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Research ArticleArticles

The Star Treatment

Estimating the Impact of Star Ratings on Medicare Advantage Enrollments

Michael Darden and Ian M. McCarthy
Journal of Human Resources, October 2015, 50 (4) 980-1008; DOI: https://doi.org/10.3368/jhr.50.4.980
Michael Darden
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Ian M. McCarthy
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Abstract

The Centers for Medicare and Medicaid Services (CMS) has calculated and disseminated an overall contract quality star rating system (from one to five stars) for all Medicare Advantage (MA) contracts since 2009. In this paper, we study the effect of CMS-reported star ratings on MA plan enrollment. We formulate a discrete choice demand model for differentiated MA plans and estimate the model with market-level plan enrollment data. We identify separate enrollment effects for each star level using a regression discontinuity research design that exploits plausibly random variation around star thresholds. The results suggest that the 2009 published star ratings directed beneficiaries away from low-rated plans more than actively toward high-rated plans. When we repeat the analysis for 2010 published quality stars, we find no significant effects. We present suggestive evidence that supply-side responses to the star rating system may explain the one-time enrollment response to CMS-published quality stars.

  • Received August 2013.
  • Accepted May 2014.
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Journal of Human Resources: 50 (4)
Journal of Human Resources
Vol. 50, Issue 4
2 Oct 2015
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The Star Treatment
Michael Darden, Ian M. McCarthy
Journal of Human Resources Oct 2015, 50 (4) 980-1008; DOI: 10.3368/jhr.50.4.980

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The Star Treatment
Michael Darden, Ian M. McCarthy
Journal of Human Resources Oct 2015, 50 (4) 980-1008; DOI: 10.3368/jhr.50.4.980
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  • Article
    • Abstract
    • I. Introduction
    • II. Medicare Advantage
    • III. Evidence on the Effects of Quality Reporting
    • IV. Methodology
    • VI. Results
    • VII. Discussion
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    • References
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