For those on Medicare, or just signing up, the open enrollment window is now wide open. As the clock ticks down the days until December 7th, millions will be making important decisions about which plan best suits their individual needs. It can be a daunting task, not because we all have too little information, but often because we have too much. Sifting out the important factors can seem overwhelming.
If you’re among the many trying to evaluate competing Medicare Advantage Plans, or trying to select the right Part D prescription plan, you’ve probably come across the Medicare five-star rating system. Perhaps you’ve wondered how valuable a tool these ratings actually are.
To help answer that question, we call your attention to this insightful article from Fortune (originally published last year) in which financial writer Richard Eisenberg offers us an explanation of what the ratings mean and how you can use them to make the right Medicare choices. We’ve done our best to update the content for the current open enrollment season.
His view: the star ratings can’t tell us everything, but if you ignore them entirely, you’re making a major error. Let’s see what Eisenberg means.
Ignoring the Ratings Despite a “Dizzying” Array of Choices
“During this Medicare open-enrollment season,” Eisenberg begins, “people selecting options for [2026] can often choose among a dizzying number of Part D drug plans and private insurers’ Medicare Advantage plans. Medicare’s star ratings can help you narrow down choices—if you understand what they mean.”
Ironically, he adds, these ratings are often ignored. “[F]ew people on Medicare bother to look to the stars, according to the KFF health policy research group.” He cites a 2023 KFF report that says, “When asked whether these star ratings influenced their decision-making when choosing a plan, the majority of participants says no.”
Eisenberg’s reaction to that oversight is clear: those to ignore the ratings are “making a mistake.”
Medicare Star Ratings: A Shorthand Look at Plan Performance
Eisenberg explains the basics. “The star ratings, which you can find in the Medicare site’s Plan Finder tool comparing Part D and Medicare Advantage (the alternative to original Medicare) plans, offer a shorthand look at how plans measure up for quality and member experience,” he writes. One expert, Dr. Sachin Jain of SCAN Health Plan, told Eisenberg, “It’s an imperfect system at best, but it’s the best we’ve got.”
The Centers for Medicare and Medicaid Services (CMS) assigns the ratings annually, says Fortune. “Five stars means excellent, four means above average, three means average, two means below average, and one means poor. On Medicare’s Plan Finder, a five-star plan gets extra prominence: a big star with the number 5 in it.”
The article acknowledges that there is a lag between analysis of the data and the assignment of star ratings. One consultant, Suzanna-Grace Tritt, told Eisenberg that ratings for 2026 are based on plan performance from 2024.
Medicare Advantage Plans Have a Financial Incentive
Insurance companies have an incentive to perform better on the star system. “Something else you might not know,” Eisenberg writes: “Medicare Advantage plans (but not Part D plans) get hefty bonus payments from Medicare if they achieve at least four stars—more than $11.8 billion worth in 2024, according to KFF.”
In theory, says Jeannie Fugelsten Biniek of KFF, those incentives could get passed along to policy-holders in the form of extra features, but that’s not often true. “If they get higher payments, they can potentially provide extra benefits,” says Fuglesten Biniek. “But it’s not necessarily a one-to-one correlation that a five-star plan is going to have more benefits.”
Dr. Jain of SCAN Health Plan told Fortune that few Part D or Medicare Advantage plans get one or two stars, though. “In practice, it’s more like a 2.5-to-five-star system,” says Jain.
Beneficiaries Can Easily Drop Most Low-performing Plans
While plans that perform well receive the carrot, those on the other end of the performance scale are at risk of the stick.
“If a plan gets fewer than three stars for three consecutive years, Medicare can terminate it,” Eisenberg says, “so plans are incentivized to keep their quality up, says Tritt. Such low-performing plans show up on Plan Finder with an upside-down red triangle that has an exclamation point inside.”
Those enrolled in one of these low-performing plans have the freedom to switch to a better plan with a rating of three stars or better during what Medicare calls the Special Enrollment Period for Disenrollment. Essentially it lasts the entire year.
