The Medicare Part C (Medicare Advantage [MA]) and Part D (MA-PD) STAR Measures program represents the cornerstone of value-based care quality assessment in the Medicare system, directly impacting over 33 million beneficiaries and billions of dollars in quality bonus payments.
Approximately 42% of MA-PDs (229 contracts) that were offered in 2024 earned 4 stars or higher for their 2024 overall rating. Weighted by enrollment, approximately 75% of MA-PD enrollees in contracts had 4 or more stars in 2024.¹ The STAR rating system evaluates Medicare Part C Organizations (Medicare Advantage Organizations [MAOs]) and Prescription Drug Plans (PDPs) across up to 40 distinct quality and performance measures¹, creating a comprehensive framework for measuring healthcare delivery effectiveness.
The 2025 bonus payment framework establishes tiered rebate percentages based on STAR performance:
The STAR system's evolution reflects CMS's commitment to driving quality improvement while managing program costs. The average plan STAR Rating will decrease from 4.07 to 3.92 in 2025, demonstrating the system's design to continuously raise performance expectations.⁶ Healthcare executives must understand that STAR performance directly correlates with financial sustainability, market competitiveness, and regulatory compliance in an increasingly value-driven healthcare environment.
The Medicare Advantage and Part D STAR Rating system emerged from the Medicare Modernization Act of 2003 and the Affordable Care Act of 2010, establishing the first comprehensive quality measurement framework for Medicare managed care. The program was designed to address three fundamental challenges: lack of standardized quality metrics across plans, insufficient transparency for beneficiary decision-making, and misaligned financial incentives that rewarded enrollment over outcomes.
Since its inception in 2012 for quality bonus payments3,11, the STAR system has evolved from a basic performance measurement tool to a sophisticated value-based care framework. After increasing by more than 400% between 2015 and 2023, federal spending on Medicare Advantage bonus payments demonstrates the program's significant growth and financial impact on the healthcare system.³
The STAR rating system employs a 5-point scale where higher ratings indicate superior performance:
The Centers for Medicare and Medicaid Services (CMS) may terminate a Medicare Advantage plan that fails to achieve a three-star rating or higher for three consecutive years. Plans consistently scoring below three stars for three years in a row face potential contract non-renewal from CMS. Additionally, CMS issues "consistent poor performer" notices to beneficiaries enrolled in plans with ratings below three stars for three or more years, encouraging them to consider enrolling in higher-quality plans during the Open Enrollment period. This regulatory framework ensures that sustained poor performance has meaningful consequences for plan sponsors.
Organizations that are non-profit more frequently earn higher ratings than organizations that are for-profit. For MA-PDs, approximately 56% of non-profit contracts received 4 or more stars compared to 36% of for-profit MA-PDs, highlighting the correlation between organizational structure and quality outcomes.¹
STAR measures align directly with value-based care's core tenets by measuring outcomes rather than volume, emphasizing prevention and care coordination, and linking financial incentives to quality performance. The system creates a comprehensive value equation:
Plan Value = (Quality Outcomes + Patient Experience + Health Equity) ÷ Total Cost of Care
This framework drives healthcare organizations toward population health management, evidence-based care delivery, and patient-centered service models essential for thriving in value-based contracts beyond Medicare Advantage.
Health outcomes measures carry the highest weight in STAR calculations, reflecting CMS's emphasis on clinical effectiveness and patient health improvement. These measures assess plans' ability to deliver care that meaningfully improves beneficiary health status over time.
Health outcomes measures use clinical thresholds based on evidence-based guidelines. Cut-points are recalculated annually using hierarchical clustering with Tukey outlier deletion to ensure statistical validity and reduce the impact of extreme performers.1,2
Intermediate outcomes focus on clinical quality indicators that serve as proxies for long-term health improvement, emphasizing preventive care and chronic disease management.
