Medicare Advantage Growth and Star Ratings Up in 2022

Medicare Advantage growth continues to climb with over 27 million Americans enrolled in a Medicare Advantage plan as of October 2021. Medicare Advantage enrollment growth projections for 2022 are expected to exceed the federal government’s projections of 29.5 million people based on full-year trends from prior years.

According to new federal data analyzed by Axios, as of January 1, 2022 more than 28.5 million seniors and people with disabilities are now enrolled in the private Medicare Advantage market. The increase symbolizes an 8.8% increase in Medicare Advantage market share compared to the same time in 2021. 

With established health insurers including UnitedHealth Group’s UnitedHealthcare, Humana, CVS Health’s Aetna, Cigna and Anthem expanding into hundreds of new counties this year, signs show the growth of Medicare Advantage will continue to represent a larger share of seniors moving away from traditional Medicare to these privatized Medicare Advantage market plans. 

Growth of Medicare Advantage Star Ratings

To help members understand the quality of each plan offered, CMS assigns star ratings annually to assist people in making informed decisions. Each year every Medicare Advantage plan gets a star rating from one to five based on their performance on various quality measures including screenings and patient satisfaction surveys. 

The star ratings for the 2022 year were calculated based on Medicare Advantage market data collected from the 2021. Adjustments for the 2022 star ratings were made due to impacts of the COVID pandemic. Ratings are also reflected in improvement in sponsors’ score on a variety of measures. Medicare Advantage growth in plans with higher star ratings is likely to drive more spending on patients and drive even more Medicare Advantage market share moving forward.

Approximately 90% of people are currently in an Medicare Advantage plan that will have four or more stars in 2022. Nearly 70% of Medicare Advantage plans that offer prescription drug coverage will have a star rating of four or more stars in 2022, a massive increase from 49% of plans just a year ago in 2021.

Medicare Advantage plans get bonuses for reaching quality ratings of four or more stars. An analysis from the Kaiser Family Foundation discovered that the annual bonuses to Medicare Advantage quadrupled from 2015 to 2021, with plans getting $11.6 billion in bonuses this year compared to $3 billion in 2015. Medicare Advantage growth in bonus payments is the result of more plans receiving bonuses, also an increase in the overall numbers of beneficiaries enrolled in the plans. 

Why Is Medicare Advantage Growing?

Spending on Medicare Advantage plans has outpaced traditional Medicare. A separate Kaiser analysis found that Medicare Advantage payments increased federal spending by $7 billion in 2019, driven primarily by higher rebates and benchmarks used to determine payments to a Medicare Advantage plan. If a plan’s star ratings are to increase, the benchmarks for that plan also increase.

Ten thousand Americans a day turn 65 years old and become eligible for Medicare and Medicare Advantage. As the Biden administration, health insurers and investors bolster this privatized form of health coverage, expect Medicare Advantage market share to grow as more seniors look to Medicare Advantage in 2022 and beyond.

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Blog by: The ForeSee Medical Team