Medicare Star Ratings Derived from Many Performance Metrics
For Part D plans, CMS considers up to 40 quality and performance measurements, according to the Fortune article. For Medicare Advantage plans, about 30 metrics go into the rating for each plan. “Broadly speaking,” says Eisenberg, “ratings for both types of plans are based partly on member experience, customer service, and plan performance.”
The evaluation of Part D plans mostly involves the safety and pricing of prescription drugs offered under each plan. Medicare Advantage ratings typically cover a broader range of measurements, evaluating the overall health of those on the plan, and ensuring that those with chronic conditions get the tests and treatments doctors are recommending.
“If I wanted to understand how well my experience would be with the plan, the star can be an indication of that,” consultant Tritt told Eisenberg. “It’s not a direct indication of how good your benefits, or your [doctors or hospital] network, will be.”
If You’re Determined to Choose a 5-Star Plan, Good Luck
After reading all this, are you bound and determined that only a 5-star plan will do? Eisenberg warns that you may be in for a disappointment.
“If you’re the kind of person who would want to enroll only in a five-star plan, though, you’ll likely be out of luck,” he writes. That’s because, as another consultant explained to Eisenberg, “CMS has revised the Medicare star rating methodology in recent years, making it extremely hard for a plan to earn five stars.” This change happened after the COVID pandemic, a period during which many medical plans were dealing with quality issues out of their control.
“In 2025,” says Eisenberg, “just 2 percent of people with Medicare Advantage/Part D plans and 5 percent in stand-alone Part D plans [were] in ones with five stars, according to CMS. There were far more five-star plans for 2024 than…for 2025.” By contrast, 4-star plans are common. “More than 70 percent of people with Medicare Advantage are enrolled in them,” says KFF’s Biniek.
Medical Community Finds Fault with Ratings System
In updating this article, we came across this crtitique of the ratings system published by JAMA Network in January 2025. The article found serious flaws in the entire Medicare 5-star rating plan especially concerning Medicare Advantage plans.
“Star ratings have high-stakes consequences,” the JAMA article states. “In total, CMS awards over $10 billion annually in bonus payments for star ratings. While there is some limited evidence of the success of the star ratings, the overall effectiveness of the program is unclear.”
Some of Medicare’s ratings have been challenged in court, says the JAMA article, by insurers claiming that erroneous evaluations are costing them clients and revenue.
System May Be Well-Intended but Flaws Persist
The JAMA article acknowledges that the system is well-intended. “The objective of the star ratings is to help beneficiaries select better plans, and to reward plans that deliver high-quality care,” the article states. But experts criticized the rating system based on three defects. (Quotes are from the JAMA analysis.)
Self-reporting: “Several measures in the star rating are reported by the plans themselves and plans often overstate their performance.”
Inflated ratings: “Over 80 percent of contracts by enrollment are rated 4 stars or higher, which is the threshold needed to earn bonus payments.” Also, ratings are assigned for each company as a whole without taking local area experiences and performance into account.
Bonus incentives don’t work: “While bonus payments for star ratings are costly, plans eligible for enhanced bonuses have not shown greater improvement in measures related to clinical quality or administrative effectiveness.”
The article’s conclusion was blunt. “Taken together,” say the study’s authors, “the current star ratings are neither useful for all beneficiaries to make their plan decisions, nor do they appear to be capturing quality or catalyzing improvement.”
Medicare Star Rating System: Advice from the Experts
Eisenberg ends his article when some “dos and don’ts” for those planning to utilize star ratings during open enrollment. We’ve shortened his recommendations somewhat due to space limitations.
Don’t choose or reject a Part D or Medicare Advantage plan only because of its star rating. Experts say overall cost and access to health providers are more important. Still, the star rating could help you choose between two similar plans.
Don’t panic if a plan’s star rating dips in 2026. It’s best to look at a plan’s star-rating history over several years, not for just one or two, since evaluations can change year by year.
If you like a Part D or Medicare Advantage plan but are worried about its star rating, Medicare Plan Finder also breaks down several subcategories. “You’ll be able to see how the plan scored in the specific quality and member satisfaction yardsticks that matter to you,” Eisenberg explains. As consultant Tritt put it, “It’s common for plans to not ace everything. They almost always have a weakness.”
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(originally reported at https://fortune.com)