Health Affairs: Medicare Advantage is Crushing Fee-for-Service
Two new Health Affairs studies this month brought further evidence that Medicare Advantage (MA) is crushing traditional fee-for-service Medicare in quality, and that the world's largest experiment in risk adjustment is working in MA.
The first study suggests that members of Medicare plans "might use fewer services and be experiencing more appropriate use of services than enrollees in traditional Medicare."
The second suggests that the government has succeeded over the past decade in reducing favorable risk selection in MA plans by introducing diagnosis-based risk adjustment, a lock-in period for members, and expanded plan types.
The studies together paint a compelling picture that MA plans are crushing traditional Medicare in cost containment without necessarily serving the healthiest members, and that risk adjustment has the desired effect.
Raising the Medicare Eligibility Age and Its Implications in the Fiscal Cliff Negotiations
You'd never guess from what you see in the news, but the fiscal cliff negotiations are proceeding on two tracks and there is a deal to be done in the coming weeks. One track is public: the screeds in the media and parliamentary chicanery on the Hill, all with the goal of proving their ideological purity to their respective bases and beating the crap out of the guys across the aisle. Speaker Boehner last Friday: "There isn't a progress report, because there's no progress to report." That piece has been depressing as hell to watch. Didn't we do this with disastrous results last August? The two parties are like little boys with toys.
The other track is private: the horse-trading going on behind closed doors by Boehner and President Obama. There, a deal is coming together. What we see is a game of chicken between Democrats and Republicans -- Dems won't budge on entitlement cuts and Republicans continue to reject any tax increases on the wealthy -- and at some point in the next two weeks, one party will blink. And the path to a deal is this: raise tax rates a little, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. They'll cap some tax deductions as well to generate more revenue.
The bigger question is what Republicans will get on the spending side of the deal. There will be cuts to Medicare -- we're thinking in the neighborhood of $400-500 billion -- and the big concession from the Dems is likely to be an increase in the Medicare eligibility age from 65 to 67. It's not great policy as it would disproportionately impact minorities and hospitals and wouldn't actually save much if anything, but it has huge symbolic importance for deficit hawks and Tea Partiers, so it represents an outsize bone for the President to toss in. That's why you see Nancy Pelosi screaming it's a non-starter -- they're making it tastier for the right.
Sarah Kliff from WaPo did a terrific post today on the five biggest implications of an increase in the eligibility age. She points out that the change would move about 5 million seniors out of Medicare, and back to their employers' insurance, into the exchanges, or into Medicaid if eligible. A whopper of a finding: "as the federal government saves $5.7 billion in 2014 by spending less on Medicare, (employers and Medicaid) would spend $11.7 billion more providing the same health care benefits." Not much of a saver there -- but red meat for budget cutters.
A Half-Trillion from Medicare/Medicaid in Fiscal Cliff Deal?
In a recent webinar we predicted that we would see $300-500 Billion in savings from Medicare and Medicaid in a deal to avoid the fiscal cliff. The shapes in the fog are becoming clearer and we'll stand by it: Senate Majority Whip Dick Durbin said this morning on MSNBC's "Morning Joe" that he'd like to see around $400 Billion in cuts from Medicare as lawmakers negotiate a deal to avoid the fiscal cliff.
"I think that's something we should start working with, I think that's a good indication of where we could go. But when we sit down with revenue on one side and entitlements on the other, that's when we get specific."
Durbin suggested a few ways to help achieve those cuts: more means testing, possibly a separate prescription drug program with a low-cost option (?) and encouraging the development of ACOs. Later, during a speech to the Center for American Progress, Durbin, a member of the 2010 Simpson-Bowles Commission, discussed raising the Medicare eligibility age. He's got plenty of "savers and raisers" up his sleeve: "There were some 20 options that were given to us, and I supported a number of them."
