In a traditional healthcare system, providers receive payment for each service they provide to a patient. Even though basic service quality metrics have existed for the last 200 years, they didn’t always correlate to profitability.
As a result, the volume and speed of service became a primary focus – at times this came at the expense of quality care. According to IHI Senior Director Molly Bogan, “In the past, the traditional business model was, ‘the more you do, the more you’ll get paid.’”
Yet healthcare’s business model changed with the introduction of the Star Ratings system in 2008. In this article, we’ll break down the Medicare Star Ratings system, examine the shift toward value-based care, and examine how health plans can increase their ratings by focusing on key areas influenced by clinical pharmacy programs.
Value-based care vs. volume-based care
Let’s start by quickly recapping the shift from volume-based to value-based care. For decades, the healthcare system in the United States was based on volume. We saw a significant shift in recent decades as we migrated towards a value-based care model.
Volume-based care refers to the payment a healthcare provider receives for services a patient may need. The type and quality of service does not heavily influence the amount of reimbursement a provider may receive.
Incentives drove the focus of healthcare providers toward the number of patients cared for rather than the value of the care provided for those patients. Success rates skewed toward profits, placing an emphasis on speed to deliver a service or often unnecessary diagnostic procedures intended to drive higher utilization. This resulted in some healthcare providers speeding through patient visits at the expense of quality care.
Value-based care - often referred to as accountable care or fee-for-value - focuses on realizing value from the delivery of quality services. Payments are based on this specialized care and other factors, such as cost reduction, which could lead to an increased emphasis on preventative care.
The best way to think about the distinction between fee-for-service and value-based care is healthcare vs sick care. In a sick care model (fee-for-service), providers are paid for the number of services they provide to a patient. Whereas in a true healthcare model (value-based care), providers are paid for the outcomes they help their patients achieve. The goal of value-based care is to keep patients healthy through programs that optimize healthy behaviors and medication use to prevent future health concerns before they occur. In short, value-based care models reward proactive providers for keeping patients healthy rather than compensating them for caring for patients who are already sick.
To capture this “patient first” approach, the Centers for Medicaid & Medicare Services (CMS) created the Five-Star Quality Rating System. The Star Ratings system is a complex combination of many criteria across various domains of healthcare quality that when taken together, creates a composite score to help patients understand the quality of a plan they’re considering enrolling in.
Star Ratings aren’t performance measures
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Introduced more than a decade ago, the Five-Star Quality Rating System was designed to help Medicare users compare different plans, based on cost, features, and medical coverage. CMS designed the rating to hold plans accountable for the quality of the service they provide.
Star Ratings were rolled out by CMS in 2007 and since then have served to measure contrasting health plan performance at the contract level. In fact, since their introduction nearly 20 years ago, health plan performance has improved on average, from 2.56 Stars in 2012, to 3.92 in 2015, and 4.04 in 2024.
While Star Ratings do measure the quality of a health plan, there is a distinction to be made. While Star Ratings can be thought of as an overall summary of a plan’s performance, performance measures are the micro-calculations of various components of health plans that are ultimately synthesized into overall Star Ratings.
Clear as mud, right?
What matters most to remember is that Star Ratings both incentivize health plans to provide the highest quality of care through awards for high-ranking plans and penalize for low-ranking ones. In turn, they also act as a major marketing tool. High-performing health plans often tout their 4- or 5-Star Ratings as proof that they’re the right choice for members searching to enroll. Rewards for high ratings include financial bonuses and the ability to enroll users all year round.
Overall, this has been a positive development from the perspective of Medicare beneficiaries because the competitive nature of the Medicare Advantage market, encourages health plans to continuously strive for better Star Ratings through improved quality and added member benefits.
Star Ratings are created from a myriad of measures that gauge quality across many areas of the health plan member experience, including:
- Preventive care
- Screenings
- Management of long-term chronic conditions
- Customer service
- Member complaints
- Medication safety
- Medication pricing accuracy
Information about the quality of a particular plan comes from billing, monitoring, user surveys, and other data that health plans submit to Medicare. This data comes together to create a score that gives Medicare beneficiaries, their families, and caregivers an idea as to the quality of the Medicare plan options available to them.
Health plans can impact approximately 50% of their Star Ratings by working directly with clinical pharmacists to influence those performance measures tied to their Star Ratings. Perhaps more surprising is that many health plans attempt to provide these clinical pharmacy services in-house, despite the monumental expenses associated with building clinical pharmacy programs from the ground up. Health plans looking to bolster their clinical pharmacy strategies should consider the cost of hiring, training, and retaining a full staff of pharmacists, not to mention costly development of a technology stack from scratch.
Other health plans have found it easier and more cost-effective to outsource MTM and other clinical pharmacy services.
Let's explore pharmacy related performance measures
The good news for health plans is that strategic programming can make a big impact on multiple performance measures, and subsequently, their Star Ratings. In 2024, there are many Medicare Advantage and PDP measures that can be influenced by clinical pharmacists. Fortunately, many of these can be addressed through medication therapy management consultations, or comprehensive medication reviews (CMRs).
As an example, during a single CMR, a pharmacist can counsel a patient about:
- Their recent visit to the emergency department and any prescribed prescriptions
- Their adherence to necessary statins
- Any side effects caused by their statin medication
- Over-the-counter medications or herbal supplements that may interfere with their prescriptions
In the example above, the pharmacist directly impacted 3 Star measures: D10 – medication adherence for cholesterol (statins), D11 – MTM program completion rate for CMR, and C14 – Medication reconciliation post-discharge.
