Study Published in Health Affairs Finds that Medicare Advantage Quality Bonus Program Has Not Improved Quality

Health Affairs recently published a research article titled “The Medicare Advantage Quality Bonus Program Has Not Improved Plan Quality” by Adam A. Markovitz, John Z. Ayanian, Devraj Sukul, and Andrew M. Ryan (December 2021). As noted in the abstract of the report, “[i]n 2012 Medicare introduced the quality bonus program, linking financial bonuses to commercial insurers’ quality performance in Medicare Advantage (MA). Despite large investments in the program, evidence of its effectiveness is limited.”

As noted in an Inside Health Policy article by Bridget Early (Jan. 4, 2022) discussing the report, “[w]hile higher star ratings have been found to correlate with increased beneficiary enrollment, the study found that they did not improve quality of care.”

This report joins the growing evidence demonstrating that the MA quality bonus program is fundamentally flawed. As previously noted by the Center for Medicare Advocacy, including in an October 2021 Special Report on the Medicare annual enrollment period, the Medicare Payment Advisory Commission (MedPAC) has “in recent years ‘discussed the flaws in the 5-star system and the [quality bonus program] and the continuing erosion of the reliability of data on the quality of MA plans’ as noted in their March 2021 report to Congress. As a result, the Commission notes, ‘[t]he current state of quality reporting is such that the Commission’s yearly updates can no longer provide an accurate description of the quality of care in MA.’”  

In addition, as discussed in a previous CMA Alert, a September 2021 Health Affairs report titled “Medicare Advantage Plan Double Bonuses Drive Racial Disparity In Payments, Yield No Quality Or Enrollment Improvements” found that double bonuses for MA plans are not an efficient mechanism to improve the program, and are not equitable in allocation of those dollars, disproportionally benefiting White beneficiaries relative to Black beneficiaries, without improving quality or enrollment.

The Inside Health Policy article analyzing the December 2021 report quotes the Center: “‘The fact 9 out of 10 MA enrollees are in plans that receive 4 or 5 stars, combined with MedPAC’s finding that quality ratings are unreliable, means that the ratings, which are promoted as a tool for consumers to compare plans, is largely unusable for such purpose,” […] “This Health Affairs report highlights that billions of dollars in bonus payments – that could instead be used to expand Medicare benefits to all enrollees – have not improved quality in the MA program.’”

The authors of the report conclude that “[t]he MA quality bonus program poses a substantial and rising expense of $6 billion annually. Given the paucity of evidence for its effectiveness, our study supports calls from stakeholders […] for CMS to substantially revise the quality bonus program or eliminate it altogether.”

We concur.