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2025 Star rating cut point changes: key updates and their impact
This week’s In Focus highlights a white paper that Wakely, a Health Management Associates, Inc. (HMA), company published in September 2024, titled “A Cut Above the Rest: Summary of 2025 Star Rating Cut Point Changes.” The paper provides an in-depth analysis of the latest cut point changes from the Centers for Medicare & Medicaid Services (CMS) to demonstrate how policies like the Tukey Outer Fence Outlier removal logic (Tukey), guardrails, and changes in overall quality performance have led to the highest Medicare Advantage (MA) Star Rating cut points in the program’s history.
Why Cut Points Matter
MA Star Ratings are a critical measure of the quality and performance of MA plans. The MA Star Ratings cut points are the thresholds CMS has set to evaluate the performance of MA plans. These ratings, ranging from 1 to 5 stars, are based on various quality measures, including clinical outcomes, patient experience, and plan administration. CMS applies methodologies such as Tukey to set the cut points and guardrails to stabilize them over time. MA plans are evaluated and earn a rating that is based on their performance against the cut points. Higher Star Ratings can lead to increased enrollment and higher payments from CMS, making them a key focus for MA organizations.
Key Findings
Wakely used the 2025 Star Rating Technical Notes to analyze measure-level cut point changes. The data summarize how Medicare Advantage organizations (MAOs) performed on various quality measures during the 2023 measurement year. Notably, the Tukey methodology was applied for the first time within the 2024 Star Ratings cut points. Initially, the full impact of this methodology was evident in the initial 2024 Star Ratings, but the updated 2024 Star Ratings restricted use of guardrails and spread the impact of Tukey over a few years.
The analysis reinforces expectations for changes in MA spending in 2026, in part because of changes in Medicare Advantage Prescription Drug Overall Star Ratings.
Key Considerations
The Star Ratings have been on a steady decline over the last two years while CMS continues to refine and evolve its Star Ratings methodology and areas of focus. Key issues to consider in this climate include:
- MAOs are experiencing significant reductions in quality bonus and rebate payments, which potentially affects opportunities to improve member health outcomes.
- Strategies to enhance Star Ratings and elevate program quality are crucial for performance and meeting the unique needs of MA enrollees.
- MA plans and other stakeholders also should consider that as plans optimize performance on certain traditional quality measures, CMS is placing increased emphasis on member experience with their health plan and providers during care.
- The Star Ratings is an important tool CMS uses to redirect plan focus and resources.
CMS is scheduled to release the final scores and Star Ratings for Star Year 2025 in early October 2024. These ratings will be based on the performance data from the 2023 dates of service. This release will provide MAOs with updated quality and performance metrics, which are used to determine CMS Star Ratings and subsequent quality-based payments.
Connect with Us
For further insights into the Star Ratings and more information on the report, contact our featured experts below.
Strategies and actions MAOs implement in 2024 and 2025 will affect their 2026 Star Ratings. For further insights into programmatic strategies, best practices for design of meaningful solutions to implement, and approaches to measure the effectiveness of these solutions, explore The HMA Stars Accelerator Solution.
October 2, 2024
Shaping the Future: Join Us in Exploring Trends and Insights at the 2024 HMA Conference
Illinois D-SNP RFP: Highlights and signals of forthcoming trends
This week, our In Focus section from the HMA Weekly Roundup highlights the Illinois Department of Healthcare and Family Services request for proposals (RFP) for a dual-eligible special needs plan (D-SNP) to replace its current Medicare-Medicaid Alignment Initiative (MMAI) demonstration.
Overview
Illinois is one of the states affected by the Centers for Medicare & Medicaid Services (CMS) decision to end the capitated model in the federal Financial Alignment Initiative (FAI) demonstration. Illinois is among the last states to issue an RFP that will support the transition from the demonstration program. Two states, Texas and South Carolina, have yet to issue RFPs. On September 10, 2024, CMS issued a memo discussing end-of-demonstration enrollment and operational considerations and deadlines by which states should make operational decisions.
The Health Management Associates, Inc., (HMA) In Focus article June 26, 2024, discussed related changes that CMS finalized to the federal policy framework for D-SNPs to enhance care coordination, improve health outcomes, and ensure that dual-eligible beneficiaries receive accurate information about their healthcare while integrating successful features of the FAI demonstration and the Medicare-Medicaid Plan (MMP) program. These decisions are prompting more states to develop new models for integrating Medicare and Medicaid services.