A growing number of plans scored highly on some measures like breast cancer screenings, while more plans scored lower on other measures like colorectal cancer screenings, demonstrating the dynamic nature of quality performance across different clinical areas.²
Patient experience measures, derived from the Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys, assess beneficiary perceptions of care quality, access, and service delivery. CMS will reduce the weight of CAHPS and administrative measures from 4x to 2x. This change shifts the focus slightly away from patient experience and administrative efficiency, prompting payers to balance their efforts across a broader range of quality measures.⁷
CMS requires all MA and PDP plans, 1876 cost contracts, and Part D sponsors with 600 or more enrollees as of July of the previous year to survey a defined sample of their eligible members. Plans must contract with CMS-approved vendors for survey administration to ensure standardization and reliability.16,19
Access measures evaluate plans' ability to provide timely, geographically accessible healthcare services to their enrolled populations. These measures focus on structural capabilities rather than clinical outcomes.
Process measures assess healthcare delivery efficiency and adherence to evidence-based care protocols, serving as leading indicators of quality outcomes.
The STAR Rating system employs sophisticated statistical methods to ensure fair and meaningful performance comparisons across diverse plan populations and geographic markets. The cut points are recalculated each year based on performance during the measurement period. Many of the measure-level cut points increased from the 2024 STAR Ratings, meaning that, overall, contracts had to achieve higher performance on these measures to receive a high STAR Rating.²
Measures undergo case-mix adjustment for patient demographics, health status, and social risk factors to ensure equitable comparisons across different patient populations and geographic areas.1,7
STAR measures utilize relative performance benchmarking, where STAR Ratings are determined by comparing each plan's performance to the distribution of all plan performances nationally. This approach ensures that ratings reflect current industry capabilities while driving continuous improvement.1,2
Generally, higher overall STAR Ratings are associated with contracts that have more experience in the MA program, indicating that performance benchmarking accounts for organizational maturity and learning effects.¹
The STAR system incorporates multi-year performance tracking to identify trends, ensure rating stability, and prevent manipulation of short-term performance fluctuations.1,2
Plans scored a 4.37 on average in 2022, compared to current lower averages, demonstrating the system's evolution toward higher performance standards and the impact of pandemic-era adjustments normalizing.⁶
The Quality Bonus Payment (QBP) system represents one of the largest value-based payment programs in healthcare, with substantial financial implications for Medicare Advantage organizations. The total spending on the quality bonus program is less than 3% of the projected payments to Medicare Advantage plans in 2024 ($462 billion), yet these payments significantly impact plan profitability and competitive positioning.⁵
UnitedHealthcare receiving the largest total payments ($3.4 billion), and Kaiser Permanente receiving the highest per-member payments, demonstrate how plan size and performance combine to determine total QBP revenue.³
STAR Ratings directly influence beneficiary enrollment decisions and plan market competitiveness beyond direct bonus payments. High-performing plans leverage their ratings for marketing advantages and enhanced benefit offerings.3,19
Medicare spending on bonus payments has grown faster than enrollment in Medicare Advantage, which doubled between 2015 and 2024 (rising from 16 million people to 33 million people), indicating that quality performance attracts disproportionate enrollment growth.³
Low STAR Ratings carry significant financial and regulatory consequences beyond lost bonus payments, including market share erosion, regulatory scrutiny, and increased operational costs.1,8
This year's total payouts are a 400+% jump from bonuses back in 2015, when plans got $3 billion total, demonstrating the escalating financial stakes of STAR performance in the Medicare Advantage market.⁹
To illustrate the real-world financial implications, consider a hypothetical 50,000-member Medicare Advantage plan:3,11
Base benchmark: $1,000 PMPM¹¹
5% QBP increase: $50 PMPM¹¹
Annual additional revenue: $30 million³
Enhanced rebate capacity: Additional 10-15% for supplemental benefits¹¹
Base benchmark: $1,000 PMPM¹¹
No QBP bonus: $0 additional revenue¹¹
Limited rebate capacity: Standard benefit offerings only¹¹
Base benchmark: $1,000 PMPM¹¹
Potential enrollment restrictions and regulatory costs¹
Lost competitive positioning and member attrition risk³
Successful STAR performance requires systematic integration of quality measures into clinical workflows, ensuring that care delivery processes naturally generate high-quality outcomes and data capture.23,24
Organizations must embed STAR measure requirements into routine care delivery rather than treating them as separate quality initiatives. This includes provider education, workflow redesign, and performance feedback systems.23,24
Robust data infrastructure forms the foundation of successful STAR performance, requiring sophisticated systems for data capture, validation, and reporting across multiple domains.1,23
CPT II codes serve as a critical component of streamlined data collection, enabling real-time performance tracking through claims submission rather than manual chart reviews. These alphanumeric codes significantly reduce administrative burden by automating HEDIS measure reporting, ensuring accurate documentation of clinical activities such as HbA1c levels, blood pressure readings, and preventive care services. Implementation of CPT II coding protocols facilitates proactive care gap identification and supports targeted interventions for quality improvement initiatives.
