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October 26, 2020

The Status of Star Ratings in Light of COVID-19

This Bulletin is brought to you by AHLA’s Payers, Plans, and Managed Care Practice Group.
  • October 26, 2020
  • Lauren Haley , Strategic Health Law

In light of the unprecedented impacts of the public health emergency (PHE) for COVID-19, the Centers for Medicare & Medicaid Services (CMS) issued this year two interim final rules with comment periods intended to provide relief from some of the administrative burden associated with reporting information for Star Rating measures and to encourage Medicare Advantage (MA) plans to prioritize efforts to address issues stemming from COVID-19 over cost and Star Rating considerations. CMS issued CMS–1744–IFC on April 6, 2020 (April 6 IFC) that addressed certain Star measure reporting and calculation changes for 2021 and 2022,[1] and more recently included a change to the existing disaster policy applicable to Star Ratings in CMS–3401–IFC published on September 2, 2020[2] (September 2 IFC).

The Star Rating system for MA and Part D plans is the basis by which CMS determines quality bonus payment (QBP) status for MA plans, as well as the beneficiary rebates amounts established under the Social Security Act.[3] QBPs to MA plans under the Star Ratings program are significant: CMS reports that approximately $12 billion for 2020 will be paid as part of QBPs in the form of higher benchmarks for both Individual and Employer Group Waiver Plans.[4] Star Ratings are generally based on measures of performance during the period that is two calendar years before the year for which the Star Ratings are issued; for example, 2022 Star Ratings are based on plan performance in 2020, and QBPs for 2022 Star Ratings will be paid in 2023.

The Star Ratings program is designed to encourage insurers to offer, and beneficiaries to enroll in, high-quality plans. To that end, high-scoring plans benefit from preferential treatment under the program. For example, MA and Part D plans that achieve a 5-Star Rating receive CMS’ gold star icon for marketing materials and beneficiaries receive a special election period to enroll in a 5-Star plan outside of open enrollment.[5] Conversely, CMS has the authority to terminate plans that receive less than a 3-Star Rating for three or more consecutive years.[6]

The PHE resulting from COVID-19 creates uncertainty for MA and Part D plans with respect to collecting and reporting on various measures that inform Star Ratings. Given the strong incentives for MA plans to improve Star Ratings and the considerable impact of Star Ratings on plans’ financial standing in future years, CMS expressed concern that MA or Part D plans might prioritize improving Star Ratings over addressing issues stemming from the COVID-19 pandemic.[7]

In response to these concerns, and to ensure that MA and Part D plans have a clear incentive to focus on providing high-quality care for members impacted by COVID-19, CMS issued the April 6 and September 2 IFCs, in addition to the Star Ratings provisions in the Final Rule[8] summarized here, designed to mitigate the adverse impact on Star Ratings from the COVID-19 PHE.

Calculation of 2021 and 2022 Star Ratings

CMS made several adjustments to the Star Ratings measures processes in the April 6 IFC to account for the potential decreases in measure-level scores, including the following:

  • HEDIS and CAHPS Data: CMS eliminated the requirement to collect and submit Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) data in 2020. The 2021 Star Ratings measures calculated based on HEDIS and CAHPS data collections will be based on earlier values from the 2020 Star Ratings;[9]
  • 2021 Star Ratings: CMS established a contingent process for the agency to calculate 2021 Star Ratings in the event its functions become solely focused on continued performance of essential agency operations and it is unable to calculate the 2021 Star Ratings;[10]
  • Data Quality Issues: CMS modified the current rules for the 2021 Star Ratings to allow CMS to use measure-level Star Ratings and scores from the 2020 Star Ratings when there is a systemic data quality issue for all plans due to the PHE;[11]
  • HOS Data: In the event CMS is unable to complete Health Outcomes Survey (HOS) data collections in 2020 due to the PHE, the agency will replace the measures calculated based on HOS data collections with earlier values for the 2022 Star Ratings;[12]
  • Guardrails: CMS delayed application of the guardrails to the 2023 Star Ratings produced in October 2022;[13]
  • Hold Harmless Provisions: In response to concerns about overall performance in 2020, CMS expanded the “hold harmless rule” for the Part C and D Improvement measures for the 2022 Star Ratings to include all contracts at the overall and summary rating levels;[14] and
  • QBP Calculations for New Contracts: For purposes of 2022 QBPs based on 2021 Star Ratings only, CMS revised the definition of “new MA plan” to mean an MA contract offered by a parent organization that has not had another MA contract in the previous four years (rather than three years), to address the fact that the 2021 Star Ratings will now be based in part on data for the 2018 performance period.[15]