Durbin took a welcome poke at some of his Democratic colleagues who oppose reforming Medicare and Medicaid: "Some say don't touch entitlements, I don't think that's a responsible approach," Durbin said. "Untouched, unchanged, Medicare runs out of money in 12 years — 12 years."
The New Post-Reform Core Capability for Health Plans: Risk Adjustment
Medicare Advantage and Part D have for years been the world's largest experiments in paying insurers more for the care of sick members while paying less for healthier members, or risk adjustment. Some two dozen states now risk-adjust Medicaid payments to health plans, and the hundreds of Accountable Care Organizations (ACOs) launching this year and next are risk-adjusted as well. Now that the election has been decided, we know that health plans operating in the insurance exchanges launching in 2014 will also be risk-adjusted based on a similar methodology to that used in MA and Part D. It's the new core capability for health insurers in the post-reform world, and it's examined closely by my two top experts, Bill MacBain and Dr. Jack McCallum, in this month's Managed Healthcare Executive magazine here.
An Old Friend's Newest Challenge: Rein in Massachusetts' Health Costs
An old, dear friend of mine and fellow XLHealth Board member, Stuart Altman, was just appointed chief of healthcare cost containment for Massachusetts' ground-breaking reform effort -- a harbinger of things to come nationally as the Affordable Care Act now hurtles toward implementation. The local NPR affiliate did a great interview with Stu that I wanted to share here. As always, Stu brings tremendous insight and a sense of history and trends to his work, and as goes Massachusetts, so will go the rest of the country in 2014 and beyond.
"Massachusetts is the first state to say that health care costs must stop increasing faster than that of most other goods and services. Prof. Stuart Altman, a Brandeis economist who advised President Richard Nixon on health policy and President Bill Clinton on Medicare, has responsibility for helping the state achieve that goal.
Gov. Deval Patrick recently named Altman to chair the Health Policy Commission, the new board overseeing the sweeping cost-control law. The board, whose other members were announced last week, will monitor progress toward keeping health care spending in line with state economic growth overall. While he's "hopeful" the state can meet this goal, Altman notes that many attempts have failed over the years. WBUR's Martha Bebinger spoke with Altman about the challenge. Here is an edited transcript of that interview:
How do you see this new role?
Massachusetts has put together the best kind of balanced program that I could think of in the country, where it is relying at one level on the many changes that are going on in the private sector. But it also has put together an overarching public assessment of what's going on to make sure that it works, and it actually brings cost down without hurting quality.
If the changes that are currently in place don't do that, this commission is responsible for giving an early warning sign. So we don't have direct regulatory power to force the system to change, but we do have a monitoring role to make sure that it is working. If it's not, [we would] first direct the delivery system and the payers to change, and if that doesn't work, we could also recommend back to the legislature that the state needs more authority.
On one level I'm pretty optimistic. The level of changes that are occurring in the state are really very substantial. And I would say that the delivery systems, including our very big delivery systems, they really are seriously trying to restructure to live within a tighter budget than they had in the past. And the payers too -- Blue Cross, Tufts and Harvard also -- are tightening up the reins and not giving big increases.
But I've been around a long time and I've seen other years and other decades when after a while the cost-containment mechanisms in place began to fall apart, and did fall apart. So while I'm going into this quite optimistic, I also have a degree of skepticism so I'm going to be watching it pretty closely.
You have seen interest in reining in costs wax and wane. How do you rank this period?
If we look back in history we had very strong government regulation environment in the early and middle 1970s, actually put forward by a Republican administration. It looked like the government was going to be a very strong regulator of growing health care spending. We had wage and price controls from '71 to '74. We created health planning agencies all over the country. We had tough certificate-of-need laws.
And then as we move through the '70s we gradually dismantled it all and by the end of the '70s, it was all gone. Then we had a very brief period when the providers had what we called a "voluntary effort" to control their spending. All that fell apart and we had the biggest growth in our history in the 1980s.