The increased frequency of data refreshes in Medicare Advantage plans necessitates robust continuous monitoring systems rather than annual evaluation cycles. Organizations must establish comprehensive gap monitoring protocols that enable proactive identification and remediation of performance issues throughout the measurement year. This shift from reactive to proactive data management requires enhanced analytics capabilities for real-time performance tracking and immediate intervention deployment when quality metrics decline.
Data integrity issues are now included in the description of missing data in the extreme and uncontrollable circumstance (disaster) policy, emphasizing the critical importance of data accuracy and completeness in STAR Ratings.¹ Enhanced data validation processes must accommodate more frequent refresh cycles while maintaining accuracy standards for measure calculations and outcome reporting.
Healthcare organizations must develop comprehensive training programs to ensure all staff understand their role in STAR performance and quality improvement initiatives.23,24
Successful organizations create culture change that aligns individual performance with organizational STAR objectives through incentive alignment, recognition programs, and shared accountability.23,24
Individual providers can implement targeted strategies to directly impact STAR Ratings through enhanced clinical practices and patient engagement approaches. These comprehensive strategies focus on four core areas that drive measurable improvements in Medicare Advantage STAR Ratings performance.
Providers should prioritize building strong therapeutic relationships through personalized outreach, educational resources, and clear communication channels that foster trust and encourage active participation in care. This includes establishing regular touchpoints with patients beyond scheduled visits, utilizing patient-preferred communication methods, and providing culturally competent care that addresses individual needs and preferences. Digital tools should be leveraged to streamline communication, provide convenient access to care information, and enable real-time patient monitoring.
Providers must also address social determinants of health by recognizing and responding to social factors that impact health outcomes, such as access to food, housing, and transportation. Additionally, promoting health equity through focused efforts on improving outcomes for underserved populations can positively impact overall STAR Ratings while advancing population health goals.
Effective chronic disease management requires implementing systematic approaches that include comprehensive care management programs, Remote Patient Monitoring initiatives, and Chronic Care Management protocols that provide ongoing support for members with complex conditions. Providers should develop personalized care plans tailored to individual patient needs, preferences, and health literacy levels, ensuring members receive the right care at the right time through coordinated, evidence-based interventions.
Medication adherence strategies are critical, including systematic medication reconciliation processes, adherence counseling, regular medication therapy management reviews, and implementation of tools and systems that help patients manage their medications effectively to reduce complications and hospitalizations.
Proactive monitoring protocols should be established for high-risk patients, with regular assessments and timely interventions to prevent disease progression and acute episodes.
Providers must systematically encourage annual wellness visits and promote preventative screenings, vaccinations, and other recommended services to identify potential health issues early and maintain optimal health status. This requires implementing robust care gap identification and closure processes that systematically address missed or delayed screenings, treatments, and preventive services to ensure members receive necessary care according to evidence-based guidelines.
