The Infamous 5 Star Rating System For Managed Care 

The Center for Medicare and Medicaid Services (CMS) uses a 5 Star quality rating system to grade health care plans. Star ratings are a crucial part of maintaining a contract with Medicare and Medicaid. 

Star ratings can directly affect how much Medicare pays the managed care organization (MCO). MCOs are paid a monthly rate by CMS based on the estimated amount needed to cover a beneficiary’s health care expenses plus administrative costs. Plans with Star Ratings of 4 or higher earn quality bonus payments – usually about 5% extra per month per member. Plans with a 5 Star rating have the additional advantage of accepting beneficiary enrollment at any time during the year, rather than only during the annual open enrollment period. There is also the "bragging rights" of being a 5 Star company when CMS posts the annual Star ratings on their website.  

Star Ratings are based on five categories:

• Staying Healthy: Screenings, tests and vaccines such as annual wellness visits, colorectal cancer screening, annual flu vaccines.
• Managing Chronic Conditions such as diabetes, COPD, heart Disease.
• Plan responsiveness, care and quality such as timeliness of getting needed care, ability to get appointments and care quickly.
• Member complaints about the health plan, problems getting services, members choosing to leave the plan, the percentage of timely appeal reviews.
• Customer Service  

The data for these categories is collected using a combination of different sources including:

HEDIS (Healthcare Effectiveness Data and Information Set): Data collected on specific measures through claims or medical record reviews. There are over 80 HEDIS measures ranging from obtaining an adult Body Mass Index to counting prenatal visits in an OB chart to screening a child for lead exposure. HEDIS information is gathered year-round between January and December of the measurement year then reported for the reporting year. For example, the 2016 data is being collected for the HEDIS 2017 Star rating. 

The National Committee for Quality Assurance, governing power of HEDIS, publishes a schedule for HEDIS submissions annually. Methods of gathering HEDIS data include healthcare providers reporting the information through claims, a scanning company gathering the charts to upload into a secure portal for review by HEDIS abstractors or scheduling an onsite visit at the healthcare provider’s office to manually review the charts. The most recent numbers indicate that HEDIS represents 30% of the overall Star rating of a health care plan. 

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