Illinois D-SNP RFP Highlights
This Illinois procurement will transition the state to a fully integrated dual-eligible special needs plan (FIDE-SNP) model, which will include a requirement that plans provide managed long-term services and supports (MLTSS) for both people who are dually eligible and Medicaid-only beneficiaries beginning in 2027.
The RFP is largely focused on quality care provisions and improved care coordination across all services lines, including overall expectations to achieve the following:
- Improved access and quality of community-based behavioral health services
- Better quality of care in facilities
- Fewer program opt-outs
- A strategy for increasing the use of alternative payment models (APMs) in Medicaid managed care in Illinois, particularly for behavioral health providers
Emerging National Trends
Overall, the Illinois D-SNP procurement reflects broader national trends toward more coordinated, equitable, and outcome-focused healthcare.
Focus on Health Equity. The procurement emphasizes health equity and reducing disparities, including information on innovations that are responsive to health-related social needs (HRSNs) and social determinants of health (SDOH). The state is weighing payers’ experience partnering with non-traditional providers to meet Medicaid customers’ needs, their innovative programs to address customers who are difficult to locate, and their strategies for improving care for adults with complex needs in facility or community-based settings.
In addition, the state will require plans to report outcomes by race, ethnicity, and geography. Given the demographic and health equity reporting requirements, payers should be prepared to speak to their data collection, member engagement strategies, and relationships with community-based organizations. This capability will be an essential component of addressing both population health and health equity activities.
Alternative Payment Models. The RFP also requests detailed information on the payer’s strategy for increasing the use of APMs in Illinois Medicaid managed care, including the models the payer intends to implement. Experience supported by data-driven outcomes and explanations of work with providers or clinics to adopt, manage, and support reporting and analytics for APMs is a key area of interest for the state. Notably, the state seeks information on plans to include behavioral health providers in APMs.
Long-Term Services Related Transitions. The RFP questions also reflect the long-term services and supports that dually eligible beneficiaries need, as well as those of Medicaid-only beneficiaries who are eligible for these services. More specifically, the RFP raises questions to determine how payers will effectively implement nursing home diversion plans, incentivize hospitals to discharge patients to community settings, and approaches to transition members from institutional settings to the home and community, including by connecting members with supports for HRSNs. Payers will be expected to provide specific examples of their experience and outcomes in other states.
Emerging National Trends
The emphasis on health equity in the Illinois RFP reflects a broader national trend. States are increasingly interested in—and in some situations required—addressing SDOH and reduce disparities, especially for the Medicare and Medicaid dual-eligible population. As a result, payers and other healthcare organizations must develop capacity internally and through external collaborations to build their expertise and evidence base for advancing improvements.
The push for APMs in the Illinois procurement aligns with national efforts to move away from fee-for-service models. Illinois’s inclusion of behavioral health providers in APMs and requiring integrated care models highlights the growing recognition of the importance of mental health in overall health outcomes.
Illinois’s RFP also reflects heightened interest in improving care transitions and coordination. The potential for incentive programs related to community placement and increased focus on nursing home diversion will require innovative plans and a long-term commitment to working with all stakeholders to build on the federal FAI experiences.
What We’re Watching
Responses to the Illinois RFP are due October 18, 2024, and awards are expected to be announced in December. The state anticipates making awards to the top four bidders. Contract execution is estimated July 2025, with implementation January 1, 2026.
As the FAI demonstration ends and CMS’s integration requirements take effect over the next several years, there will be a steep learning curve for states, payers, and other key stakeholders adapting to this evolving environment. Compliance with new CMS rules will be crucial, and experiences in Illinois and other FAI demonstration states can provide valuable insights for other states and stakeholders.
Additional growth and program refinements in the federal Medicare Advantage (MA) landscape are expected in the coming years, especially among MA D-SNPs. Those MA D-SNPs that have yet to participate in Medicaid will need to continue make significant business decisions on participation and actively compete to secure state Medicaid contracts, which will have downstream implications for their state and local partners.