Then we introduced managed care, which was extremely effective in slowing the growth in spending, but it was perceived by the patients — and the beneficiaries and the press — as a system that was holding back access and quality. We had this strong backlash and we essentially destroyed managed care by the end of the ‘90s. So I've seen both the private sector fall apart and the government sector fall apart.
Now, I think what's being done is smarter, and not quite as aggressive as the ‘90s, which I think is a good thing. If you're too aggressive you're going to get a lot of backlash too quickly. So I give it a higher probability of success than either the ‘90s or the ‘70s, and I am hopeful.
What's your main worry?
There are two:
Ultimately the constraints begin to hurt certain segments of the provider community, [and they] begin to put out statements to the patients that they're being denied needed care and we begin to develop a new backlash. So I think patients need to be part of this equation and we need to be balancing their needs with the people that pay the bills, so that's one side.
Massachusetts can only be so far ahead of the rest of the country. If inflation really begins to rear its head again in the rest of the country, the likelihood that Massachusetts would be able to really have a significantly lower level of spending growth is hard to hold on to. I'm going to be very conscious of trying to minimize any backlash and I'll also be watching what's going on in the rest of the country.
For patients, are things moving along now in terms of communicating clearly with patients as you think they should?
No. I don't think patients really understand these limited networks and tiered networks and ACOs and the like. I think there needs to be an expanded consumer education program. Also I think we need to do it smarter. You don't force a patient into any one delivery system, you just make it more expensive if they jump out of one to the other, which continues to gives them the choice. What happened in the ‘90s is that often they had no choice, they had to be at a particular network and they couldn't jump out.
So I think we've learned something in the last 20 years. If we're going to ask organizations to have responsibility for total spending of a particular patient population, [the patients] need to know they're in a particular group, but they also need to have the flexibility if for some reason they want to get out. I think we need to better educate our consumers and patients, but I think we've also learned from the ‘90s, so I'm hopeful.
This story is part of a reporting partnership that includes WBUR, NPR and Kaiser Health News.
Election Gives Health Reform the Kiss of Life
It's hard to argue this wasn't a decisive victory for the President and Democrats in the Senate. What remains to be seen is whether intractable Congressional Republicans will come to the table to get stuff done.
While it was a distant #2 issue in exit polls, this election was a de facto referendum on health reform. The ACA will not be repealed and is now assured to be Obama's lasting legacy. The "repeal and replace" campaign -- over three dozen repeal attempts in Obama's first term at taxpayer expense of more than $50 million -- is over. The GOP fought the ACA fiercely but I expect it will be hugely popular by 2016. Our hope is that Congressional Republicans will lay down their arms and help shape the ACA's implementation so they can share the credit when it's as successful as Medicare Part D has been. House Speaker John Boehner made some welcome gestures this week, asserting that "ObamaCare is the law of the land" and that the repeal agenda is over. We'll see.
Here are some thoughts on what happens in government health programs now that the election is over:
Sequestration and Fiscal Cliff: the 2% across-the-board sequester will not happen and the two parties will make a deal on the fiscal cliff that leaves everyone pissed — like compromise is supposed to. The political dynamics strongly favor the President, as his ideal scenario — raising taxes on the wealthy to accompany budget cuts -- occurs without any legislative action, and nothing happening in Congress is always a safe bet these days. Any deal reached will now involve both entitlement cuts and tax increases, we'd guess in the neighborhood of $2T or roughly half that recommended by the Simpson-Bowles Commission, and it will have bipartisan support.
"Doc Fix": The Sustainable Growth Rate (SGR) or the "doc cut" will be fixed, but it has to be paid for — and that's the obstacle both parties struggle with. MA rates are profoundly impacted by this issue, and Congress's inclination to deal with it through annual increments rather than the 10-year price tag in CBO estimates means that MA plans must wait until the next year's rates are announced. The discrepancy between how and when MA rates are set vs. FFS means that MA plans are never really made whole. It's a tremendous challenge for our industry — and an enormous windfall for MA in 2014 and beyond if Congress solves the problem.
