January, 11 2013
By Don Gerdts
Were Mark Twain still around, he might say that reports on the killing off of Medicare Advantage (MA) plans have been greatly exaggerated.
More than 13 million Americans currently receive their Medicare benefits through MA plans that offer greater choices in coverage, enticed by lower out-of-pocket expenses and more robust benefits than traditional Medicare.
Despite the fear that millions of seniors will lose coverage because of healthcare finance reform that slashed $132 billion from MA funding over the next 10 years, Medicare Advantage plan enrollment has grown by 28 percent since 2010, and the Centers for Medicare and Medicaid Services (CMS) anticipate that it will continue to grow by another 10 percent next year. In other words: The program is changing, not dying.
CMS developed MA Star Ratings to help consumers choose among competing plans, awarding between one and five stars based on certain measures of quality. This year marks the first in CMS’ three-year demonstration rolling out changes to its Star Ratings.
One of the ideas behind the demonstration is to soften the blow in payment reductions by offering increased, scaled bonuses to MA plans with three or more stars, with the most money going to those plans with the highest ratings. CMS also hopes that the bonuses will lead to rapid and widespread quality improvements.
The new policy changes are increasing pressure on MA plans to improve overall performance. Here are five ways the Star Ratings will impact you:
Limited Time Only Scaled Bonuses
Starting this year, MA plans with fewer than three stars will not receive bonuses, leaving about $3.1 billion in payments for the remaining 91 percent of contracts. Of this amount, the Kaiser Family Foundation estimates that a third will go to plans rated above average (four or more stars), and two-thirds will be divided among plans rated as average (three to three and a half stars) and plans that were not rated by CMS because they are either too new or had too few enrollees. Five-star plans can receive bonuses of up to five percent additional reimbursement and up to 10 percent in "double bonus" counties, as was recently accomplished by Humana in their WI MA plan.
The demonstration expands the number of plans eligible for bonuses by also providing incentives to plans rated as average performers, whereas under the healthcare reform law payments would have only applied to those plans with above average ratings. It also increases the size of the bonuses for all eligible plans based on their ratings and local benchmarks. However, the scaled bonuses go away in 2015, and only MA plans with four, four or more stars will receive bonuses and enhanced rebates.
Ongoing Open Enrollment for Top Tier
As yet another incentive for meeting improvement targets, plans stand to gain more members and even more money through a new policy that allows MA beneficiaries to switch into a five-star plan at any time. However, the change can take place only once during the calendar year. Of course, very few plans receive five stars – only 11 plans out of 569 achieved that laudable goal last year.
As yet another incentive for meeting improvement targets, plans stand to gain more members and even more money through a new policy that allows MA beneficiaries to switch into a five-star plan at any time. However, the change can take place only once during the calendar year. Of course, very few plans receive five stars – only 11 plans out of 569 achieved that laudable goal last year.
Emphasis on Outcomes
Star ratings measure performance in the areas of clinical process and outcomes, patient experience and contract performance. In response to concern that the system placed the same amount of emphasis on all of its measures, putting customer service on par with prescription drug adherence, CMS has announced plans to add additional measures and redistribute the weighting of current measures in the coming years, giving greater weight to outcomes over process.
More Is Better
Four of the biggest players in the MA field – United Healthcare, Blue Cross Blue Shield Association affiliates, Kaiser Permanente and Humana – are expected to receive more than half of the total bonus payments. For these companies, the final lump sum awarded is directly tied to the number of enrollees as well as their Star ratings. In other words, a plan with more bodies will make more quality bonus payment (QBP) money even if its ratings are lower than a competitor’s.
Industry experts are concerned that in just a few short years, only four- and five-star plans will have enough revenue to offer additional benefits and lower co-pays, making these plans even more attractive to enrollees and likely leading to the consolidation of plans.
Bad News for Poor Performers
MA plans that are awarded fewer than three stars are considered to be out of compliance. Their ratings will be posted on the CMS website and, starting in 2013, CMS will issue notices to enrollees in low-performing plans alerting them to opportunities to switch to a higher quality plan. Plans that are persistently low performing for three consecutive years will have their MA contracts terminated.
The Star ratings have and will continue to shape the delivery of quality care for seniors while holding stakeholders accountable for bending the cost curve. For better or worse, despite the rating system’s original intent, change in the healthcare environment is inevitable. But it is hardly a harbinger of doom. MA plan leaders should view these changes as motivation for moving forward on best practices and innovative ideas as they seek to improve their ratings, increase bonus payments and attract new members.
Don Gerdts is the National Director of Healthcare Information Services for Medical Electronic Attachment, Inc. (MEA) based in Atlanta, GA.
http://www.healthcarepayernews.com/content/five-things-you-need-know-about-changes-ma-star-ratings?goback=%2Egde_84467_member_204771287
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