With 2025 Star Ratings published, health plans find themselves navigating an increasingly difficult Medicare Advantage (MA) business environment with a slew of headwinds including an influx of beneficiaries, higher cut points, and less CMS dollars to go around.
Here’s a closer look at the challenges ahead and strategies for health plans to ensure success.
Medicare is an Increasingly Tough Business
Post-Pandemic Utilization and Cost Management Challenges
The business of Medicare is becoming more complex and competitive. Since the pandemic ended, healthcare utilization trends have not only caught up to, but have exceeded pre-pandemic levels. As beneficiaries seek more care, plans are finding it difficult to manage costs effectively without compromising quality.
The Shift to Health Equity
At the same time, the introduction of the Health Equity Index (HEI) to replace the Reward Factor has significantly altered the financial equation for MA plans. This shift emphasizes CMS’s continued commitment to health equity, requiring plans to invest in underserved populations to ensure they meet the new criteria for financial success.
Rising Cut Points and Impact on Star Ratings
As the October 10th official release of 2025 Star Ratings shows, rising cut points mean fewer plans are able to achieve top ratings. Even though, on the whole, health plan quality performance went up, Star Ratings fell because cut points went up more. One overarching example is measure C27 Health Plan Quality Improvement. On average, plan performance against this 5-weighted measure increased 0.6, but Star Ratings in this measure fell from an average 4.07 in 2024 to 3.92 in 2025. Despite posting gains that, in virtually any other Star year, would have meant higher ratings, this year proved that plans that think that they’re doing enough probably aren’t.
Shrinking Pool of 4.0+ Star Plans
Star Ratings have resulted in a shrinking pool of plans that can benefit from quality bonus payments and rebates. Just 209 plans notched a score at 4.0 stars or higher. That’s down from 242 last year. In the same vein, only 62% of members find themselves in 4.0+ star rated plans. Last year, that number was 74%. That’s bad news for plans that slipped, and plans that maintained their ratings have already launched marketing campaigns ahead of AEP to coax star-conscious members from falling plans to their plans. It’s logical to assume that—before the end of AEP—¾ of all members will again be in plans with four or more stars, they’ll just likely leave their current plans to migrate to one.
Retention, Marketing, and Economic Pressures
Just as member retention has never been more important, MA plans in years past had been ready to woo them with zero-dollar premiums and supplemental benefits. Headlines in the last few years have focused on the gold rush of new membership. But the economic realities of caring for members have required plans to scale their services while maintaining high-quality care. CMS’ forthcoming requirement that plans proactively remind members of the benefits they bought (and how many of those benefits they’ve used) stands not only to increase benefit utilization, but to add engagement expense due to the required member communication. Plans can’t count on using benefits as a marketing tool that they don’t have to deliver on.
Contraction in the Medicare Advantage Market
Recent market activity seems to indicate that plans large and small are choosing to get out of the Medicare Advantage business as return on investment becomes more challenging. While the reduction in available MA plans from 2024 to 2025 was only about 5%, broader financial challenges suggest a trend towards contraction. CMS’s drive toward higher performance may result in the unintended consequence of consolidation as more plans join the ranks of Cigna, Moda, and Blue Cross Blue Shield of Kansas City who are getting out of the MA line of business. The expected voluntary member migration in the next few months during AEP will be joined by members who will need to find new coverage as plans exit the market or sell to other entities.
Strategies for Future Stars Success
Those plans that expect to keep their MA lines in place and growing should consider the following strategies to thrive in this challenging environment:
Refocus on Health Outcomes
Many plans took their focus off of critical HEDIS and HOS measures as they pursued high-weighted CAHPS measures and interpreted pandemic-related reductions in utilization as persistent if not permanent. Plans must shift their focus back to achieving better health outcomes through effective quality gap closures. By reprioritizing HEDIS and HOS measures, plans can improve their overall Star Ratings and ensure better care for beneficiaries. Icario data shows that members who complete an Annual Wellness Visit close 5.5x more gaps than members who don’t. Plans should integrate these visits into their quality programs to enhance patient engagement and improve health outcomes holistically.
Leverage Health Risk Assessment Data
Mining Health Risk Assessment (HRA) survey data can reveal actionable gaps in care and critical social needs. By identifying these issues proactively, plans can address them before they show up in claims data and manifest in increased utilization. DSNP plans that have simplified their HRA questionnaires to expedite completions and benefit their C05 star measure are actually doing themselves and their members a disservice by trading valuable member insight and intervention for the performance of one, single-weighted measure.
Take Advantage of the Finite and Knowable
The list of reasons why members don’t take their medications, get their screenings, or see their practitioners is finite. And the challenges members face are already known quantities. Plans must break free from the siloed thinking and budgetary constraints that often force them into the linear, monthslong practice of Assess -> Analyze -> Act. Real-time member interventions that are ready to deploy, as increasingly important member data becomes available, is critical to curing the lag most plans face in dealing with known member issues.
Set Your Star Rating Strategy for 2025
In conclusion, the 2025 Medicare Advantage Star Ratings present a formidable challenge for health plans. However, with strategic focus and a commitment to quality, plans can not only navigate these obstacles but also emerge as leaders in a competitive landscape. Emphasizing health outcomes, addressing social determinants of health, and leveraging data-driven insights will be essential for success in the years to come.
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