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Episode Transcript

Announcer [00:00:00] Welcome to RadioRev, podcasting from the heart of healthcare in Minneapolis, Minnesota. This is the podcast for change makers looking to do more than just health engagement. It’s about getting people to take action and do things that actually improve their health. It’s a radical idea, right? So we’re talking with the leaders, innovators, movers, and shakers who are bringing new ideas, inspiring others, and leading the way.  

Jenn [00:00:27] I don’t know about you guys, but I’m excited about today because it’s our very first episode of RadioRev. Today we’re going to be diving into Medicare Star Ratings, what they are, why they matter, and who should care about them. Joining the conversation we have Jeff Fritz, CEO here at Icario, and Sara Ratner, our Government Programs Specialist. Sara is going to explain everything that you need to know about Medicare Star Ratings. So welcome to the show.

Jeff [00:00:51] Well, thanks. Before we begin, we want to start with a really important question. As a fellow child of the ’80s, you’re probably younger than I am by a long shot, but what is your favorite ’80s song? What would be your walk-up music?

Sara [00:01:09] “Hit Me with Your Best Shot” by Pat Benatar. Definitely. {music plays}

Jeff [00:01:27] Pat Benatar—wasn’t she an opera singer? She was a trained opera singer who went rock ‘n roll.

Sara [00:01:33] Really? I didn’t realize that.

Jeff [00:01:34] Yeah, a fun fact there. So we’re going to go right off of the ’80s song, which we could talk about and have a lot of fun with. We’re going to deep dive into an even more exciting topic of Star Ratings. Why are you studying Star Ratings?

Sara [00:01:53] Well, Star Ratings are incredibly important for the Medicare Advantage population. They were started in 2007, and it was a way to compare plans. Individuals couldn’t understand the difference in plans. Typically, they couldn’t understand the out-of-pocket benefits. They couldn’t understand deductibles. And there was no way to really measure the quality. So CMS implemented the Stars program to enable beneficiaries to compare plans, initially. And then as the Affordable Care Act came into play, more incentives and rewards were implemented for plan performance. And so it’s gotten to be a program where it allows beneficiaries and members to see which plans are better. They’re highlighted as part of open enrollment and for plans to also be encouraged and incented to provide better benefits and higher quality.

Jeff [00:02:59] And so CMS—was it always Centers for Medicare and Medicaid? Is that where all this comes from?

Sara [00:03:12] It used to be HCFA, Healthcare Financing, a long time ago.

Sara [00:03:19] So our government agencies are clearly marketers. They’re making the best out of how they brand themselves from HCFA to CMS. And I’m really intrigued by this. So going from a place where, and correct me if I’m wrong, where the members, the beneficiaries, the people who are beneficiaries of Medicare and Medicaid, are shopping in the market, and they can see these ratings on the quality that they’re about to buy. So it’s really a quality type of measurement that they can depend on.

Sara [00:03:57] Correct.

Jeff [00:03:57] And then it’s shifted to the Affordable Care Act, which added some measures for the plans to improve?

Sara [00:04:09] It really blew out the rewards and incentives that exist for plans to become better. So the rewards around plan performance, which allows plans to distinguish themselves, have become much richer. So the higher-performing plans are continuing to be high performing while the lower plans are struggling. And we’ll see that more and more.

Jeff [00:04:36] So Sara, I think about the challenge I have when I’m at my family reunion, trying to describe what the heck we do every day in this world of healthcare, and Star Ratings, and CMS. And then I think about the people that are really smart folks that are coming into this business and trying to help solve these problems. What can you share for me or others to bring those people up to speed quicker on the basics, the nuts and bolts of Star Ratings? How would we break this down to an easy-to-consume level, just to level-set for a little bit on what Star Ratings really are?

Sara [00:05:25] Star Ratings are essentially a report card. Think of when you get your report card, you have it broken down by different classes that you take. You could do really well, or you could do poorly. And when I look at the report card in all, you do an average, I could have an A or I could have a C average. And that’s essentially what the Star Ratings do. They assign a particular category and give it a score and then they take all of those different scores, similar to a report card, and come up with an average to say your Star Rating for a plan is, for example, four. So it’s very, very similar to any report card that people have seen.

