Following a series of lawsuits from some of the country’s largest insurers, the Centers for Medicare and Medicaid Services (CMS) said it’s changing how it determines the quality of Medicare Advantage plans.
Speaking at economic think tank the Milken Institute’s 2024 Future of Health Summit in Washington, DC, on November 13, Meena Seshamani, CMS deputy administrator and director, said the agency is downgrading the weight of what’s known as the call center metric, which has been at the heart of multiple lawsuits.
The call center metric is one of the metrics CMS uses to determine star ratings, which rank Medicare Advantage plans from one to five stars (five being the best). The goal of the rankings is to help beneficiaries compare plans, but insurers that receive higher scores also get bonus payments from CMS, so when their scores fall, they stand to lose millions of dollars.
CMS paid insurers more than $12.8 billion in bonus payments in 2023, nearly a 30% increase from 2022, according to health policy research firm KFF.
As part of the star ratings evaluation, CMS looks at how well the insurer’s call center operates, judging performance based on factors such as average hold times, percentage of unanswered calls, and disconnect rates.
The update. CMS weighs each metric for star ratings also on a scale of one to five. Previously, the call center metric was weighted as a four-point item, but with the change, the metric will be weighted as a two-point factor starting in 2026, according to a CMS document.
“I think there is a lot of opportunity to continue to look at how we can improve star rating so that it is addressing quality and continuing to hold health plans accountable to make sure that quality is improving, that it’s not just some checking the box,” Seshamani said during the event.
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After a number of large insurers saw their star ratings fall in 2024, they claimed in lawsuits that the call center metric holds too much weight.
UnitedHealth Group, for example, filed a lawsuit on September 30 claiming its star ratings fell due to an “arbitrary and capricious” assessment of a single phone call. Centene filed another on October 22 saying that CMS dinged its star rating—allegedly also due to a single phone call—costing the insurer $73 million. And Humana sued the agency on October 18 claiming CMS lowered its ratings for at least a dozen of its plans based on three phone calls.
On November 22, a Texas federal judge ruled that CMS must recalculate UnitedHealth Group’s star ratings without taking the phone call into account, according to an opinion the judge filed in the US District Court for the Eastern District of Texas, Tyler Division.
Whit Mayo, senior managing partner of equity research at investment bank Leerink Partners, said in a November 24 analyst note that the judge’s decision is a “big win” for the sector. He anticipates the recalculation will give UnitedHealth Group a $10 million increase in earnings—though that’s a drop in the bucket for a company that brought in $371 billion last year.
Mayo added that, based on the judge’s ruling in UnitedHealth Group’s case, he’s optimistic that Humana could also win its case, which would give the company a $1.5 billion boost.
Zooming out. This isn’t the first time CMS has changed course following legal action this year. In June, the agency recalculated its 2024’s star ratings after two court rulings questioned its methodology.
CMS declined to provide further comment. Healthcare Brew also reached out to the insurers named in this story but did not receive responses by publication.