February 26, 2025
Health insurers face declining star ratings, driven by evolving performance standards and member expectations. MERGE explores how enhancing customer experience, driving behavior change, and fostering organizational alignment can turn the tide and safeguard financial performance.
Katie Lukas
Health insurers are contending with the fallout of sharp declines in star ratings, the benchmark for Medicare Advantage plan quality. This drop largely stems from changes in the Centers for Medicare & Medicaid Services (CMS) formula, including higher performance thresholds and the removal of extreme outliers. These abrupt adjustments have drastically reduced the number of plans earning four or more stars, with some insurers even suing CMS to restore their ratings. The evolving, stricter standards demand that health insurers adapt quickly to maintain competitiveness and financial viability.
Amid these challenges, improving customer experience (CX) offers a critical path forward. Convenience, personalization, technology, transparency, and education—identified by Oscar as key drivers of customer expectations—are central to mitigating the effects of cost-cutting decisions that negatively impact member benefits. By emphasizing seamless digital tools, advanced technology, and personalized communication, insurers can reframe CX as a way not just to meet rising demands, but to compensate for the lost value that members feel. As Press Ganey notes, "A high CMS Star Rating reflects a superior member experience. When health plans prioritize and improve certain aspects (like customer service and care accessibility), member feedback tends to be more positive. This not only enhances overall member satisfaction but also builds trust and member loyalty."
Additionally, transparent practices foster trust, while education equips members to make informed health decisions, ensuring insurers deliver perceived value even during operational constraints. On the whole, these CX enhancements reinforce metrics essential for stronger star ratings while addressing the broader dissatisfaction caused by reduced benefits.
Adjusting to Evolving Benefits Without Sacrificing Satisfaction
While concerns about reduced benefits have been prevalent, many consumers are only beginning to experience these changes—and in many cases, the impact has been less significant than anticipated. Medicare Advantage plans, which once offered perks like gym memberships and dietician services, are adjusting offerings due to financial pressures, such as the loss of bonus payments tied to four-star ratings. Even modest reductions, however, can elicit an emotional response, as the perception of losing something—whether used or not—can erode trust and amplify dissatisfaction.
This emotional impact risks affecting critical metrics like customer service scores and access to care, which are essential to retention and overall performance. Insurers can address these challenges by refining their communication strategies with clear, empathetic messaging that helps members understand the rationale behind changes. Guiding members toward plans better suited to their needs while maintaining transparency can reduce disruption and foster loyalty.
By prioritizing strong CX during this period of transition, health insurers can strengthen connections with members. Clear communication, trust-building efforts, and proactive support ensure smoother adjustments, minimize backlash, and provide the stability members seek, even as benefits evolve.
Beyond Messaging—Driving Behavior Change
One key aspect of improving star ratings is changing member behavior, yet many payers take the wrong approach. Communications often rely on repetition—encouraging members to schedule screenings or attend preventive care appointments through multiple emails and reminders. But more communication isn’t the solution; better, more personalized, and more flexible communication is.
To that end, behavior change requires multi-modal strategies and an integrated perspective about the member experience. Data, clinical operations, member engagement, market research, and experience team members all must work together to design a holistic experience that will support behavior changes both small and large across a broad continuum of potential health risks, events, needs, and challenges.
This includes incentivizing positive behaviors, communicating clearly and frequently about risk factors and preventive measures, including creating personalized communications and notifications especially for higher-risk individuals, and incorporating consequences for non-compliance.
Further, behavior change must flex around a member’s journey. As behavior change occurs, a member will need more or less support, encouragement, and different kinds of messaging. A comprehensive view of behavior change takes not only the levers and dials carriers can manipulate, but also the state of being of any individual member and the various impacts that will have on their behavior and receptiveness to input.
A Holistic Approach to Customer Experience
Improving star ratings isn’t just about better benefits or behavior changes—it’s a question of how well an organization delivers on its promise to members. A polished CX strategy is essential, but many health payers aren’t honest with themselves about their shortcomings.
Health insurers must assess the gaps where member experience fails—whether in digital self-service tools, customer service calls, or care transitions. Are the systems too complex? Are members receiving irrelevant communications? Identifying these pain points provides a foundation for meaningful change.
Ultimately, CX improvements need to be tied to clear, measurable goals. Star ratings themselves provide a ready-made roadmap, highlighting specific areas for enhancement. Metrics like medication adherence, member satisfaction, and health outcomes should feed directly into the CX plan.
Breaking Down Organizational Silos
One of the greatest barriers to star ratings improvement is the siloed nature of many payer organizations. Teams responsible for individual programs often operate independently, competing for limited resources. This fragmented approach prevents a unified focus on the member experience.
The solution? Restructure the organization to center around the member. Instead of viewing CX as an isolated initiative, it should be the lens through which all strategies are built. Leadership must champion this shift by prioritizing investments in CX competencies, ensuring budgets support cross-functional initiatives, and incentivizing improvements in star ratings performance.
For example, incentive tactics, such as recognizing and rewarding teams for creative problem-solving or exceptional collaboration, can motivate employees and drive meaningful engagement. These approaches foster a supportive work environment without relying solely on metrics like medication adherence or customer service satisfaction, outcomes that health insurers might influence but don't fully control due to their inherent complexity.
Star Ratings and the Financial Bottom Line
At the end of the day, star ratings aren’t just an abstract measure; they hold tangible financial implications for Medicare Advantage plans. Achieving a four-star rating or higher qualified plans for bonus payments, which can significantly bolster their financial resources. And while seniors may not specifically shop based on star ratings, the perception of quality tied to these benchmarks can still influence trust and satisfaction among members. Plans that fail to meet these performance thresholds miss out on crucial opportunities to invest in enhancements that improve the overall member experience.
Top-performing insurers recognize that star ratings improvement is more than a compliance goal—it’s a business-critical objective. They invest in understanding their members, forging strong partnerships with providers, and embedding CX excellence into their operations. Good customer experience not only drives satisfaction, but also becomes a stabilizing force during times of change.
Whether navigating evolving plan designs, addressing potential benefit reductions, or guiding members to plans that align with organizational goals, a focus on CX helps foster trust and loyalty. By proactively addressing member concerns and delivering consistent value, these insurers are better positioned to retain members and avoid the disruptive cycle of dissatisfaction, declining enrollment, and reduced financial performance.
The Path Forward
For health insurers, improving star ratings requires more than band-aid solutions. It demands a commitment to excellent customer experiences, strategic behavior-change initiatives, and organizational alignment. While cost pressures and regulatory hurdles make this challenging, forward-thinking payers can turn these obstacles into opportunities.
Ultimately, the organizations that thrive in this new landscape will be the ones that put members at the center, leveraging every touchpoint as an opportunity to drive engagement, satisfaction, and better outcomes. By doing so, they won’t just improve their star ratings; they’ll secure their future.
*Michelle Boudreau, MERGE SVP, Group Client Service also contributed to this article.
Ready to take the first step in optimizing customer experience for your organization? Reach out to the team of CX experts at MERGE today!
