Department of Health & Human Services
Centers for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, Maryland 21244-1850
Center for Medicare

TO:

All Part C and D Plan Sponsors

FROM:

Amy Larrick Chavez-Valdez, Director
Medicare Drug Benefit and C&D Data Group
Kathryn A. Coleman, Director
Medicare Drug & Health Plan Contract Administration Group

DATE:

February 6, 2019

SUBJECT:

End of Moratorium on Authority to Terminate Medicare Advantage Organization
Contracts Based on Low Star Ratings

The purpose of this memorandum is to inform Medicare Advantage (MA) Organizations and
Medicare Prescription Drug Plan (PDP) sponsors of CMS’ policy for resuming the exercise of its
authority to terminate Part C and Part D contracts that have consistently failed to achieve good
Star Ratings.
Under the Part C regulations at 42 C.F.R. §422.510(a)(4)(xi), CMS may terminate an MA
contract that has failed to achieve a Part C summary rating of at least three stars for three
consecutive contract years. The Part D regulations at 42 C.F.R. §423.509(a)(4)(x) provide a
similar basis for terminating a Part D sponsor contract based on consistently low Part D
summary ratings. In December 2016, the 21st Century Cures Act was enacted and section
17001(b)) prohibited CMS from terminating MA organization contracts through December 31,
2018.
Given the expiration of this prohibition on December 31, 2018, CMS will resume its authority to
terminate Part C and Part D contracts that have consistently failed to achieve good Star Ratings.
To calculate the number of consecutive years a contract has failed to achieve at least three stars,
CMS will use the first Star Ratings released after December 31, 2018 as the first set that may
count toward an MA contract’s qualification for termination pursuant to 42 C.F.R.
§422.510(a)(4)(xi) or a PDP contract’s qualification for termination pursuant to 42 C.F.R.
§423.509(a)(4)(x).
The Star Ratings for each year are released in the fall of the preceding year. For example, the
final 2019 Star Ratings were released in October 2018. Therefore, the 2020 Star Ratings, issued
in the fall of 2019, will be the first set of ratings where performance below three stars would be
counted toward qualification for termination. The first MA or Part D contract that could be
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 terminated by CMS following the temporary delay would be qualified for such action based on
the contract’s failure to achieve at least three stars for the 2020, 2021, and 2022 sets of Star
Ratings.
If you have any questions, please contact Scott Nelson at Scott.Nelson2@cms.hhs.gov.

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