Star Ratings Explained


What star ratings are and why they matter to community pharmacies.

Star ratings matter a great deal to Medicare Advantage (MA) plans because these ratings affect their revenue, reimbursements and enrollment.[i] Since many of your customers are enrolled in MA and MA Prescription Drug Plans (MAPDPs) and because the care you provide as community pharmacies can affect star rating outcome measures, it pays to have a basic understanding of what they are, why they matter, and the impact your pharmacy can have on them.

Let’s take a step back.

What Exactly Are Star Ratings?

CMS originally developed star ratings in 2008 as a system to help consumers compare quality among competing Medicare Advantage plans. Now, CMS is also using the star ratings as a financial incentive to reward high-quality plans with bonuses and rebates.[ii]

To help consumers select a Medicare Advantage plan, the federal government has instituted the star ratings program. Each year, every Medicare Advantage plan (Part D) is rated[iii] on a scale of 1 to 5 stars based on how well the plan performed in the following areas:

  • Helping members stay healthy
  • Managing chronic conditions
  • Members’ experience with their health plan
  • Members’ complaints or problems getting services and improvement in performance
  • Health plan’s customer service

In addition, Medicare drug plans (Part C) are rated on how well they perform on:

  • Drug plan customer service
  • Members’ complaints or problems getting services, and improvement in performance
  • Members’ experience with the drug plan
  • Patient safety and accuracy of drug pricing

In total, these ratings involve more than 50 different measures.

Why Do Medicare Advantage Plans Care about Their Star Ratings? 

MA plans care a great deal about their star ratings. Here’s why:

  • A plan’s star rating affects its compensation. Top-performing plans (those that achieve at least 4 stars) can receive bonus payments, which can boost revenue and affect a plan’s bottom line.
  • Consumers are more likely to select well-rated plans. A study in the Journal of the American Medical Association[iv] found that if a plan was rated one star higher than another, first-time beneficiaries were 10% more likely to enroll in the higher-rated plan, and beneficiaries switching plans were also more likely to enroll in higher-rated plans. Net, higher ratings help plans attract new customers.
  • Top-rated plans have marketing advantages. While most plans can only market to beneficiaries during the open enrollment period in the fall, MA plans receiving a 5-star rating are allowed to market year round. And, beneficiaries are allowed to switch to a 5-star plan at any time during the year, not just during the open enrollment period.
  • Patients can’t enroll in low-performing plans. Currently, the Medicare Finder Plan blocks consumers’ ability to enroll in plans with the Low Performer Icon — those with less than 3 stars for at least three years in a row. Beginning in 2015, CME has the authority to terminate low-performing plans.[v]

So, a Medicare Advantage plan’s star rating affects its revenues, its ability to attract new members, and its marketing activities. That’s why one publication has written, “Health plans … are investing in processes to maintain or improve their star standing.”[vi]

How Does Community Pharmacy Impact Star Ratings?

Of the nine categories of measures, there are two categories where pharmacy has an impact:[vii]

  • Improving medication adherence for diabetic medications, statin therapies, and hypertension drugs.
  • Providing point-of-service interventions to address gaps in care. This includes interventions related to diabetes treatments and high-risk medications.

Importantly, prescription drug measures are triple weighted because they are considered “intermediate outcome” measures. These measures accounted for 11% of the overall star rating for MA plans in 2012, which doubled to 22% when the value of adherence measures is combined with other clinical quality measures that typically improve with greater adherence to appropriate medications (e.g., cholesterol and blood pressure control measures).[viii] Community pharmacies can play a role in improving adherence in these areas and improving a Medicare Advantage plan’s star rating.

As an Owner of a Community Pharmacy, Why Should You Care about Star Ratings?

While pharmacies don’t directly receive star ratings, you’re a critical member of the team that drives quality healthcare. To achieve high star ratings, Medicare Advantage health plans increasingly want to work with providers who understand and support their objectives — including achieving high star ratings — and who can provide services and experiences that help boost these ratings. Some retail chains see and have jumped on this opportunity to collaborate with MA plans to improve their star ratings.[ix] Community pharmacies have the same opportunity to work collaboratively with plans in their area to deliver strong ratings.

Helping ensure compliance and supporting MA plans in improving their star ratings is not a stand-alone effort. It fits with the other activities that community pharmacies are already undertaking to improve drug adherence and to become a more comprehensive provider of healthcare services. By understanding and adapting to the changing landscape, your pharmacy will continue to be a star.

Check out our other Smart Retailing Rx blog post to give you more ideas:

You are the sole owner of your pharmacy and in sole control of all aspects of its operations. The information provided here is for reference only and does not constitute legal advice. We make no representations with regard to the content’s comprehensiveness. You are solely responsible for investigating and complying with all applicable laws that govern the operation of your business.
[i] Reid, RO. Partha, D. Howell, BL. et al. “Association Between Medicare Advantage Plan Star Ratings and Enrollment.” JAMA. 2013; 309(3):267-274 (
[ii] “CMS Star Ratings leave you seeing stars? The ratings system explained.” July 26, 2012. (
[iii] Choose Higher Quality for Better Health Care, Department of Health and Human Services, July 2013
[iv] Association Between Medicare Advantage Plan Star Ratings and Enrollment, JAMA 2013
[v] Oates, V. Director, Division of Clinical and Operational Performance Medicare Drug Benefit and C & D Data Group. CMS Star Ratings System. Presentation at NACDS Regional Conference. February 5, 2013. (
[vi] Why Medicare Advantage Star Ratings Matter, HealthLeaders, January 16, 2013
[vii] “Access to Lives; Did You Know Payer Incentives Are Presenting an Opportunity for Community Pharmacy?” Tony Willoughby, Sr. Director Franchise Operations, Health Mart
[viii] Seizing the Opportunity to Improve Medication Adherence, Health Affairs Blog, August 28, 2012