Connect with Us
Health Management Associates (HMA) experts continue to review the evolving landscape and federal changes that will affect D-SNPs in 2025 and beyond. Contact our featured experts below for details about the nationwide D-SNP rules and landscape.
Countdown to HMA’s fall 2024 conference: Spotlight on Medicare-Medicaid integration
The upcoming HMA event, Unlocking Solutions in Medicaid, Medicare, and Marketplace, offers extensive opportunities to engage with leaders from various sectors who are designing and implementing Medicare-Medicaid integration initiatives. Join us for main stage panel discussions with distinguished health plan executives from national and local plans and Medicaid directors from Iowa, New Mexico, New York, and Rhode Island.
HMA Principal Holly Michaels Fisher will lead a deeper dive into integration issues during the breakout session, Innovations to Improve Outcomes for Medicare-Medicaid Dually Eligible Individuals, with speakers Michael Carson, President and CEO of WellCare; Dr. Steven R. Counsell, Medical Director for the Division of Aging at Indiana Family and Social Services Administration; Dr. Linda Kurian, Executive Medical Director for the Center of Excellence of Medicare Duals/D-SNP at Aetna; and Juliet Marsala, Deputy Secretary for the Office of Long-term Living in the Pennsylvania Department of Human Services.
During the breakout, Meeting New Expectations for Health Equity and Improved Beneficiary Outcomes in Medicare Advantage, HMA Principal Greg Gierer will facilitate a conversation on the evolving landscape of MA rates and supplemental benefits, with experts Melinda Buntin, Health Economist and Bloomberg Distinguished Professor at the Johns Hopkins Bloomberg School of Public Health and the Johns Hopkins Carey Business School; Mark Fendrick, Director of the University of Michigan’s Center for Value-Based Insurance Design, and Matt Kazan, Vice President of Policy and Government Affairs at the SCAN Group.
Online registration ends October 1st.
September 25, 2024
Countdown to HMA’s Fall 2024 Conference: Spotlight on Medicare-Medicaid Integration
Is Enhancing Quality of Care the Future of Medicaid Innovation?
Caprice Knapp, a seasoned health economist with over 20 years of experience in Medicaid and healthcare policy, shares her journey through various roles in government, academia, and private insurance. In this episode, Caprice offers a unique perspective on the challenges of measuring quality in healthcare, the importance of data-driven decision-making, and how global healthcare models can inspire innovation in Medicaid. From pediatric palliative care to cost-effective policy solutions, Caprice sheds light on how improving quality of care can transform healthcare outcomes for vulnerable populations.
HMA works with states to add Respite Care programs
Expanding access to medical respite care for individuals who are unhoused or have no stable housing and are too ill to be discharged to the streets but not sick enough to stay in the hospital and require some supports to recover from their illness or injury.
Medical respite, or recuperative care, according to the National Institute of Medical Respite Care (NIMRC) is “an intervention that provides post-acute medical care for individuals experiencing homelessness who are not sick enough to warrant hospitalization, but who are too frail or ill to recover safely in a shelter or on the streets.”
Respite care benefits both providers and patients and saves money. According to a study by NIMRC, respite care results in a 24% reduction in Medicaid cost per enrollee, 30% decrease in hospital admissions, 38% reduction in emergency department visits, and a 92% attendance rate at follow up appointments within 30 days of hospital discharge.
Medical respite is not a housing service. Housing support services like housing stability, shelter, and supportive housing are critical components of the housing support system. Medical respite is the bridge and a safe transition from the medical care system back to the community and other needed services and supports. By providing a safe bed, clean restrooms, nursing assistance, and healthy meals, medical respite services can improve health outcomes and begin a process of addressing other critical health-related social needs, such as stable housing.
HMA offers a full suite of professional health and human services consulting services to organizations across the country. In Minnesota, HMA helped write the legislation that helped Minnesota Medicaid give coverage for respite care and has expertise in creating this model that can be used in other states. Many states lack this benefit and even in Minnesota, where it is now covered, there is a shortage of providers.
Project Spotlight: Minnesota Recuperative Care Benefit
THE TASK:
Legislation was passed requiring Minnesota’s Department of Human Services (DHS) to create a recuperative care benefit through Medicaid. Stakeholder engagement to discuss Medicaid options and to define the benefit. Recuperative Care was not well developed in MN and there were few beds operating in the state.