Data analytics should be utilized to identify high-risk individuals and proactively reach out to members who may be at higher risk for certain conditions or complications, enabling targeted interventions that improve outcomes and prevent costly complications.
Providers should implement comprehensive data collection and integration systems that create a unified view of member health across all care settings and touchpoints. This includes utilizing advanced data analytics to identify trends, predict risks, and personalize interventions that improve patient outcomes while supporting STAR measure performance. Evidence-based clinical decision support tools should be integrated into workflow processes to guide clinical decision-making and ensure adherence to best practices.
Quality assurance processes must be established to continuously monitor and improve the quality of care delivered, with regular performance reviews and improvement initiatives targeting specific STAR measures relevant to the patient population.
Key provider strategies include establishing standardized workflows for STAR-specific measures, utilizing patient registries for systematic tracking and outreach, and maintaining robust documentation practices that capture all relevant clinical activities and outcomes.
Providers should participate in collaborative care models that enhance coordination across the care continuum, implement shared decision-making processes with patients to improve engagement and adherence, and engage in continuous quality improvement activities that target specific STAR measures. Comprehensive care coordination for high-risk patients should include regular team-based reviews, structured communication protocols, and seamless transitions between care settings to ensure continuity and prevent gaps in care delivery.
STAR measure success requires coordinated effort across multiple departments and functions, necessitating formal governance structures and communication protocols that align all stakeholders around common quality and performance goals.²³
STAR measure success requires coordinated effort across multiple departments and functions, necessitating formal governance structures and communication protocols.
Regular interdisciplinary meetings, shared performance metrics, and integrated improvement initiatives ensure alignment across all functional areas impacting STAR performance.²³
A regional Medicare Advantage plan serving 150,000 members achieved 5-star status through systematic quality improvement initiatives and strategic focus on patient experience.²³
31 are MA-PD contracts earned 5-star Ratings in 2024, representing exceptional performance across multiple quality domains.¹
Success required multi-year sustained investment, organizational culture change, and alignment of financial incentives across all stakeholders.23,24
A health system-sponsored Medicare Advantage plan integrated STAR measure improvement with bundled payment program participation to create synergistic quality outcomes.23,24
Surgeons in CJR hospitals were significantly more likely to report hospital programs focused on improving post-discharge care (83% versus 47%), indicating successful care coordination improvement.⁴
The approach demonstrated how value-based care initiatives can create positive reinforcement loops across different payment models and population types.23,24
The average bonus payment per enrollee is highest for employer- and union-sponsored Medicare Advantage plans ($456) and lowest for special needs plans ($330), raising questions about the implications of the quality bonus program for equity.10
A Dual Eligible Special Needs Plan (D-SNP) implemented targeted interventions to address health equity disparities and improve STAR performance for vulnerable populations.7,10
The case study demonstrates the need for risk adjustment and targeted support for plans serving high-risk populations while maintaining quality improvement incentives.7,10
Healthcare organizations successful in STAR improvement implement systematic quality improvement methodologies that enable rapid testing and scaling of effective interventions.23,24
Plan: Identify specific STAR measure performance gaps and design targeted interventions.²³
Do: Implement small-scale pilots with defined populations and timeframes.²³
Study: Analyze performance data and assess intervention effectiveness.²³
Act: Scale successful interventions or modify based on learning.²³
Lean Six Sigma methodologies provide structured approaches to eliminating waste and reducing variation in processes critical to STAR measure performance.²³
Effective STAR performance requires sophisticated population health management capabilities that identify, stratify, and intervene with members across the risk spectrum.
By analyzing multiple data sources, predictive models can be used to target specific member populations, increase engagement, and improve overall health outcomes.¹⁵
Advanced analytics capabilities enable proactive identification of members at risk for poor outcomes and targeted intervention deployment to prevent adverse events.
