Medicare’s open enrollment begins this week, and I feel for the millions of seniors who have to navigate a bewildering set of choices. Many want to find the highest-quality plan, but the process isn’t just confusing, it’s misleading.
The Medicare Advantage star ratings don’t measure what many might think they do. They’re not plan-level reviews of quality or performance. More than 34 million people, over half of all Medicare beneficiaries, are now enrolled in Medicare Advantage, and many shop using those stars. Across nine of 10 studies in a recent systematic review, Medicare star ratings were associated with big increases in plan enrollment and reductions in disenrollment. When a family like mine logs on this open-enrollment season, they see numbers that appear authoritative but often have little to do with the quality of care they’ll receive.
What the stars really measure might surprise people. Each of those five stars reflects an aggregation of dozens of quality indicators like diabetes control, medication adherence and preventive screenings, depending far more on their list of doctors and hospitals than on the insurance plan itself. Others have pointed out this mismatch between how Medicare’s stars are displayed and what they actually measure. But the deeper problem isn’t just transparency; it’s that these ratings now shape billions of dollars in payments and consumer choices without reflecting the care patients actually receive or the doctors they can see.
Plans can shape their provider networks around high-performing clinicians, which can be a positive signal. In that sense, the system rewards insurers that contract with better providers, potentially steering members toward higher-quality care. But it’s likely that many of the providers that make that plan highly rated are not even available to enrollees. The problem is worsened by “ghost networks,” directories filled with doctors who appear on paper but aren’t actually accepting patients.
There is also a lot of taxpayer dollars at stake. The government pays Medicare Advantage plans more than $12 billion a year in quality-bonus payments based on these same contract-level ratings. The stars also determine how much of a plan’s savings an insurer can keep and reinvest in supplemental benefits like dental or vision coverage through higher rebate percentages.
Then there is grade inflation. Each year, more plans are rated four stars, which qualify them for bonus payments. Today, nearly three-quarters of Medicare Advantage enrollees are in plans rated four stars or higher, up from just 28% in 2012.
Experts call it the “Lake Wobegon effect,” where almost every plan appears “above average,” even though the quality on the ground hasn’t necessarily improved. When nearly every plan qualifies as a high performer, the stars lose meaning as a signal of quality even as they drive massive financial rewards.
To its credit, the Centers for Medicare and Medicaid Services (CMS) follows measurement science. Larger sample sizes of insurers’ data create statistically stable results, scores less affected by random variation. Without aggregation, smaller plans might not have enough members to generate reliable ratings. But statistical stability isn’t the same as decision-making reliability. In 2019, MedPAC, Congress’s nonpartisan Medicare adviser, recommended replacing the program in favor of a small set of population-based outcome and patient experience measures more relevant to consumers.
Changing the system isn’t simple. CMS’s payment, auditing and compliance structures all operate at the contract level. Overhauling that machinery would mean redesigning how bonuses and rebates are calculated. Large insurers might resist the idea because big, multi-state contracts make it easier to maintain high averages. Policymakers, meanwhile, might prefer one neat number over a nuanced picture.
But that could harm millions of seniors like my dad. When he sat down to pick a Medicare Advantage plan last fall, my mom was right there beside him, laptop open, paperwork spread across the kitchen table. Between them, they had to compare premiums, deductibles, provider networks, prescription drug coverage and extra perks like dental or gym memberships. My mom wasn’t messing around; she wanted to make sure he got the best coverage possible at the right price.
I asked my dad what he’d do if two plans were similar, one with five stars and one with fewer, both covering his medications and doctors. “I’d go with the better reviews,” he said. And Medicare.gov fosters that impression. It doesn’t mention that these ratings represent an average across an entire contract, sometimes spanning multiple states.
There are multiple ways to make these ratings more useful. The star ratings could instead reflect member satisfaction, voluntary switching and appeal-overturn rates for each plan in each county. Much of this data is already collected and some is already included in the star ratings, just not at the plan level where it’d be most useful for consumers. We should consider adding a simple network adequacy score to show how easily enrollees can find in-network doctors.
In the meantime, consumers can protect themselves. Don’t rely on the stars as the deciding factor when reviewing plans. Closely review the provider networks and their specific ratings where available. Check whether your doctors are in-network, confirm that your prescriptions are covered and reach out to your state’s State Health Insurance Assistance Program (SHIP) counselors, who are free, unbiased experts who can walk you through the options.
My parents ultimately made a smart choice, but it shouldn’t take an informal audit from their policy-researcher son to decode a government website. The current star system has an admirable goal but falls short of doing what it intends. It’s time to redesign Medicare’s quality measures so next year, families like mine can make better decisions.
Andrew Anderson is an assistant professor of health policy at the Johns Hopkins Bloomberg School of Public Health, where his research focuses on Medicare Advantage quality measurement, health equity and payment reform.
