Star Ratings Tend to Rise With Medical-Management Spending Growth

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. By James Gutman, Managing Editor August 22, 2013 Volume 19 Issue 16 There is a strong correlation between true medical-management expenditures and star ratings achieved by Medicare Advantage plans, according to new data presented by health plan benchmarking specialist Sherlock Co. on Aug. 14. Based on a study of 24 MA plans and their 2013 CMS star ratings, President Douglas Sherlock told a webinar audience, “there is effectively a floor of [medical management] expenses” of $6 per member per month (PMPM) needed to achieve a rating of at least three stars — the rating CMS in the past considered about “average.” The correlation was strongest, according to the Sherlock data, when non-core medical management activities such as precertification, utilization review, health and wellness promotion and medical informatics were removed from the analysis. The result was plotting points closely bunched along a straight upward-sloping line, with star ratings on the vertical axis and the PMPM “medical management subset costs” on the horizontal axis (see table). Estimating the return on investment of medical management is very difficult, Sherlock told the webinar audience, but the data his firm compiled clearly suggest a high ROI for medical management in MA based on bonuses that plans get for earning high star ratings. The plans studied, he said, included both Blues and “independent/provider-sponsored” non-Blues organizations serving a combined 1.8 million MA members. Sherlock used those plans’ 2013 star ratings, which a webinar registrant pointed out are based mostly on 2011 data, and compared them with what the plans reported as medical management costs for this year. He excluded as an “outlier” from the data one plan that had high spending following a history of low ratings. The remaining plans constituted somewhat of an “elite” group, he acknowledged, since they averaged four stars versus a current CMS overall average of 3.4. In the question period, Sherlock readily conceded that the limited-scope analysis did not examine some other aspects of the medical management versus stars relationship that could be illuminating. The model, for instance, didn’t look at the correlation between MA plans’ other administrative expenses and star ratings, or between medical management conducted in-house versus by outside vendors, he noted. Moreover, he said, the study didn’t separate out results of HMO versus PPO MA plans. http://aishealth.com/archive/nman082213-06?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=26543629