Successful predictive analytics programs require data governance, model validation, workflow integration, and continuous performance monitoring to ensure clinical relevance and operational effectiveness.
Medicare Advantage organizations must navigate complex regulatory requirements for STAR measure data collection, reporting, and validation to maintain program compliance and avoid penalties.
Organizations must maintain detailed documentation supporting all STAR measure submissions, implement approved survey vendor contracts, and respond to CMS information requests within specified timeframes.
The STAR program continues evolving to address emerging healthcare priorities, technological advances, and policy objectives, requiring organizations to anticipate and prepare for future requirements.
CMS is introducing five new measures across several domains, reflecting its desire to address critical areas of patient safety, mental and physical health.⁷
CMS will reduce the weight of CAHPS and administrative measures from 4x to 2x. This change shifts the focus slightly away from patient experience and administrative efficiency, prompting payers to balance their efforts across a broader range of quality measures.
STAR measures increasingly align with other CMS quality initiatives, creating opportunities for synergistic improvement efforts and coordinated compliance strategies.
Organizations can leverage shared infrastructure, data systems, and improvement initiatives across multiple quality programs to maximize efficiency and impact.
Healthcare policy experts and industry stakeholders have identified key areas for STAR program enhancement and healthcare quality improvement more broadly.
The Medicare Advantage STAR Measures program represents the most comprehensive and financially significant quality measurement system in American healthcare, directly impacting patient care for over 33 million beneficiaries and driving over $11 billion in annual quality-based payments. Healthcare executives must recognize that STAR performance is no longer optional but essential for organizational sustainability and competitive success in the evolving healthcare landscape.
The financial benefits of STAR improvement extend far beyond quality bonus payments. High-performing plans achieve enhanced market positioning, improved member retention, expanded benefit offering capabilities, and reduced regulatory oversight costs. Bonus payments vary substantially across firms, with UnitedHealthcare receiving the largest total payments ($3.4 billion), demonstrating the scalable financial impact of quality excellence.³
The Medicare Advantage STAR system will continue evolving as healthcare moves toward greater value-based accountability, health equity focus, and outcome-based measurement. Organizations that view STAR measures as integral to their mission rather than regulatory compliance requirements will achieve sustainable competitive advantages while delivering superior care to the Medicare population.
Healthcare leaders must recognize that STAR excellence requires organizational transformation encompassing clinical practice redesign, technology deployment, workforce development, and culture change. The organizations that invest strategically in these capabilities will not only achieve superior STAR Ratings but will be best positioned for success across the broader value-based care landscape.
STAR measures represent both the present reality and future direction of healthcare quality measurement. Organizations achieving excellence in STAR performance demonstrate the clinical capabilities, operational efficiency, and patient engagement required for success in value-based care across all populations and payment models. The $11.8 billion in quality bonus payments for 2024 represents just the beginning of healthcare's transition toward comprehensive value-based accountability.³
Current Procedural Terminology Category II (CPT II) codes are supplemental tracking codes used primarily to support quality and performance measurement in healthcare, especially within value-based care (VBC) frameworks. Unlike Category I CPT codes, which focus on medical procedures and services, CPT II codes provide additional clinical data for performance evaluation and quality assessment.
CPT II codes are integral to the Healthcare Effectiveness Data and Information Set (HEDIS) measures, supporting the STAR Rating system managed by the Centers for Medicare & Medicaid Services (CMS). These codes streamline data collection, enhance clinical documentation accuracy, and improve the efficiency of quality reporting by reducing the need for chart reviews and manual data abstraction.
CPT II codes consist of five characters — four digits followed by the letter 'F.’ They categorize clinical data related to:
Using CPT II codes helps providers meet quality benchmarks that directly affect STAR Ratings, influencing reimbursement, patient care incentives, and provider rankings. Accurate coding supports compliance with CMS performance measures and facilitates proactive care management, improving patient outcomes and organizational efficiency.