Such examples make it easy to see how a robust medication therapy management program staffed by clinical pharmacists can be an advantage for health plans looking to win in the highly competitive Medicare Advantage landscape.
Many health plans are already shifting to models that leverage the untapped potential of our nation’s pharmacists. Given recent career challenges and poor work conditions plaguing the pharmacy profession, thousands of pharmacists are leaving their traditional careers for roles allowing them to build true relationships with their patients.
What health plans need to know about CMS Star Ratings
The Medicare Star Rating system is a part of CMS’s plan to push the entire healthcare industry to focus on value. Initially, the goal tied 90% of Medicare expenditures to their value by 2020, but the COVID-19 pandemic slowed those plans down.
Health plans that have at least four stars have a major advantage when it comes to marketing. They can market their business year-round without worrying about open-enrollment periods. Not to mention that beneficiaries can switch to these plans at any time.
It’s in a health plan’s best interest to ensure that they achieve the highest Star Rating possible. A rating can directly be affected by clinical pharmacists working with health plan members, in fact, a recent study shows that 80% of Star Ratings are directly influenced by medication therapy.
These benefits of high Star Ratings are in addition to the obvious benefits for member health. Programs addressing Star Ratings also ensure medication adherence, chronic condition management, and member health education.
How Star Ratings are calculated
A Star Rating is calculated for each measure based on information collected from multiple sources, including CAHPS, HEDIS, HOS, IRE, and CTM. These individual Star Ratings are then taken and averaged to generate a single rating.
For health plans, it’s important to note which individual ratings can move the needle the most. For example, CMS increased the weight of experience/complaints and access measures from a weight of 2 to 4. This is significant since the weights increased to 2 from 1.5 in 2020. Previously, the highest weight was a 3, indicating an increased emphasis on member experience.
This change means a pharmacist can impact member experience and the perception of their plan significantly – ultimately impacting the overall Star Rating.
Star Rating is determined based on 39 different metrics. Standalone Part D prescription plans are evaluated based on 12 performance metrics. Included in the evaluation of both plans are 5 additional metrics, all of which are related to medication utilization.
These metrics can be affected by pharmacists directly. Pharmacy performance measures:
- Percentage of members with diabetes who take statins
- Percentage of members with diabetes that takes their medication 80% of the time
- Percentage of members that take cholesterol medication 80% of the time
- Percentage of members who take their blood pressure medication 80% of the time
- Percentage of eligible members who completed a comprehensive medication review
- High Star Ratings vs. low Star Ratings
A poor Star Rating costs health plans. Millions of dollars in fines are paid every year, from pharmacy benefit violations to poor service for members unhappy with their plans. Health plans that maintain high Star Ratings, on the other hand, receive significant benefits. Here are some of the most common rewards and penalties for Star Ratings:
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Rewards for good Star Ratings |
Penalties for bad Star Ratings |
|
Eligibility for incentives |
Ineligibility for incentives |
|
Qualifying for yearly bonuses |
Bonus disqualification |
|
Ability to enroll patient year-round |
Ineligible to provide Medicare plan options |
Another difficulty of Star Ratings is that they’re not static. They’re constantly evolving based on CMS’s determination of our nation’s greatest health needs. Recently CMS introduced the Health Equity Index. While the Health Equity Index itself is not another Star Rating measure, it is an amalgamation of existing measures, intended to examine how health plans care for their most socially at-risk populations. Luckily for health plans, pharmacist-led programs can make headway in improving the key measures that make up the Health Equity Index.
Health plan opportunities to improve Star Ratings
As every health plan decision maker knows, Star Ratings can’t be ignored. In fact, recent changes to Star Rating calculations that stand to decrease health plan scores have spurred such an uproar the industry giants have taken legal action against CMS. This development alone illustrates the importance of strong Star Ratings for health plans big and small, nationwide.
Through targeted clinical programs to ensure member enrollment rates and Star Ratings are high, health plans can expect to stay profitable for years to come. Recent studies have shown that the ability to work directly with plan members is one of the most important factors in improving health plan Star Ratings.
Fortunately for health plans unsure of where to start, healthcare technology organizations such as Aspen RxHealth stand ready and willing to help with experience doing so for health plans across the country. Aspen RxHealth’s community of thousands of pharmacists allows health plans to meet any clinical pharmacy need faced by their members, without concerns such as capacity, language compatibility, or clinical specialties.
Health plans with existing in-house pharmacy teams are left out though. Alliance by Aspen RxHealth empowers these in-house teams with access to the Aspen RxHealth platform to deliver clinical pharmacy consultations with industry-leading efficiency while we handle all back office administrative work.
Leveraging technology and outsourcing services where Star Ratings are weak enables health plans to provide better care to members and, ultimately, improve profitability.
In addition, in the world of Star Ratings, healthcare technology is leveraging connectivity and advanced algorithms to provide increasingly successful matching between pharmacists and patients.
If history has taught us anything, it’s that as healthcare-focused technology platforms continue to evolve – the health plans that embrace these new technologies will be the ones left standing when the dust settles.
If your health plan is ready to unlock its potential to improve Star Ratings, we’d love to explore how our partnership will improve the health of your members for years to come.