Jeff [00:06:23] And the grader in this case is the government agency called CMS.

Sara [00:06:30] The grader is the government agency. It’s also standards set by organizations such as HEDIS, measures that give a clinical quality score to certain measures.

Jeff [00:06:47] And so the student in this case that’s getting these grades was predominately then plans?

Sara [00:06:57] Correct.

Jeff [00:06:58] And a plan being defined as an insurance company who’s issuing Medicare policies to the general public?

Sara [00:07:09] Correct. They have a contract with the federal government to offer a plan in a particular area.

Jeff [00:07:16] And the reward for getting—I never got money for good grades. I maybe got a stern talking-to if I didn’t get good grades. But are there stern talking-tos, and are there rewards that are associated with the Star Ratings? And how are those levers pulled?

Sara [00:07:34] Sure. So there are rewards associated with it. Think of it as, if I’m a plan I get more money with a higher Star Rating. Now similar to if I’m a kid, my parents may say I’m not going to give you actual money, but I might get you a car, or we get to go on a great trip, or I may pay for part of your college. That’s similar to what exists today where CMS is saying to the plans, “This is not going to go directly to your bottom line. You can use it to offer additional benefits to your members, or you can choose to say, I’m going to reduce the premium that members pay.”

Jeff [00:08:23] So I’m getting graded, getting all these grades from all my teachers. How many grades are there that make up my overall grade or my overall Star Rating?

Sara [00:08:37] So there are approximately 34 Medicare Advantage ratings. There are 14 Part D ratings as well. And we haven’t spoken a lot about Part D. We’ve been primarily focused on the true, core MA plans Part C, but the D plans have a lesser amount. But the ratings count for quite a—they have quite a weight. 

Jeff [00:09:17] And speaking of weightings, are all scores weighted equally?

Sara [00:09:22] That’s an excellent question.

Jeff [00:09:26] That’s why I’m here!

Sara [00:09:26] No, they are not. Plans are graded based on their performance, but the performance measures are all weighted differently. So, for example, a new plan that comes in, they may get a rebate of $65 per member per month.

Jeff [00:09:51] And when you say rebate, that’s on top of their normal premium?

Sara [00:09:56] Correct. That’s in addition to what they’re typically paid by CMS. What their bid is.

Jeff [00:10:03] OK. So Jeff and Sara start an insurance company. We bid to be a seller of insurance policies in Medicare. And we get our bid. And so when we sell our first policy, our rate that we were able to get, I don’t know, pick a number, $500. And on top of that, we have an incentive out there for us of $65.

Sara [00:10:35] So you could have an incentive of that. Yeah. So when you think about Star Ratings, what Star Ratings does is it increases your, for all practical purposes, bid amount. You may have the same bid, but you get a bonus on top of that. And that bonus, CMS says, “Well, you can’t keep that. You have to give that to the members in some way, shape, or form.” So the bonus for doing well is really benefiting the members. But ultimately, it benefits the plans because as they offer richer benefits and continue to perform, they are going to increase their enrollment because they’re going to be much more attractive plans or much more affordable.

Jeff [00:11:25] What are things that I can’t use it for?

Sara [00:11:29] You can’t use it to go directly to your bottom line. You can’t just book it, and say, “We’re not going to give any back to the beneficiary.” But to give you some perspective of scale. If you take a bid of, for example, $700, between three and a half Stars and four Stars, my lowest rebate amount for three and a half Stars could be roughly $65 per member per month. If I’m at four and a half Stars or higher, it could be as high as $98 per member per month. So there is a big disparity that exists in the ability to offer a rebate in the amount. And those that are three Stars or lower, obviously have a much lower amount to rebate, if anything at all.

