The federal government has released draft scoring thresholds for next year’s Medicare Advantage quality ratings, and about half of them got harder to reach. That single change ripples well beyond an insurer’s spreadsheet: star ratings determine the bonus payments plans receive, and lower bonuses are part of what has been pushing insurers toward the benefit cuts and county exits that Medicare Advantage members have been feeling all year.
What CMS Actually Released
The Centers for Medicare and Medicaid Services sent plans draft cutpoints for the 2027 star ratings earlier this month as part of what the agency calls its second plan preview, ahead of official results due in early October. Cutpoints are the thresholds CMS uses to convert a plan’s raw performance and quality scores into a rating of one to five stars. According to an analysis by the Newton Smith Group, a Medicare Advantage consultancy reviewed by Healthcare Dive, about 50 percent of the 2027 cutpoints got harder to reach, 33 percent stayed the same, and 17 percent actually eased. The thresholds are not final, since plans can still flag potential errors before CMS publishes official scores, but the agency’s cutpoints rarely change materially between the preview and the final release.
Why Tougher Thresholds Aren’t a Deliberate Punishment
The tightening isn’t the result of CMS deciding to make the program harder on purpose. Cutpoints are set relative to how the industry as a whole is performing, so when plans collectively improve on a measure, the bar for a top score rises automatically the following year. Most of the movement is concentrated in the Healthcare Effectiveness Data and Information Set, known as HEDIS, a set of 90 metrics across six domains that measure how accessible and effective a plan’s care actually is. Newton Smith Group founder Melissa Newton Smith said many HEDIS thresholds are climbing because plans have gotten better at collecting the underlying data, which makes it easier to track members’ health and demonstrate improved outcomes. Two examples from the technical notes Healthcare Dive reviewed: the threshold for Kidney Health Evaluation for Patients With Diabetes rose by 7 to 10 points depending on the star level, and the Colorectal Cancer Screening threshold tightened by 4 to 11 points.
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Why a Half-Star Swing Is Worth Hundreds of Millions
Insurers compete aggressively for higher stars because the ratings translate directly into money. Reaching the four-star cutoff unlocks larger bonus payments, and a plan that submits a bid below CMS’s benchmark can also receive a bigger rebate tied to its rating. Even a single half-star change can be worth hundreds of millions of dollars to a large plan. Newton Smith called the stakes blunt: “The average payer leader should be very worried. Very worried,” she told Healthcare Dive, adding that “there are very few tailwinds sitting in stars right now.” CMS paid out at least $12.7 billion in Medicare Advantage quality bonuses last year, according to estimates from the health policy research organization KFF, and more than 35 million people, over half of all eligible Medicare beneficiaries, are currently enrolled in the program.
UnitedHealthcare, the largest Medicare Advantage insurer in the country, looks the most exposed under the new cutpoints. Applying last year’s performance to the 2027 thresholds, Leerink Partners analyst Whit Mayo found that UnitedHealthcare would see its raw scores fall across nine of its ten largest contracts if it hasn’t improved, with its single largest contract slipping from 4.5 stars to 4. Humana, the second-largest Medicare Advantage insurer, would fare roughly flat under the same analysis, though the company has said it expects its ratings to be “meaningfully higher” for 2027 after its share of members in plans rated four stars or better fell from 94 percent in 2024 to 20 percent in 2026, a decline that has cost the insurer an estimated $1 billion or more.
A Ratings Program Still Tangled in Litigation
The tighter cutpoints land amid unresolved legal fights over how CMS calculates stars in the first place. A federal judge ruled in May that the methodology the agency used included illegal metrics after Clover Health sued over its own scores, and CMS is appealing that decision while it reruns industry-wide scores in the meantime. For 2027, the agency used the same disputed methodology again, according to Newton Smith Group’s analysis, which Newton Smith said could fuel another round of litigation from insurers unhappy with their results: “We very well might see a wave of lawsuits,” she told Healthcare Dive. “To say this is a volatile year would be an understatement.”
The volatility follows several rocky years for the ratings program. Average stars fell industry-wide after pandemic-era disaster relief provisions expired, and scores were further reshaped as regulators excluded outlier plans from the calculations and industrywide quality improvements pushed cutpoints higher. Average Medicare Advantage star ratings were essentially flat for 2026 after those consecutive declines, leaving this year’s draft cutpoints as the first real signal of where the program is headed for 2027. Consumer-experience scores add a separate wrinkle: Newton Smith said it was surprising that CAHPS cutpoints, which measure patient satisfaction, barely moved, given surveys showing declining member sentiment toward Medicare Advantage, more physicians terminating their contracts with plans, and the disruption caused by insurers exiting counties and cutting benefits to protect margins. “The mechanics of the CAHPS survey process may by design be masking those very real frustrations that we know are undeniable,” she said.
Part of a Larger Debate Over What Medicare Advantage Costs
The star ratings program sits inside a broader argument about whether Medicare Advantage’s financing rewards the right things. A congressional advisory group has estimated the federal government will pay about $76 billion more this year to cover Medicare Advantage enrollees than it would if those same people were in traditional Medicare, and watchdogs have raised concerns that the star program itself does not reliably improve plan quality even as it adds billions in bonus payments. The insurance industry, for its part, maintains that Medicare Advantage remains cheaper for seniors than traditional Medicare, offers a wider range of benefits and produces better health outcomes, and it points to sustained enrollment as evidence: more than 35 million people remain in the program despite the cuts, exits and ratings turmoil playing out around them.
Inside the decision kit
A cost calculator spreadsheet comparing plans on cost, drugs and doctors, a prescription-by-plan comparison, a provider call script and the Open Enrollment calendar.
The 2027 Medicare Open Enrollment Decision Kit includes a 42-page decision kit, a cost calculator spreadsheet that compares plans on cost, drugs and doctors and a prescription-by-plan comparison.
Open The 2027 Medicare Open Enrollment Decision Kit.
This article was assisted by AI tools and reviewed for accuracy before publication.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
