What Gets Paid Gets Improved

James Gutman - October 14, 2011

If the Medicare Advantage plan star ratings for 2012, released Oct. 12, were the first test of the impact of CMS's new large-scale demonstration program to pay quality bonuses to MA plans, then the program passed the test — with some exceptions. On the plus side of the ledger, there were 12 MA plans that earned the coveted five-star rating, which will pay the biggest bonuses and allow for year-round marketing, for 2012, compared with only three five-star plans for 2011. Similarly, the number of 4.5-star MA plans more than doubled the year-ago total. On the negative side, there also was a big rise — from 63 to 135 — in the number of CMS-called "low performers" (i.e., less than three stars), with the principal category contributing to their downfall being ratings related to prescription-drug benefits.

The situation may have been akin to that of a student who knew a college scholarship rested on his or her performance on a test. MA plans faced with the knowledge that bonuses needed to offset declining CMS payment rates for MA plans beginning in 2012 depended on the outcomes of star ratings, so they "studied" hard and did better on the "test" than they did when it mattered less a year ago. The improvement on average scores was mainly across the board, according to CMS, but all of the five-star plans again were provider-affiliated. That fact, plus the other aspects of the stars program, leads to a few tough questions, even though many MA plans favor the star-ratings program's recent changes toward more use of actual outcomes rather than process measures.

Are the star ratings, for the most part, measuring the right things in terms of improving quality? Is the program's structure fair to all kinds of MA plans, even ones not provider affiliated or located in rural areas in the South? Is the likely thinning of the MA ranks that the star ratings may foster in the best interest of beneficiaries? And are the gains clearly recorded by many MA plans an indisputable sign of improving quality, or instead perhaps more an indicator of "studying to the test"?