An “October Surprise” in Medicare Advantage Star Ratings

Each year, one of the most anticipated announcements in the Medicare Advantage (MA) industry is the Star Ratings and program technical guidance for the coming year from the Centers for Medicare & Medicaid Services (CMS). This year’s includes an “October Surprise:” a little-known methodological change that could force dozens of 4- to 5-Star-rated plans to lose their hard-fought bonuses and rebates.

Roughly 370 MA plans are currently scored under the Star Ratings system, which we all know by now is graded on a curve. Plans above 4 Stars get substantial bonus payments and bid rebates from CMS and above 5 Stars can market and sell their products year-round. In this sense, plans below 4 Stars are circling the toilet bowl as there is only so long they can compete against the better benefits of 4+ Star plans. The Star Ratings for 2017 will likely knock many 4+ Star plans off their pedestals. Here’s why: for 2017, for the first time, 188 new plans could be scored under Star Ratings.

• 64 of the 188 are Medicare-Medicaid Plans (MMPs), which CMS announced in June will be moved into their own separate Star Ratings program this fall. This is a bit of bad news for most MA plans, since their inclusion in the MA Star Ratings program would likely have helped fill the lowest end of the curve.
• The 124 that are left still represent enough mathematical volume that their performance will shift the bell curve. Most will likely earn an overall rating of 3 or 3.5 stars, which will cause rating dilution for those at 4+ Stars. If those plans have the same level of performance as the previous year, they will likely dip below 4 Stars. This is a looming disaster for those companies because they’ve already booked the bonus money and predicated their benefit designs and 2017 campaigns on receiving the rebate.
• Regarding the 6 “dead men walking” plans below 3 Stars for 3+ years and slated for termination: a “hospital improvement” bill, which passed the House and is still in the Senate, includes a provision to delay CMS’ authority to terminate MA contracts based on poor Star Ratings for 3 years. It’s possible these 6 plans may continue to fill the very lowest end of the Star Ratings bell curve, thus helping other low-performing plans by padding the lowest end of the bell curve.

Many plans are going to get a nasty shock when they dig into CMS’ latest news. It’s another stark reminder Star Ratings management is a constant campaign, and plans cannot afford to get comfortable when it comes to their quality performance.

Resources

CMS recently notified plans of the first preview period for the 2017 initial Star Ratings data. It is critical for plans to begin the annual re-evaluation of Star Ratings performance now to pinpoint new problem areas, implement tactical actions, and identify improvement opportunities to raise ratings. Read full analysis >>

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