How CMS can better support Medicare Advantage’s health – Healthcare Blog
Written by Emmanuel Animashaun
The Medicare & Medicaid Service Center (CMS) star rating system represents the cornerstone of the Medicare Advantage (MA) quality assessment, aiming to enable consumers to access transparent information while rewarding programs that provide excellent care. However, recent developments, especially earthquake degradation of human ratings, suggest an unexpected consequence: systems designed to measure and incentivize quality may now be actively undermining it.
Human Cases: Symptoms of a More Wide Problem
In 2025, Humana's Medicare Advantage star rating crashed, with only 25% of its members staying on the four-star or higher program, below 94%. This is not due to a decline in clinical performance, but is due to a statistical adjustment of the “Tukey Outier Deletion” of CMS, which has the least adjustment. This change raises the performance barrier, causing Humana to lose billions of dollars in quality bonus payments and $4 billion in market value. Humana's legal challenge argues that CMS violates the Administrative Procedure Act through non-transparent procedures. Other insurers, including UnitedHealthCare and Centene, are also concerned about methodological rigidity, and the rating system may be different from the purpose of improving patient care.
The elevated and scanned situations can be even more astonishing, which further illustrates how strict metrics distort assessments of actual care quality. In March 2023, the two insurers were punished after allegedly missing a single CMS “Secret Shopper” call, claiming they had never received the call. The downgrades cost them tens of millions of quality bonus payments and raise legal challenges. As Scan's CEO wrote, sanctions are ongoing despite high clinical manifestations and patient outcomes. A federal judge later ruled that a scan was ruled in June 2024, prompting CMS to recalculate star ratings in all Medicare Advantage programs. This episode highlights a key issue: When measurements depend on unverifiable management moments, it may end up being punished rather than promoting quality.
How mass measurements destroy actual quality
The Star Rating System has aggregated over 40 metrics in preventive health care, medication adherence, membership experience, and customer service. However, it disproportionately rewards the compliance of the process and documentation on health outcomes. Programs can perform well by optimizing coding, maximizing documentation, or improving investigation participation without providing better care. This misalignment shifts resources from real healthy innovation. Research on NBER working papers even found that higher-rated programs have a statistically better range than those with lower-rated programs in keeping patients’ lives than programs with low ratings, raising fundamental questions about whether the system measures are critical to patient health.
More worrying is that MA consistently scores with a higher proportion of dual-qualified, disabled or racially diverse members, not because they provide lower care, but because the scoring system is not sufficient to accommodate social risk factors. A study by the JAMA Health Forum highlights how programs that serve more black beneficiaries get lower star ratings even when controlling for other factors. This structural bias effectively punishes the challenging work of serving people with complex needs, thus making people unfavorably focus on health equity.
The uncertainty of frequent changes in star rating calculations can also have a serious impact on the company's strategic planning. When companies like Humana lose billions of dollars in due to technical recalibration, it sends disturbing messages: Long-term investments in quality improvements may not yield returns if the measurement method is unpredictable. This volatility makes strategic planning difficult and prevents continued investment in quality planning.
The impact of reality on patients
The disadvantages of these approaches not only affect the bottom line of health plans; they have tangible consequences for health insurance beneficiaries. As Avalere Health suggests, when planning to lose quality bonus payments (QBPs), they often have to reduce valuable supplementary benefits such as transportation assistance, dental coverage or at-home support services or increase plan premiums. McKinsey estimates that CMS rating changes could cost more than $800 million in bonuses, reducing the resources available to such gains.
Additionally, rating fluctuations may trigger unnecessary planning switches because whether the lower stars indicate poor mass and changing plans is unnecessarily confused. These transitions often undermine established provider relations and care management programs and may undermine clinical outcomes. Research shows that disruption of provider relationships can lead to lower primary care utilization, increased emergency visits and higher hospitalization rates, especially for vulnerable people with chronic diseases.
Furthermore, if demographic reality means that despite clinical success, plans may hesitate to adopt novel approaches to manage high-cost and high-risk populations. This indifference effect on innovation ultimately harms beneficiaries who benefit from the creative care model to the greatest extent, which strengthens a system that will standardize rewards rather than meaningfully improve care services for complex populations.
A framework for meaningful reform
To restore consistency between the Star rating system and improving quality care for Medicare beneficiaries, four basic reforms are needed:
1. Stabilize the method and increase transparency: CMS can only introduce methodological changes after strong public notifications, meaningful stakeholder engagement and sufficient implementation timelines. Transparency in measuring development, weighting and adjustments is critical to maintaining system trust and enabling programs to adjust their quality strategies accordingly.
2. Implement comprehensive social risk adjustments: The current classification adjustment index shows a moderate impact. A more equitable assessment system must fully consider income disparities, disability status, race, language barriers, and other social factors that affect care delivery and outcomes. This adjustment confirms other resources needed to achieve equal outcomes for people with complex social needs.
3. Repositioning meaningful results: Focus should shift to measurable health improvements, such as reduced hospitalizations and better chronic disease management, rather than focusing on process indicators or findings that may be relevant to actual health benefits.
4. Reward innovation and health equity work: CMS should recognize that plans make meaningful investments in addressing health disparities and creating innovative care models for underserved communities.
The Humana case, along with the disturbing scan and elevated telephone incidents, represents a critical inflection point in Medicare Advantage quality measurement. The system has clearly lost its purpose when a missed call, despite its clinical excellence, triggers devastating financial penalties, and plans to serve millions of beneficiaries may lose billions of dollars in value due to methodological changes rather than actual care deficiencies.
By implementing the proposed reforms, CMS could transform stellar ratings from compliance exercises to real catalysts for better patient care. The ultimate measure of success should not be statistical perfection or compliance with strict administrative protocols, but whether the system helps vulnerable elderly people live healthier and live longer while reducing the differences in quality of care. Only then can Star Rating fulfill its intended role: directing beneficiaries to truly excellent programs while rewarding insurers who are good at improving health, not just compliance.
Emmanuel is a Nigerian doctor and a second-year MPH/MBA candidate for Johns Hopkins Bloomberg Public Health and Carey Business School. His work focuses on health financing, delivering strategic approaches to reform and health system transformation.
