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 Lauren
Flynn Kelly, Managing Editor
December 21, 2017Volume 23Issue 24
In response to the ongoing trend of plans moving Medicare
Advantage enrollees to contracts receiving quality bonus payments under the
star ratings system, CMS in a recent Medicare Advantage and Part D proposed
rule (82 Fed. Reg. 56336, Nov. 28, 2017) suggested using an enrollment-weighted
average to determine the star rating when contracts are consolidated. While the
Medicare Payment Advisory Commission (MedPAC) has advocated for the use of an
“averaging method” to calculate the ratings for a surviving contract, the
commission during its latest public meeting considered a draft recommendation
to calculate ratings by geographic area. This would more adequately level the
playing field among competing organizations, argued one analyst.
MedPAC has repeatedly expressed concern about the rising number of
MA sponsors that have consolidated contracts in order to boost quality bonus
payments associated with ratings of 4 and above. The commission observed that
in the past five years, there have been 140 contract consolidations, including
108 contracts moving from non-bonus to bonus status. Put another way, 4.1 million
enrollees, or about 20% of total MA enrollment, have been moved to bonus
status.
Proposal Addresses Gaming of the System
“Although the share of enrollment in bonus level plans is reported
as being in the 70% range, the actual percentage is smaller because lower-rated
contracts are being absorbed by higher-rated contracts through consolidation,”
stated MedPAC analyst Carlos Zarabozo during a Dec. 8 presentation. And this
has never been more prevalent than with “the current cycle,” with 17 contracts
moved to bonus status after the release of the 2017 star ratings, affecting 1.4
million enrollees or about 8% of overall MA enrollment, he said.
While Zarabozo acknowledged that there are “good reasons” for
plans to consolidate contracts (e.g., when one plan acquires another and they
serve the same county), he observed that “more often than not, contract
consolidations have been undertaken to obtain additional bonus payments.” And
since a new bonus means a higher benchmark on which to base payments, the lag
time between when star ratings are released each October and bids for the
following plan year are due “allows plans to maximize their bonus revenue
through consolidations.”
CMS echoed MedPAC’s concerns in the proposed rule, suggesting that
this practice “results in masking low quality plans under higher rated
surviving ones.” In an effort to improve transparency for beneficiaries and
ensure that contracts are being rewarded for actually delivering higher
quality, CMS proposed to modify the current policy of assigning the surviving
contract the star rating it would have earned regardless of a consolidation and
instead use an “enrollment-weighted mean of the measure scores of the surviving
and consumed contract(s).”
“What CMS and MedPAC are concerned about is there are plans that
are clearly just gaming the system,” observes Eric Goetsch, a principal and
consulting actuary in the Milwaukee office of Milliman. “If your company has
plans all over the country, and you have 3.5 star-rated plans in Maine that
you’re consolidating with plans in New Mexico that have 4.5 stars, I don’t know
the purpose of that other than to get the higher star rating.”
MedPAC Wants Local-Level Reporting
Goetsch predicts that if implemented, the change proposed by CMS
will dampen the number of contract consolidations going forward. “If there
isn’t a financial reason to consolidate, I’m not sure what the other benefit
is, other than maybe you have to do fewer bids. But to me, the financial gain
by consolidation is the real draw, and if you no longer have that, I think
you’re going to see less consolidating.”
MedPAC presented two draft recommendations, which could be
incorporated into a future report to Congress, that take a multiphase approach
to reducing consolidations. They are:
(1) For MA contract consolidations involving
different geographic areas, the secretary should require contracts to report
pre-consolidation quality measures and determine star ratings as though the
consolidation had not occurred, until quality can be reported at a local
geographic level.Assuming there would be
program savings relative to the current policy — given that it would lead to
fewer consolidations and thus fewer bonus payments — this policy also would
improve the accuracy of information available to beneficiaries on plan quality
while “level[ing] the playing field for contracts that compete against
contracts that acquired their bonus status solely through a consolidation,”
asserted Zarabozo.
(2) Establish geographic areas for MA quality
reporting that are accurate reflections of health care market areas, and
calculate star ratings for each contract at that geographic level.The implications for spending are uncertain, and
depend on the distribution of star ratings in each year, he added.
“Reading between the lines, I think they’re saying that the
enrollment-weighted star rating approach is, until you can get something
better, an improvement over what’s happening now,” observes Goetsch. But longer
term, calculating the star ratings for each contract at the geographic level
“makes the most sense,” he says, given that quality measures that reflect
outcomes in one health care system could vary widely from those in another
geographic area.
Since CMS has recognized the growing prevalence of consolidations,
it’s likely that the agency will take a hard look at MedPAC’s second
suggestion. Although CMS may seek industry feedback on it in a future proposed
rule, it’s very unlikely as a possible change for the 2019 plan year, adds
Goetsch.
For more information, visit www.medpac.gov.
https://aishealth.com/archive/nman122117-03
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