Jeff [00:12:31] Interesting. When I see some plans that are acquiring other, smaller plans, do they get the benefit of—is there something with the Stars that is a lever that they can pull with an acquisition like that? So as they’re growing, and they determine there’s an opportunity to get synergies out of bringing another plan into their family, a small plan, let’s say. But that small plan has performed poorly. Is that part of their calculation? I assume that they can lift the ratings of the acquired plan? And conversely, if the plan is performing really well, they can apply those practices to the broader book of business?

Sara [00:13:24] Absolutely. That’s why we’re seeing a lot of M&A activity, because plans want additional enrollment. And an inexpensive way to do that—and very quickly—is to acquire a company. And the interesting thing is that the plan that acquires the, let’s say, poor-performing company, that poor-performing company assumes the Star Rating of the acquiring plan. So it becomes one plan with the higher Star Rating.

Jeff [00:14:02] So they get an immediate lift.

Sara [00:14:04] An immediate lift.

Jeff [00:14:05] And two years to not screw it up.

Sara [00:14:09] So I don’t know how long that will continue for because it’s going to encourage so much consolidation that you could have antitrust issues at some point in time. And arguably it could create less choice for a member without the competition. So I don’t know if CMS is going to start looking at that or putting barriers in place or more constraints around M&A activity.

Jeff [00:14:37] What do you see changing? What are the highlights?

Sara [00:14:44] Where’s the puck going? So where it’s changing—there’s a couple of components. One is technology. One is relating to, I guess benefits, we’ll call it. And then the other relates to member satisfaction. So with respect to technology, CMS implemented what’s called the Blue Button. And the Blue Button is a developer-friendly, standard-based API. And it uses the HL7 FHIR API. And that is an open API, so it allows different organizations to access the data that CMS puts out. So, for example, when U.S. News and World Report put out a list of the plans that are high-performing, that information is derived from the open API that CMS has put out there. This has not always been the case. They haven’t been forward-thinking, and it really, it was Seema Verma who brought this to the table and really pushed it. And Seema had a story that kind of propelled this forward dramatically. Her dad was very, very sick, and he almost didn’t make it because he didn’t have access, or they did not have access to all of his data. So she viewed it as incredibly important for beneficiaries to be able to get their data. They shouldn’t have to call a million different providers. They shouldn’t have to go to the claims system. They should be able to get that data. So what CMS has done is they’ve implemented the Blue Button, which allows a member to request their data, all of the data that CMS has, a member can request. This is incredibly important for technology companies like Icario, because when the beneficiary requests their data, Icario then can be—essentially assign that data by the beneficiary and now it opens up a number of opportunities to help support that member. So it really is a different way of operating than we have in the past. And it puts the member in charge of their data, and they’re the center rather than the plan or the provider or CMS. Another component to the technology is CMS has spoken and issued, we’ll call it informal guidance, that coming up shortly, they will be tying a Star Rating to the plans implementing the FHIR API. So plans that do not want to play in the sandbox with CMS and give the data to CMS will be penalized. And that’s the same thing with providers. They will not have what is considered a required electronic health records system unless they have a FHIR API as well. And you can go on Epic’s website and see the list of providers that have actually already adopted the FHIR API. So it’s an important time in our—in the CMS cycle because it really is changing the ability to operate within the system.

Jeff [00:18:36] It’s super interesting where all of these payers and providers supposedly want to maximize their rebates by taking advantage of the evolving rules, regulations. And this FHIR API is one of those that they’re going to put some screws down on. And I’m going to say it back to you to just make sure I’m correct on it. What that looks like is for them to share data back to CMS in a standardized way. And if it’s in some kind of API, it sounds like it could be even a real-time sharing of data.

Sara [00:19:18] Correct.

Jeff [00:19:19] And then the CMS Blue Button is member centric, where the member owns their combined data from all of the providers and payer systems that they’ve touched or interacted with over time. And they would be able to have access or grant access to their data to somebody who is caring for them or managing their care.

Sara [00:19:44] Exactly.

Jeff [00:19:46] That sounds like a really big deal. How are the payers reacting to it?

