How Star Ratings work
CMS evaluates each MA contract annually on a 1-to-5 star scale, drawing on a range of measures grouped into several broad categories: clinical quality (such as screening and disease-management rates), member experience and satisfaction, member complaints, and customer service (such as call-center responsiveness and appeals processing). Individual measures are combined into an overall rating for the contract.
Ratings are published annually and are also displayed to beneficiaries comparing plans during enrollment periods.
How the Quality Bonus Program works
The Affordable Care Act created the Quality Bonus Program (QBP), which increases a plan's benchmark — and therefore its potential rebate — for contracts rated four stars or higher. The size of the bonus is added as a percentage on top of a county's existing quartile-based benchmark scaling (see How MA Plans Get Paid), and the bonus percentage is doubled in certain "qualifying counties" — generally urban areas with historically high MA penetration and lower-than-average fee-for-service spending.
Unlike some other Medicare quality-payment programs, the QBP is not designed to be budget-neutral: it funds bonus payments to higher-rated plans without a corresponding penalty or withhold applied to lower-rated plans.
Program cost and scale
For 2026, roughly 40% of MA contracts achieved the 4-star bonus threshold, and those contracts account for approximately 64% of total MA enrollment, contributing to a national average star rating of 3.98.1 MedPAC estimates the QBP added approximately $16 billion to Medicare spending in 2026.2 KFF separately estimated federal spending tied to the QBP at approximately $12.7 billion in 2025, covering roughly 40% of MA contracts that year.3
What the research finds
Several studies and oversight reports have examined whether Star Ratings and the QBP achieve their stated goal of rewarding and encouraging higher-quality care:
- An early GAO review of a CMS demonstration that preceded the current QBP structure found the demonstration primarily rewarded plans with average (3 to 3.5 star) performance, rather than plans that were clear outperformers.4
- A 2021 study published in Health Affairs examined the relationship between QBP bonus payments and subsequent plan quality and found no evidence that the bonus program improved plan quality.5
- Research summarized by the Urban Institute in 2024 noted that Star Ratings, as currently constructed, do not always reflect the measures that matter most to beneficiaries and do not clearly drive quality improvement.6