The recent adjustments in Medicare Advantage star ratings have sparked significant interest within the healthcare industry, particularly for major insurers like UnitedHealth and Centene. The Centers for Medicare & Medicaid Services (CMS) has recalibrated its ratings, resulting in notable enhancements for both companies, which are set to impact their financial standings in the upcoming year.
On December 4, 2024, CMS released revised ratings that reflected an increase in star ratings for 12 contracts held by UnitedHealth and seven contracts associated with Centene. This recalibration comes after both insurers engaged in legal battles with federal regulators, challenging the initial ratings that were published in October.
For UnitedHealth, the revisions were particularly beneficial. Three of its contracts have now crossed the crucial four-star threshold, a significant milestone that unlocks access to lucrative performance bonuses. Additionally, two of UnitedHealth’s contracts received an upgrade to the prestigious five-star rating, which allows the company to receive the maximum rebate from the federal government. These improvements not only enhance UnitedHealth’s reputation in the market but also provide substantial financial incentives.
Centene also experienced positive changes, with one of its contracts elevated to four stars—the only contract for 2025 to achieve this rating. Furthermore, two of its contracts saw their ratings increase from 2.5 stars to 3 stars. This is particularly critical for Centene, as contracts that consistently score below three stars face restrictions on expansion and could potentially be terminated from the Medicare Advantage program.
The backdrop to these developments is a contentious environment where many health insurers expressed dissatisfaction with the original star ratings released by CMS. The agency had tightened the criteria for achieving higher scores, leading to a general decline in ratings across the board. This shift has serious implications for insurers, as star ratings are directly linked to reimbursement rates in the Medicare Advantage program.
In response to the unfavorable ratings, a coalition of insurers, including UnitedHealth, Centene, Humana, Elevance, and Blue Cross Blue Shield of Louisiana, took legal action against CMS. The lawsuits aimed to contest the fairness of the star ratings, particularly highlighting concerns over how customer service metrics were evaluated. A federal judge recently ruled in favor of UnitedHealth, directing CMS to revisit its ratings due to perceived inaccuracies in assessing the insurer’s customer service call center performance.
The revised ratings released by CMS on Monday represent a significant turnaround for both UnitedHealth and Centene, reflecting the impact of their legal challenges. As the healthcare landscape continues to evolve, these changes underscore the importance of star ratings in determining the financial viability of Medicare Advantage plans.
Industry analysts will be closely monitoring how these adjustments will affect the competitive dynamics among insurers in the Medicare Advantage market. The financial implications of star ratings are profound, influencing not just bonuses and rebates, but also the ability of insurers to attract and retain members in a crowded marketplace.
As the healthcare sector prepares for the upcoming year, the focus will remain on how insurers adapt to changing regulations and rating systems. The recalibrated star ratings for UnitedHealth and Centene are just the latest chapter in an ongoing narrative about the intersection of healthcare policy, corporate strategy, and consumer impact.