Sara [00:19:53] I think it’s—up until this point, payers have been payer-centric around the data. They’ve invested a lot in developing data warehouses so that they are a central point. And this doesn’t displace them by any means, but it opens up an additional point of access for members to get their data. So the more a plan can play in this space and help a consumer understand their ability to access data, the better the satisfaction will be, which then becomes a virtuous cycle of when you have happy members, you have good scores for your Star Ratings. And then ultimately it improves your Star Ratings.

Jeff [00:20:47] Right. Now I’m wondering…I think the corollary that I think about is the banking systems out there. At one point, my bank competed based on basically hoarding my data. So because they’ve done business with me, they have a file on me. They know the most about me, and it’s easier. They felt like that was their competitive advantage, to lock up my data about my financial transactions. And then that was the loyalty that they thought they had with me. That data got set free. And I own that access to the data through credit bureaus now. So any bank has access to that information, and they now compete based on what they do with the data. And I think that’s a pretty big turning point from these silos of data getting connected back to who really is the owner of the data, being the member, and shifting the focus on what they do with the data and provide services and value to the membership.

Sara [00:21:48] Absolutely. Think of it as with banking today, you can grant Mint, the application, access to all of your accounts. Well, as the consumer, you have to initiate that. But at that point of initiation, now, Mint can get access to all of that data. Similarly, HIPAA, which we all complain about, gave that member a right of access to their data. So CMS is now leveraging that, leveraging the requirement that’s been around for a very long time, and saying, “Members, you can get access to this now and give it or assign it to any provider that you want,” which is a big change.

Jeff [00:22:39] It’s fascinating. And even with the latency of the Star measure scores, you can see how there’s a bit of an acceleration starting around, innovating around the member, and the member experience, and the member quality, which is refreshing, I think, in healthcare. I think we all, the people who’ve worked in the space, have joked about how behind healthcare is compared to all the other technologies and systems out there. And it’s neat to see there are some changes in a real positive way coming.

Sara [00:23:18] Yep.

Jeff [00:23:19] What are the true drivers of member retention?

Sara [00:23:23] Well, one of the key drivers is just familiarity with your plan. So members who are 75 and older have a tendency to stay with their plan because they’ve been on it. It’s easy. It’s simple. They don’t have to change. They know that they can see the doctor that they want. They know their prescriptions will be covered. It’s just a—they’re used to it. They’re accustomed to it. Those that are younger are more technology savvy. They’re used to shopping a bit more for what they want. And now that the ability to get access to what the plans are offering and the additional benefits and services, which has dramatically increased this year, people who are less than 75 are more likely to shop and really see which plans are going to offer the best services beyond what their deductible, their copay, and their out-of-pocket costs are.

Jeff [00:24:27] That makes sense. I think back to my parents, who are in that age bracket. They worked for 30+ years in the same job. They were less likely to move. Their physician relationships were very personal in nature. And when I think about my generation or my children’s generation, they’re more open to watching for new innovations, regardless of the person or the institution who delivers them. And that includes them looking for different education opportunities, different experiences, different employment opportunities. So it seems to reflect that.

Jenn [00:25:15] A big thank you to both Jeff and Sara for being here today. Obviously, we have just started to scratch the surface of CMS and Medicare Star Ratings. So if you would like more information, visit our website and review our Medicare Star Ratings content.

Announcer [00:25:31] Thanks for joining us for the RadioRev podcast, brought to you by Icario. If you found today’s conversation as informative and energizing as we did, please take a moment and subscribe to the podcast. As always, we invite you to learn more about us and check out all of our content at

Inside the Episode

Our first episode of RadioRev dives into the world of Medicare Star Ratings with Sara Ratner, Icario Medicaid Advisory Council Member. We cover the nuts and bolts of Medicare Star Ratings, what they are, why they matter, and who should care about them. Here are the highlights of the conversation:

  • What Medicare Star Ratings are in their simplest form
  • The consequences of performing poorly and how scores are weighted
  • What’s changing and how health plans feel about the future

To keep the conversation with Sara going, connect with her on LinkedIn.

“The more a health plan can play in this space and help consumers understand their ability to access data, the better the satisfaction will be.”


Sara Ratner

Icario Government Programs Advisory Council Member

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