The Centers for Medicare & Medicaid Services (CMS) Star Rating system provides consumers with an unbiased way to compare Medicare Advantage (MA) plans. It helps consumers make informed decisions about their health care by providing information about quality alongside information about benefits and costs. Higher Star Ratings can lead to increased enrollment and higher annual bonus payments from CMS, making them a key focus for MA organizations.
The CMS calculates Star Ratings based on several factors, including cut points. Here’s more on cut points and how they determine the level of performance required to achieve a particular rating.
What are cut points?
Cut points are the upper and lower-level thresholds that the CMS uses to evaluate a plan's performance on specific quality measures. They define the ranges within which a contract's score on a specific measure must fall to achieve a 2, 3, 4, or 5-star rating for that measure. Each measure has its own cut points, which are based on the market's overall performance. If the CMS identifies a contract with measure scores that are based on inaccurate or biased data, they will receive 1 star.
How are cut points calculated?
Cut points are recalculated every year. They are calculated using a clustering algorithm that groups contracts with similar measure-level performance. For this reason, if all contracts were to decline in quality performance, cut points would also likely decline.
The CMS applied the Tukey outlier deletion methodology for the first time within the 2024 Star Ratings cut points. The Tukey removes contracts’ data points that are deemed as “outlier performers” before applying the clustering logic to the measure-level cut points. Since there are often more low-performing outliers than high-performing outliers, this change increased many cut points for 2024, but the changes were bound by the updated application of guardrails.
How did cut points change for the 2025 Star Ratings?
The full impact of this methodology was evident in the initial 2024 Star Ratings, but the updated 2024 Star Ratings restricted the use of guardrails and spread the impact of Tukey over a few years. As this change limited the movement in 2024, we are now seeing a significant change in 2025 Star Ratings cut points again due to the ongoing migration towards Tukey cut points.
How will cut points change for 2026 Star Ratings?
The CMS has introduced several changes to the cut point methodology. The first change occurred for the 2022 Star Ratings year. It implemented mean resampling to reduce the sensitivity of the clustering algorithm used to create the cut points to outliers to help stabilize cut points. The CMS introduced the Tukey outlier methodology in 2024 to remove exceptionally high and low scores compared to the rest of the industry to eliminate outliers and provide a fairer representation of a plan's performance.
For 2026, the CMS has recognized the need for a more dynamic and responsive methodology that accurately reflects large industry performance shifts, such as the drop in preventive screenings during the COVID-19 pandemic. The latest proposal suggests the removal of guardrails for non-CAHPS® measures to allow for more significant shifts in cut points exceeding 5%, which can significantly impact a plan’s overall score.
How can health plans navigate Star Rating changes?
As the CMS continues to refine and evolve its Star Ratings methodology and focus areas, it is vital to take a proactive approach and implement strategies to improve your ratings and the member experience. One fundamental way to navigate Star Rating changes is to evaluate against predicted cut points.
As Star Rating programs evolve, so do the cut point methodologies used to determine Star Ratings. Assessing how changes in cut point methodologies may impact your plan's ratings is crucial. Leveraging historical data and industry trends to predict potential cut point changes and evaluate your performance against these predicted points can enable you to identify areas of weakness and proactively develop strategies to improve performance.
Focus on measures that significantly impact Star Ratings and contribute the most to overall ratings, and align your improvement efforts accordingly to maximize your chances of achieving higher Star Ratings.
Navigate Star Rating changes with LetsGetChecked
Although the Tukey methodology will eventually reduce year-over-year cut point volatility, we will continue to see significant changes in cut points for the next few years. The increase in 2025 Star Ratings cut points will lead to a decline in contract-level 2025 Overall Star Ratings and a reduction in 2026 MA Quality-Based Payments, or QBPs. Cut points will likely continue to increase over the next few years, making it even more important for MA plans to increase their focus and investment in Star Ratings.
LetsGetChecked’s comprehensive member-centric healthcare solutions can help your organization successfully navigate changes in Star Rating programs. Our configurable and vertically integrated infrastructure provides quality solutions at scale that seamlessly cater to your members' needs, so you can achieve higher Star Ratings and deliver exceptional care to your members.
