Navigating Potential Revenue Changes Under the Health Equity Index

February 21, 2024


The Centers for Medicare & Medicaid Services (CMS) shared new technical notes for the Health Equity Index (HEI) on December 19, 2023, and presented Medicare Advantage plans with contract-level reports to help guide improvements. Based on these updates, plans have a clearer picture of the HEI’s impact on Star Ratings and quality bonus payments.

Under this new model, plans are challenged to address health disparities for members with social risk factors (SRF) or miss the opportunity to earn additional Star Ratings that are vital for securing quality bonus payments. Explore how to navigate the transition to the HEI reward model and develop strategies to maintain revenue.

The Health Equity Index Timeline

Below is a timeline of when the HEI will start measuring SRF data, when it will impact the Star Ratings and when CMS will eliminate the Reward Factor.


The HEI will use two years of Star Ratings data to determine if plans are eligible to receive between 0.1 to 0.4 additional points to the Star Ratings. CMS will start with measurement year 2024 and 2025 to determine the 2027 Star Ratings based on a subset of quality measures for two SRF:

  • Members who are considered low-income subsidy (LIS) or dually eligible (DE) for Medicaid.
  • Members who qualified for Medicare due to a disability.

The HEI will also replace the current Reward Factor model, and measurement year 2024 will be the last year to increase Star Ratings under this model. The transition between these two reward models will significantly shift how plans earn quality bonus payments.

How the HEI Impacts Revenue

The current Reward Factor model allows plans who have achieved at least 4.0 Star Ratings to receive between 0.1 to 0.4 additional points to eligible quality measures. Many plans who achieve 4.5 to 5.0 Star Ratings and higher quality bonus payments do so through these additional points.

Unlike the Reward Factor, the HEI applies to all plans who meet minimum population requirements for members with social risk factors (SRF). CMS expects the HEI to lower overall costs of the Star Ratings program and reduce the number of plans who achieve quality bonus payments due to the challenge of improving measure performance for SRF.

Measurement years 2024 and 2025 present plans with two significant financial challenges because of these changes:

  • The transition between these two models will require new financial projections to give plans a clear understanding of how revenue will change under the HEI. Resources, staff and programs will need to shift focus to address populations that traditionally have the highest physical, mental health and social needs.
  • Quality performance projections should account for more competitive environment due to the HEI expanding rewards to all eligible plans. Performance targets for HEI rewards will naturally change over the next few years as plans implement an array of programs to improve quality scores for members with SRF.

Take Advantage of HEI Opportunities

As intimidating as the HEI is, plans have several opportunities in front of them for improving revenue, Star Ratings and overall performance under the new model.

Familiar Measures

The HEI does not add any new quality measures to the Star Ratings program and empowers plans to earn rewards while standing on familiar ground. Rather than adapting to new clinical codes or performance measures, plans only need to focus on improving health outcomes for a subset of the population within specific, existing measures.

These measures exclude:

  • Measures that focus on plans or providers rather than members
  • Retired or display-only measures
  • Measures that experience specification change during measurement years
  • SNP-only measures
  • Measures where at least 25% of contracts were unable to meet the criteria necessary to be included in the HEI

Set Up for Success

CMS has already shared contract-level reports with plans based on 2024 Star Ratings data. Through the initial HEI scores and hypothetical rewards calculations in this report, plans can begin analyzing contract-level performance, identifying areas for improvement and building strategies to achieve success. The faster plans start reviewing HEI data, the faster they can determine the necessary resources to support new care gap initiatives.

Scalable Programs

Strategies that improve health outcomes for members with the biggest healthcare challenges benefit all populations. By directing targeted care gap initiatives at members with SRF, plans achieve higher overall Star Ratings performance while achieving HEI rewards. In addition, any internal improvements to program efficiency, analytics and outreach benefit plans in the long run.

This is even true for plans who are not eligible for the HEI due to low SRF populations. Accelerating performance for the most chronically ill and at-risk members will only benefit plans in the long run by reducing emergency room visits, readmissions and long-term costs. When done in a scalable way, plans can use new programs and expertise to expand outreach beyond at-risk members to general populations to boost overall performance.

Enough Time to Plan Ahead

The clock is ticking on measurement year 2024, but plans still have time to make a powerful impact on SRF performance and prepare for future developments.

CMS plans on including additional SRF categories in the future. While nothing has been codified yet, CMS has expressed interest in reducing health disparities based on race, ethnicity and foreign languages. The Healthcare Effectiveness Data and Information Set (HEDIS) already requires plans to stratify some measures by race and ethnicity, and plans should expect quality programs to move in a similar direction.

The work completed this year enables plans to develop the necessary analytics, programs and outreach to adapt to future adjustments to the HEI.

Secure Health Equity Improvements and Rewards

Redirecting staff, resources and programs towards health equity is a challenging process, but Healthmine equips plans with the tools and guidance to streamline this transition.

Through the expertise of our industry-leading consultants, Medicare Advantage plans can begin analyzing SRF data to support short-term and long-term strategies. When paired with Healthmine’s full suite of tools, plans can implement improvements with the support of member-centric screenings, stratified engagement lists and targeted omnichannel outreach.

Pave a path to stronger Star Ratings with a full-service member engagement platform. Contact us for more information.

Healthmine is the leading member engagement and rewards solution focused on empowering people to take the right actions to improve their health.

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