The industry may see further adjustments in plan offerings, with insurers potentially reducing supplemental benefits or increasing premiums to protect margins. As major carriers scale back their MA plans, focusing on narrower networks and cost-sharing designs, the landscape of Medicare Advantage offerings could shift, impacting consumer choices and access to healthcare services.
Beyond the Headlines
The release of the star ratings amidst a government shutdown highlights potential communication challenges within federal agencies. The methodology used by CMS for ratings has been criticized by some insurers, like Clover Health, which argues that the ratings do not accurately reflect the health outcomes delivered to members. This raises questions about the transparency and fairness of the rating process, which could have long-term implications for how insurers strategize and compete in the Medicare Advantage market.