HOW WE HELPED:
HMA engaged interested individuals as guided by DHS. This included interviewing individuals with lived experience. Our Medicaid and recuperative care SMEs walked everyone through understanding the service and defining the service. In addition, we educated interested parties about the pathways in Medicaid including a state plan amendment and the various waiver options. The group came to consensus with DHS on a state plan amendment. HMA wrote the legislative language and report to support this direction.
THE OUTCOME:
The legislative language was approved. The state plan amendment was submitted and approved by CMS. Recuperative care is now a Medicaid benefit in Minnesota.
HMA can help states, providers, and communities create this benefit, implement effective respite services, and adapt the set of national standards for Medical Respite given your state and community needs including:
Safe and quality accommodations
Environmental services
Care transitions into medical respite from other settings
Access to high quality post-acute clinical care
Care coordination and wrap-around services
Safe care transitions out of medical respite to the community
Quality improvement
HMA can also provide technical assistance, help with alternate payment models, workforce and strategic planning to support respite care.
Contact our experts:
Tia Cintron
Managing Director, Population Health
Paul Fleissner
Senior Principal
Margaret Kirkegaard
Principal
New HMA analysis explores options to improve California’s substance use disorder treatment system
In recognition of National Recovery Month this September, our In Focus section spotlights a new report from Health Management Associates, Inc. (HMA), Substance Use Disorder in California: A Focused Landscape Analysis. Published in August 2024 with support from the California Health Care Foundation, this analysis provides valuable insights into California’s substance use disorder (SUD) treatment system and offers actionable recommendations for improvement that can be applicable for other states.
The SUD Landscape in California
SUDs continue to be a significant issue both nationally and in California. In 2022, approximately 9 percent of Californians ages 12 and older met the criteria for SUD, compared with 16.5 percent nationally in 2021. The prevalence of SUD is also on the rise: in 2015, 8.1 percent of Californians ages 12 and older met SUD criteria, rising to 8.8 percent in 2022. Of the Californians struggling with SUD, only 10 percent received treatment for their condition, compared with 6 percent nationally in 2021. Overall, 81 percent of US adults who received care for SUD reported struggling to access necessary services.
California’s public behavioral health system siloes specialty mental health (MH) services, mild-to-moderate MH services, and SUD treatment services, resulting in a fragmented and inconsistent system that struggles to effectively support people with co-occurring conditions.
County plans administer specialty behavioral health (BH) services. They all have memorandums of understanding with the state’s Department of Health Care Services that are separate from the state arrangements to provide physical healthcare services. BH programs vary significantly across the state because counties operate them differently, with key variations in access policies, quality monitoring, services, and programming. Mild-to-moderate (non-specialty) MH benefits are administered by Medicaid managed care plans. Much of the state’s SUD treatment is operated by the Drug Medi-Cal Organized Delivery System (DMC-ODS).
Barriers to Care: Key Findings
System barriers prevent many Californians with SUD from accessing adequate care. Interviewees received a pre-interview questionnaire to determine the factors they believe have the greatest impact on access to SUD treatment. According to 11 out of 14 respondents, lack of access to housing and residential services is a “huge barrier” to SUD treatment.
Other barriers to care access, ranked in order, include limited access to food, transportation, and other social drivers of health (SDOH), SUD provider shortages, stigma against people with SUD, disparities in service availability across racial/ethnic groups and other populations, and complex referral and intake processes.
Respondents also identified factors that could negatively affect clinical outcomes for people with SUD. Insufficient access to stable housing ranked first, followed by inadequate care coordination, and limited access to residential SUD treatment. Respondents ranked 11 factors as follows:
Figure 1: Factors Leading to Reduced Outcomes, Ranked from a List of 11
Service gaps pose another significant barrier to people accessing SUD treatment, and some populations are more likely to encounter challenges than others. According to the respondents, by various population groups, Latine/Hispanic populations, African American/Black populations, and Native American/Alaska Native populations are most likely to experience SUD service gaps. By age, people who are 19−25 years old (transition-age youth) and adults ages 26−65 are most likely to face service gaps.
