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Medicare Advantage Star Ratings: Detaching Pay from Performance

Rewarding quality health plans is an admirable goal for the Medicare Advantage program. Unfortunately, the current system of linking star ratings to bonus payments and rebate adjustments instituted by the Patient Protection and Affordable Care Act (and expanded by the CMS Quality Bonus Payment Demonstration) fails to achieve that goal, and depending on its specific implementation, may even be counterproductive.

Because criteria for evaluation are not published until after the period for which performance will be evaluated, there is no possibility that MA plans will be able to improve their performance to achieve the goals CMS intends to incentivize. Any adjustment plans will be able to make to their bids or plan offerings would have to be aimed at increasing enrollment in counties with the highest bonuses and rebates based on data from performance in previous years, possibly at the expense of improving their performance in the future.

The system rewards beneficiaries for choosing those plans favored by the selected CMS criteria, rather than the plans that best meet their needs. In effect patients whose preferences, health status, and even counties of residence, don’t match the CMS model of a highly rated plan will be at a disadvantage. Simultaneously, the system will likely reduce the scope of choice available to MA-eligible beneficiaries, and reduce competition among MA plans.

Finally, the system rewards beneficiaries for living in counties with low poverty rates (since relatively wealthier counties tend to have more plans with higher ratings), thus adversely impacting poor beneficiaries even more than non-poor beneficiaries.

These impacts are inconsistent with the overall policy purpose. The goal of incentivizing quality health plans is legitimate and admirable; that goal will not be achieved by the rating structure currently being put into place.

The star bonus system could be improved by transforming it to a system in which criteria for performance were announced in advance, and bonuses were paid based on performance during the period in which it occurred. In addition, the system should not tilt the playing field against any particular beneficiaries’ preferences. A star system with these characteristics would ensure that the program goal of incentivizing the achievement of high-quality plan offerings is achieved.

Read the full paper.

Douglas Holtz-Eakin is president of the American Action Forum. He served as director of the Congressional Budget Office from 2003 to 2005. This post first appeared at the American Action Forum.

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Health InsurancePaulaImprove Vision ExercisesL. WoodeTelehealth Recent comment authors
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Health Insurance
Guest

Keep up the work!! I am grateful to you, thanks for letting me know about this things..

Paula
Guest

Why not find a way for the results to get published as early as possible?

Improve Vision Exercises
Guest

Thank you for any other informative site. Where else could I am getting that type of info written in such an ideal way? I have a undertaking that I am simply now operating on, and I’ve been at the glance out for such info.

L. Woode
Guest

Enrolled with Kelsey Care Advantage due to 5 Star Rating..affiliated doctors in my area refuse to do pap screen advocated by Medicare for Well Woman exam. Saying there is no need for women over 65. KCA book of Evidence Coverage states pap screen covered. Five Kelsey doctors refused.

Telehealth
Guest

Among the greatest selling points that Medicare insurance Advantage Plans have is the most inexpensive. The U.S. government still subsidies diets and it has a brand new strategy which makes certain ones more beautifully listed. They are ranked on the five-star scale along with a high rating means more federal funding. That, consequently, means rates could be low since the insurance provider is generating more federal money of the routine.