Disaster Policy for Extreme and Uncontrollable Circumstances

CMS made additional adjustments to the Star Ratings measures processes in the September 2 IFC to address the unintended consequences associated with the Star Ratings disaster policy for extreme and uncontrollable circumstances. Under the existing policy, several conditions must be satisfied before the Star Rating for a contract can be adjusted due to an emergency situation, including (1) that at least one enrollee resides in a Federal Emergency Management Agency (FEMA)-designated Individual Assistance area; (2) that the service area be within a county designated in a major disaster declaration; and (3) that the contract’s service area be within an “emergency area” during an “emergency period.”[16] The existing policy provides that if 60% or more of a contract’s members are living in a FEMA-designated Individual Assistance area at the time of the extreme and uncontrollable circumstance, these contracts are excluded from the measure-level cut point calculations for non-CAHPS measures and from the performance summary and variance thresholds for the Reward Factor (60% Rule).[17]

Because almost all states/territories have been designated as Individual Assistance Areas due to COVID-19, the extreme and uncontrollable circumstances policy is unworkable.[18] With almost every contract in these states/territories meeting the requirements for a Star Ratings adjustment under the extreme and uncontrollable circumstances policy, there will not be sufficient contracts to reliably make the calculations needed to assign Star Ratings for non-CAHPS measures or thresholds for the Reward Factor for 2022.[19] That is, CMS will not have enough measures with Star Ratings to calculate either the 2022 overall or summary Star Ratings or 2023 QBPs.[20]

To prevent these unintended consequences, CMS will not apply the 60% Rule in calculating non-CAHPS measure-level cut points or the Reward Factor for 2022 only.[21] This will ensure that CMS can calculate measure-level cut points for the 2022 Star Ratings, calculate measure-level ratings for the 2022 Star Ratings, apply the “higher of” policy for non-CAHPS measures, calculate the Reward Factor, and ultimately calculate overall and summary ratings for 2022 Star Ratings and 2023 QBPs.[22]

Absent any additional changes to the Star Ratings program, all other rules for calculating Star Ratings will apply, including those reflected in regulations and sub-regulatory guidance.


[1] 85 Fed. Reg. 19230 (Apr. 6, 2020) (to be codified at 42 C.F.R. pts. 400, 405, 409, 410, 412, 414, 415, 417, 418, 421, 422, 423, 425, 440, 482, and 510).

[2] 85 Fed. Reg. 54820 (Sept. 2, 2020) (to be codified at 42 C.F.R. pts. 410, 413, 414, 422, 423, 482, 483, 485, 488, and 493).

[3] See Sections 1853(o) and 1854(b) of the Social Security Act; see also 42 C.F.R. §§ 422.258(d)(7) and 422.260.

[4] 85 Fed. Reg. at 54844.

[5] See, e.g., 42 C.F.R. §§ 422.62(b)(15) and 422.166(h)(1)(i).

[6] 42 C.F.R. § 422.510(a)(4)(xi).

[7] 85 Fed. Reg. at 19270; 85 Fed. Reg. at 54846.

[8] 85 Fed. Reg. 33796 (June 2, 2020).

[9] 85 Fed. Reg. at 19271-72; 42 C.F.R. §§ 422.152(b)(6)), 422.166(j)(1)(iii), and 423.186(j)(1)(ii).

[10] 85 Fed. Reg. at 19273; 42 C.F.R. §§ 422.164(i), 422.166(j)(1)(v), 423.184(i), and 423.186(j)(1)(iv).

[11] 85 Fed. Reg. at 19273; 42 C.F.R. §§ 422.164(i) and 423.184(i).

[12] 85 Fed. Reg. at 19270-71; 42 C.F.R. § 422.166(j)(2)(ii).

[13] 85 Fed. Reg. at 19274; 42 C.F.R. §§ 422.166(a)(2)(i) and 423.186(a)(2)(i).

[14] 85 Fed. Reg. at 19275; 42 C.F.R. §§ 422.166(f)(1)(i), 422.166(g)(3), 423.186(f)(1)(i), and 423.186(g)(3).

[15] 85 Fed. Reg. at 19275; 42 C.F.R. § 422.252.

[16] 42 C.F.R. §§ 422.166(i) and 423.186(i).

[17] 42 C.F.R. §§ 422.166(i)(9) and 423.186(i)(9).

[18] 85 Fed. Reg. at 54845-46.

[19] 85 Fed. Reg. at 54845.

[20] Id.

[21] 85 Fed. Reg. at 54845; 42 C.F.R. §§ 422.166(i)(11) and 423.1186(i)(9).

[22] 85 Fed. Reg. at 54846.