Opportunities to Support Improvements in SUD Care
Findings and recommendations to enhance support for individuals are informed by surveys and interviews conducted with SUD stakeholders from across the state. Recommendations highlighted in the report include:
- Investments in the workforce. By addressing the shortage of licensed clinicians and implementing peer support workers into the care continuum, the state would increase access to care. Many stakeholders have positioned themselves to meet SUD needs, but they cannot do so without an adequate workforce. Furthermore, the workforce would benefit from strengthening culturally responsive training in evidence-based practices.
- Expansion of residential treatment services and housing options. There is a growing need, especially among transition-age youth, for residential treatment and SUD recovery housing.
- Increased access to and training around harm reduction. Although stigma around harm reduction has decreased, training and access remains a barrier. Respondents highlighted the need to better manage contingencies, make methadone more accessible, establish safe consumption sites, expand medication assisted treatment for SUD and AUD, and improve the availability of Narcan.
- MH and SUD treatment integration. Offering concurrent MH and SUD treatment with the same providers can help improve access to care for people with co-occurring conditions and minimize duplication.
- Improved care coordination. Respondents suggested funding formal care coordination positions—a recommendation that is consistent with the national movement toward the coordinated care model applied in certified community behavioral health centers.
- Improved data literacy. Behavioral health organizations need support and technical assistance to learn how to track and use data to support continuous quality improvement.
What to Watch
The overarching challenges facing California’s recovery system are present in other states. These states can adapt the strategies discussed in this report to address their own SUD concerns. In California, as in other states, an important aspect of addressing SUD treatment involves strategic allocation of opioid settlement dollars. These funds, resulting from legal settlements with opioid manufacturers and distributors, are expected to play a significant role in improving the state’s SUD treatment infrastructure, especially when considered alongside available federal funding, demonstrations, and regulatory flexibilities.
Connect With Us
The upcoming HMA event, Unlocking Solutions in Medicaid, Medicare, and Marketplace, will offer more opportunities to engage with leaders from various sectors who are advancing solutions to improve access to care and reducing access disparities. Throughout the conference, federal and state officials, community leaders, and national experts will shed light on the challenges and solutions to these issues.
September 18, 2024
New HMA Analysis: Options for Improving California’s Substance Use Disorder Treatment System
HMA helps expand and support FQHCs across the country
Community Health Centers (CHCs), also known as Federally Qualified Health Centers (FQHCs), are community-based health care providers that are vital lifelines in medically underserved areas.
Funded by the Health Resources and Services Administration (HRSA), they provide comprehensive primary and preventative care, dental services, mental health and substance use services, and supportive services like transportation and translation, for patients to access health care. In addition, we have supported more than 20 states to write their CCBHC planning grant applications to initiate a state-run CCBHC model. Most recently, we had 100% success rate for our FY23 planning grant applications, resulting in four states receiving one year planning grants to build a state-run CCBHC model.
FQHCs partner with HMA for expert guidance in strategic planning, board development, finance and operations, clinical improvement, understanding federal and state policy, advancing health equity, grant writing, community health needs assessment, expanding practice scopes, and executive coaching. HMA’s consultants bring extensive real-world and leadership experience and expertise working with FQHCs prior to joining HMA, offering FQHCs a range of services and support with:
- Health equity initiatives
- Financial reimbursement and diversification
- Solutions for complex patient populations such as individuals who are uninsured, low health literacy, non-citizens, justice-involved, homeless
- Responding to rapidly evolving Medicaid/Medicare policy
- Addressing difficult workforce recruitment and retention efforts
In addition to working with FQHCs, HMA works collaboratively with multiple Primary Care Associations (PCAs) to leverage our expertise benefiting multiple FQHCs.
How HMA can help
HMA’s FQHC value-based payment team has extensive experience working with PCAs, Health Center Controlled Networks, and FQHCs to form integrated delivery systems focused on the Medicaid and Medicare populations to help them progress along the CMS Framework for Value‐based Payments commensurate with their readiness. Current and recent projects have included PCAs and FQHCs in New York, Illinois, Rhode Island, Oklahoma, Wisconsin, Missouri, North Carolina, Montana, and Indiana.
