What is the Medicare Star-Rating System?

What is the Medicare Star-Rating System?

If you plan to participate in Medicare Parts C and D, you’ll want to make sure you’re picking the right plan. A great start is to pay close attention to Medicare’s star-rating system, which grades plans based on their quality.

Stephanie Faris

Published October 16th, 2020

Updated December 18th, 2020

Table of Contents

Key Takeaways

  • While Medicare Parts A and B are managed by Medicare, Parts C and D are offered by third-party providers.
  • Medicare monitors its providers for quality and uses a star-rating system to help members.
  • Providers are issued between 1 and 5 stars based on feedback from members, healthcare providers, and plans.

When you sign up for Medicare Parts A and B, you choose from a list of Medicare’s participating providers. But with Parts C and D, you’re no longer staying within the Medicare system. Third-party providers oversee those plans, working in coordination with the Centers for Medicare and Medicaid Services (CMS).

That’s where Medicare star ratings come in. To protect those participating in the Medicare system, the government issues ratings for those outside insurers. But you’ll need to fully understand the star-rating system to know how to track down a good insurer that will help you with your prescriptions, vision care, and other services covered by Parts C and D.

What Is the Medicare Star-Rating System?

If you plan to participate in Medicare Parts C and D, you’ll want to make sure you’re picking the right plan. A great start is to pay close attention to Medicare’s star-rating system, which grades plans based on their quality.

Star ratings for Medicare Advantage plans and prescription plans will show up when you’re searching for providers using Medicare’s Plan Finder Tool. Medicare bases its star ratings on information gathered through surveys filled out by members, plans, and healthcare providers.

How the Medicare Star Rating System Works

Medicare stars are issued based on a scale of one to five:

  • 5 stars: Excellent
  • 4 stars: Above Average
  • 3 stars: Average
  • 2 stars: Below Average
  • 1 stars: Poor

The criteria for grading Medicare advantage star ratings can vary depending on whether it’s a prescription or it’s medical care. With home healthcare, for instance, Medicare looks at how often the care was issued in a timely manner and whether the care had positive outcomes.

Low-Performing Plans

Most plans fall in the mid-range of the star rating scale, with the average plan earning between 3 and 3.5 stars. Plans that fall below 3 stars are deemed “low-performing.” After three years of earning below 3 stars, a plan will be flagged in the system. You’ll see these plans denoted in the plan finder with an exclamation point over an upside-down triangle.

What if your current provider registers as low-performing? If your plan earns less than 3 stars in the star rating system for Medicare advantage plans or prescription plans, you’ll receive an alert. You won’t be able to enroll in a low-performing plan online. You’ll have to call 1-800-MEDICARE or get in touch with the plan directly.

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Plan Enrollment

As with most insurance plans, Medicare has a special enrollment period that limits signups to one set time frame each year. But there is an exception for 5-star Medicare Part D plans, as well as 5-star Part C plans. You can switch to a 5-star plan outside of the special enrollment period, but you’re limited to one switch per year.

If you only have Part C, though, it’s important to note whether your plan covers prescription drugs. If you switch from a plan that includes prescription coverage to a 5-star one that doesn’t, you could lose that benefit.

Final Thoughts

The Medicare star rating program provides a useful way for members to make sure they’re getting quality from their Parts C and D plans. Whether you’re retiring soon, have already retired, or are planning for the future, we recommend working with a Certified Financial Planner® to decide what insurance plan is the best setup for you.


Medicare Basics

Medicare Benefits

Medicare 2022

Applying for Medicare

Medicare Considerations

Medicare Taxes

Healthcare Considerations

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Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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