Elevance Gains $190M On Revised MA Star Ratings

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Dive Brief:

• Elevance Health expects a $190 million boost to its revenue next year after federal regulators improved its Medicare Advantage quality scores.
• It’s a positive development for the insurer, which sued the government earlier this year after its scores, called star ratings, fell dramatically.
• Four of Elevance’s MA plans will have a higher star rating this year after the CMS updated the original ratings from October, Elevance disclosed in a Monday filing with the Securities and Exchange Commission. Elevance now estimates roughly 49% of its MA members will be enrolled in plans with at least four stars.

Dive Insight:

Coming out of the COVID-19 pandemic, regulators took a tougher stance on meting out MA star ratings. But the CMS has now made a targeted adjustment for Elevance, which has been particularly stringent in expressing its displeasure with the scores.

When asked to clarify, a CMS spokesperson said MA plans “may request an administrative review of their ratings” and after the review is completed, “Star Ratings are updated as needed.”

The CMS spokesperson did not specify why Elevance’s ratings were improved. Elevance did not respond to a request for comment.

Yet the amount Elevance expects to recoup from the adjustment — $190 million — is the same amount the insurer expected to lose in bonuses due to a dropped phone call to its call center, according to its January lawsuit suing regulators over the star ratings adjustments.

One element CMS factors into star ratings is the quality of insurers’ call centers that field inquiries from customers. Regulators use secret shoppers to test those centers. The CMS decided Elevance didn’t reach the cut point for five stars on this measure (a 99% success rate) after its call center missed a single call — a fact Elevance said was due to a call dropping through “no fault” of its own, according to the suit.

“There is no evidence that the single call CMS attributed as a missed call to Elevance ever connected with Elevance’s call center,” the lawsuit says.

Elevance also took issue with the how the CMS allegedly calculated the call success rate. It would have been impossible for Elevance to meet the 99% success rate for calls because the CMS used a methodology that mathematically didn’t allow the cut point to be reached unless not a single call was missed, the lawsuit argues.

Star ratings, which run from one to five stars, have a huge impact on the operational and financial health of a MA plan. They determine whether a plan receives a bonus and a plan’s ability to bid against a higher benchmark rate for the following year.

Star ratings ballooned during the coronavirus pandemic due to disaster relief provisions. But in 2022, the CMS took steps to pare back what regulators viewed as overinflated scores. As a result, fewer plans reached the four-star threshold for bonuses in 2024: 42%, compared to 51% of contracts in 2023.

Elevance had one of the largest year-over-year decreases in star ratings of any MA payer: Just 34% of its plans had four or more stars in 2024, down from over 64% in 2023.

As a result, Elevance expected its quality bonus payments to fall by $500 million in 2025.