HMA Principal Art Jones, MD, MPH, was the architect of the first FQHC APM in the country that transitioned payment from fee-for-service to capitation. It was adopted by the FQHC he led as CEO and four other Chicago-area FQHCs in 2001. In 2017, HMA helped the Washington Health Care Authority, the Washington Primacy Care Association, and its FQHC members develop a capitated FQHC APM. Since then, HMA has worked with PCAs and FQHCs in New York, Illinois, Rhode Island, Oklahoma, Wisconsin, Missouri, North Carolina, Montana, and Indiana to develop their own capitated FQHC APMs.
HMA Principal Art Jones, MD, MPH, partnered with five Chicago area FQHCs and five hospitals to establish Medical Home Network in 2011, the prototype clinically integrated network focused on underserved communities. Driven to solve social drivers of health and seeking to demonstrate that in the safety net, technology can be deployed to deliver superior outcomes, the network has grown to include 14 FQHCs and three health systems with more than 180,000 Medicaid beneficiaries with delegated responsibility for care management and global risk. It supports 80 FQHCs in eight states in Medicare ACOs. Another HMA principal was CEO of one of the founding FQHCs at the network’s inception. This model has been replicated in other states to benefit communities of need.
FQHCs in some states receive general revenue funding to support operations. HMA has extensive experience with federal-directed payment program rules that can secure matching federal funds that at least double and sometimes as much triple total funding depending on the state’s federal match rate for Medicaid. Directed payment programs require a value-based payment component. HMA has worked with three state PCAs to develop their programs.
HMA consultants assist FQHCs and their clinically integrated networks in assessing the value-based payment arrangements being offered by managed care plans and proactively designing proposals to take to payers. In many cases, HMA joins in active negotiations with the payer.
HMA has several clinically licensed consultants with experience working at and with FQHCs in their pursuit of value-based care. This includes assisting in NCQA Patient-Centered Medical Home certification, implementing care management programs, and designing and implementing new clinical models of care made uniquely financially feasible under APMs.
HMA has several experienced consultants helping individual FQHCs, State PCAs, and FQHC-led clinically integrated networks with their strategic planning process.
HMA has consultants focused on helping providers, including FQHCs, improve their billing and collections systems to improve cash flow and revenue.
HMA experts are uniquely positioned to help FQHCs and other organizations develop strategies and write for New Access Point and Service Area Competitions.
We believe in a data-driven approach to drive actionable insights. We start with an efficient assessment of your current state and prepare a roadmap for success. After our thorough and rapid assessment, our consultants work with your organization on any aspect of implementation to ensure a sustainable, high-performing empanelment environment that drives operational quality and optimizes
current and future revenue streams. A high-performing empanelment environment leads to optimized PCP continuity of care, accountable PCP and care teams driving clinical quality improvement, readily available appointment slots, and patient retention and productivity goals.
No matter the size, HMA empowers FQHCs to thrive in an ever-changing healthcare landscape. With deep expertise at every level, HMA teams partner with FQHCs nationally to address a wide range of operational challenges, including designing innovative school-based care, and expanding community health centers, optimizing scheduling and empanelment, integrating behavioral health care and strategically adopting telehealth solutions, we help FQHCs seize opportunities. Our experience extends to selecting and implementing cutting-edge IT systems for population health management, optimizing participation in the 340B program, and maximizing workforce capacity. HMA is dedicated to ensuring that FQHCs deliver exceptional care to those who need it most.
State PCAs frequently ask HMA to speak on various value-based payment-related topics at annual conferences.
Project Spotlight
Community Health Center, New York
HMA assisted the community health center in creating its strategic approach to value-based care. The project included analysis of current clinical and financial performance under managed care arrangements, workforce optimization, and opportunities to identify shared savings on total cost of care.
Health Center Strategic Planning, California
HMA worked with the board of directors, community stakeholders, clinicians, and staff to create a theory of change and then identify internal and external opportunities for expansion, quality improvement, and financial growth.
Community Health Center Service Area Competition (SAC) Grant, Ohio
HMA supported a CHC in completing its needs assessment and writing its SAC grant.
PACE readiness, Illinois
HMA consulted with an FQHC in Illinois to analyze, plan for, and apply to open a Program for All-Inclusive Care for the Elderly (PACE) focused on the Latinx population.
Learn more about our work
Contact our experts:
Warren J. Brodine
Managing Director, Finance and Operations
Melissa Corrado
Principal
Iliana Gilman
Principal
Jill Kemper
Senior Consultant
Margaret Kirkegaard
Principal
