The Buzz This Week
The Centers for Medicare & Medicaid Services (CMS) released its annual Star ratings for Medicare Advantage (MA) and Part D plans earlier this month, with average Star ratings for 2026 staying nearly flat after several consecutive years of declines.
Under the Star ratings program, CMS evaluates MA contracts based on a set of quality metrics like clinical quality and member experience. Scores on these measures result in an overall Star rating on a scale from one to five. Over the last few years, CMS removed rules that relaxed the scoring methodology and eliminated outliers from its calculations, making the highest ratings more difficult to achieve.
Plans that earn four or more stars qualify for a 5% boost to their payments. In comparison, plans that score below 4 Stars are financially disadvantaged.
This year, 18 MA plans earned 5 stars, an uptick from seven in the 2025 plan year. However, 13 fewer plans (or 73 contracts) received 4.5 stars compared to last year. The number of plans receiving 4 stars was level at 116. Overall, this led to 63.5% of MA membership enrolled in a 4+ star plan, down slightly from 64.1% last year. At the other end of the spectrum, two plans earned 2 stars, up from just one plan in 2025.
This year’s Star ratings especially impacted the health insurance arms of health systems (known as provider-sponsored health plans), which faced some of the biggest declines in the share of members earning 4+ stars.
Despite the increase in 5-star plans compared to last year, CMS reported that the average star rating for 2026 is 3.66, only slightly higher than the 3.65 average for 2025.
Why It Matters
This year’s Star ratings coincide with regulatory disruption and growing market pressures. Though historically a lucrative market, MA margins have shrunk in recent years with the increase in utilization of medical care for seniors, high medical spending, changes to prescription drug benefits, changes to Star rating program methodology, and a risk adjustment coding update.
Plans that saw their Star ratings decline below 4 stars will receive lower revenue from CMS and may elect to cut supplemental benefits or increase premiums to protect their margins. Several national MA providers have pared back offerings, eliminated broker commissions for some plans, modified benefits and narrowed provider networks for 2026 to try to recover margins. Some regional companies are exiting the MA program completely.
Overall, plan offerings are down slightly, with the average number of plan offerings falling below 40 for the first time since 2022. Only six states are offering more plans than last year. These market changes could lead to a record 1.8 million people (5% of MA members) switching plans for 2026, according to Deft Research.
Despite overall declines in plan offerings, Chronic Condition Special Needs Plans (C-SNPs), which are exclusively available to seniors diagnosed with specific diseases or disabilities, are expected to rise significantly this year. These plans focus on coordinated care for a given clinical condition and often have additional benefits. If plans can better manage care for these members, they may improve financial performance.
The disruption in the MA market creates a unique inflection point for health plans, including provider-sponsored health plans. For plans remaining in the MA market while competitors plan exits or reduce the richness of their benefits, this disruption represents an opportunity to grow membership and achieve critical mass in the market. This is something many regional and provider-sponsored health plans have struggled to reach compared to their national for-profit MA competitors.
Plans recognize the immediate growth opportunity and the long-term potential for MA, especially compared to other lines of business (such as Medicaid and Affordable Care Act plans, which are facing significant challenges from One Big Beautiful Bill Act provisions).
However, this opportunity for growth comes as plans face many headwinds to financial performance. With the decline in member enrollment in highly rated plans, reduced bonus payments and rebates, the rising cost of care, and growing financial headwinds, some health systems may need to make difficult decisions about their path forward.
As MA enters a period of recalibration, both payers and providers are reassessing how to sustain performance and profitability amid tightening margins and evolving CMS standards. The next few years will likely determine which organizations can adapt their strategies to achieve financial sustainability. Success will be marked by innovations in care coordination, data analytics, and member engagement.
RELATED LINKS
Axios:
Medicare Advantage plans embrace riskier patients
Fierce Healthcare:
A look at the 2026 Medicare Advantage Star Ratings
Modern Healthcare:
Medicare Advantage ratings 2026: Winners and losers
The Medicare Advantage Insurers Bucking Trends and Expanding
