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CVS Health’s operating will take up to a $1 billion hit in 2024 because low Medicare Advantage star ratings, the company said in a Securities and Exchange Commission (SEC) filing today.

Just 21% of the people in the company’s Medicare Advantage plans were in plans with 2023 star rating of 4.0 or greater compared with 87% in the 2022 star ratings, the SEC filings said.

The Centers of Medicare and Medicaid Services (CMS) uses its star ratings to determine which Medicare Advantage plans qualify for quality bonuses. Plans with a rating of 4.0 or more can receive the quality bonuses to their premiums

The CVS’ 2024 operating income is affected by the 2023 ratings because CMS uses the 2023 ratings to determine eligibility for the 2024 bonuses.

Modern Healthcare was the first to report on the SEC filing.

The star ratings are based on measurements of Medicare Advantage’s coverage of preventive care and chronic disease management as well as customer satisfaction.

In the SEC filing, CVS said the main driver of the precipitous drop in members covered with plans eligible for bonus payments was a 1-star decrease in the company’s Aetna National preferred provider organization.

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