Impact of Medicare Advantage Prescription Drug Plan Star Ratings on Enrollment: Before and After Implementation of Quality-Related Bonus Payments in 2012

Objective: Since 2007, the Centers for Medicare and Medicaid Services has published five-star quality rating measures to aid consumers in choosing Medicare Advantage and stand-alone Prescription Drug Plans. We examined the impact of these star ratings on Medicare Advantage Prescription Drug (MAPD) enrollment before and after 2012, when provisions of the Affordable Care Act and a CMS demonstration program began to tie star ratings to bonus payments for Medicare Advantage plans.

Methods: A quasi-experimental design and multivariable hybrid models were used to assess the impact of star ratings on MAPD contract enrollment and to examine how effects differed before (pre-period) and after (post-period) 2012. Stand-alone prescription drug plan (PDP) contracts, which were not eligible for bonus payments, served as a comparison group. The main analysis was based on contract-year level data from 2009-2015. Extensive sensitivity analyses were performed varying the unit of analysis (i.e., plan-year level data), sample inclusion criteria (i.e., including Medicare Cost contracts), and analytic techniques (i.e., fixed effects models).

Result: The main analysis included 3,866 MAPD contract-years. In the post-period, an increase of one star was associated with a corresponding increase of 3,559 enrollees in the current year (p=0.054) and an increase of 11,337 enrollees in the subsequent year (p<0.001). In contrast, effects were much smaller in the pre-period and were not statistically significant. Further, the difference in subsequent year effects was statistically significant between the post- and pre- periods. Stand-alone PDP contracts, which did not receive bonus payments during the post-period, did not show the same effects. Extensive sensitivity analyses indicated that the findings were robust.

Conclusion: Prior to the introduction of bonus payments for highly rated Medicare Advantage plans, star ratings had limited direct impact on enrollment. However, bonus payments tied to star ratings, which must be reinvested in plans to provide additional member benefits, do appear to be leading to increased enrollment in better quality (more highly rated) MAPD plans.