People favor Medicare plans with higher star ratings when enrolling or switching, study shows

Highly Rated Medicare Advantage Plans Draw More Consumers

People favor Medicare plans with higher star ratings when enrolling or switching, study shows

People favor Medicare plans with higher star ratings when enrolling or switching, study shows
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Medicare recipients who pick a Medicare Advantage plan are significantly more likely to choose a plan with a higher star rating than one with fewer stars, according to new research. That's true both for people choosing a Medicare plan for the first time and those switching from one plan to another.

The finding underscores the impact that ratings can have on consumers' choices in healthcare. It also suggests that insurers will want to offer plans that meet the government's criteria for quality, as more and more Medicare beneficiaries take notice of the star ratings.

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The study adds to evidence that ratings make a difference to consumers, says study coauthor William H. Shrank of the Centers for Medicare and Medicaid Services (CMS). Insurers could use this fact to justify improving the quality and performance of plans, he says. His group's study was released Tuesday by the Journal of the American Medical Association.

"This helps build the business case to care about quality," Shrank said. "For patients, the key story is they should take advantage of all this information to make the best decisions for themselves. For policymakers, it's reassuring that the public reporting of quality helps steer patients toward higher quality plans."

CMS, a government agency, began in 2007 to rate the quality of Medicare Advantage plans on a scale from one to five stars. The ratings are based on such factors as a plan's customer service, member experience, and management of patients' long-term conditions.

Medicare Advantage plans, which are run by private insurance companies and are government-regulated, are alternatives to traditional Medicare. Under a private plan, a senior may pay different amounts than she would under traditional Medicare for certain medications and healthcare services. In some cases, she'll also have to pay more in monthly premiums. Almost 14 million seniors are currently insured by a Medicare Advantage plan, about 27 percent of all Medicare beneficiaries, according to the Kaiser Family Foundation. About 2,000 plans exist, though typically fewer than two dozen are available in any given location.

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The federal government, as well as brokers like, have online tools that show the ratings of Medicare Advantage plans. As a result, many seniors may encounter the ratings in the process of researching and enrolling in a plan, increasing the likelihood that the ratings will factor in enrollment decisions. (Disclosure: U.S. News & World Report has a revenue-generating relationship with eHealthInsurance, which owns

The JAMA study analyzed 2011 enrollment information on more than 950,000 first-time enrollees and about 323,000 people who switched plans during that year. For every additional star a plan received, first-time enrollees were 10 percentage points more likely to choose that plan. For people who switched plans, each additional star increased by six percentage points the likelihood that they would choose it.

Understanding how consumers use the star ratings in finding a plan is critical, says Jack Hoadley, a researcher at the Health Policy Institute at Georgetown University who wrote an editorial about the study in the same issue of JAMA.

"If consumers are looking at price and quality, then [insurers] are sent a signal: you need to try to lower costs in a way that maintains the quality of what you are offering," Hoadley says. People do look at multiple factors when they choose a plan, he says. Relative cost, monthly premium, and benefits for specific procedures and medical services are important drivers of consumer choice, he contends. Ratings are likely a second-level tier consideration.

Studies show, he says, "people want information that is easily digestible. That's the advantage of the star ratings."

Shrank's team noted that the majority of plans earned middle-range ratings of either three or three-and-a-half stars. So while Medicare Advantage enrollees in the study typically could choose from about 17 plans available to them, only two plans on average had four or more stars.

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