Exchanges: Many Red State governors held out hope the election would settle whether they must prepare for health reform. The 11th hour means most have been caught flat-footed and the Federal Exchange will operate in over 30 states and will be the defining marketplace for health insurance starting in 2014. Far-right governors in Kansas and Virginia will eat the Federal fallback; Wisconsin Governor Scott Walker is now scrambling to get his own exchange together, and a handful of others may follow. It's one of the supreme ironies of Obama's reelection: the governors who screamed loudest of a "government takeover of health care" are about to get just that for their inaction, when the Federal Exchange comes to town in 2014.
Medicaid: most, if not all, of the 7-8 Red States who opposed expansion following the Supreme Court ruling will fold and take the expansion funds in the next 90 days — it's just too good a deal to pass up. Most of the 16 Million new Medicaid beneficiaries envisioned by the ACA — many childless uninsured adults -- will be assured of coverage in a second Obama term.
Dual Eligibles: The migration of dual eligibles to health plans will now move forward in more than two dozen of states in the next two years. The state fiscal crisis will overwhelm concerns about the speed of the migration, and it will result in over $200 Billion in new annualized premiums for plans in the next 3 years. The duals are now affirmed as the biggest opportunity for health insurers in a generation — bigger than the exchanges. They're also the most vulnerable, complex and expensive patients in the entire US health system and will challenge health plans like never before.
Medicare Advantage and Part D will continue on the course set by the ACA, and we expect the consolidations within the industry to accelerate with the election's uncertainty resolved. Look for a much tougher CMS in a second Obama term, with a continued increase in oversight, bolder regulations raising the bar, and a tougher compliance posture from CMS for Medicare Advantage and Part D plans.
- The Stars program's current trends will continue: Standards will change every year and underperforming plans will be hunted down and eliminated. CMS may get moving on SNP-specific rating standards, as SNP plans will be in trouble soon without them. Plans with 4+ Stars will continue to get bonuses and rebates under the ACA, but 2013 will usher in a new era of sub-3 Star plans being shut down by a much tougher CMS.
- CMS will keep trying to find a better way to risk adjust. We expect an attempt to recalibrate the HCC coefficients based on encounter data, which will change the dynamic: Plans will have to find missing codes to avoid being cut, rather than getting paid more. How CMS adjusts for the FFS error rate will be crucial.
- SNP and 1876 reauthorizations will both get paid for, but we need a vehicle to get the 1876 extension quickly, since it expires the end of December 2012. SNPs expire at the end of 2013, and so have more time for reauthorization.
Medicare: We expect Medicare will serve as a piggy bank for deficit-reduction proposals, given its size and fiscal situation.
- The Ryan/Wyden Medicare reform proposal will be debated as a gesture of "cross the aisle" goodwill from the President, but won't come close to enactment. But "premium support" will go mainstream in the debate and become more palatable over time — it reeks of inevitability and Democrats must come to the table to save the program we all hold so dear. The discussion begun by Ryan and Wyden must have its day.
- We expect the cuts that have been considered in prior budget proposals will be back on the table, including: fraud detection, reforming Medicare cost sharing rules, restricting first dollar coverage in Medigap, extending Medicaid drug rebates to duals and LIS, and more means testing. Provider cuts will also be on the table, especially for hospitals.
- An increase in the eligibility age to 67 is a possibility. But unlike with Social Security, deferring the eligibility age merely cuts off the lowest-cost tail of the distribution. The cost reduction would be disproportionately small compared to the number of people politicians would upset.
ACOs: with the ACA intact, the truly astounding surge in ACOs participating in Medicare, Medicaid and the commercial market will continue. Over 100 ACOs are already operating in Medicare. Over 500 applications were received by CMS for the September filing deadline for the Medicare Shared Savings Program, and over 300 ACOs are active in the commercial market and Medicaid reforms. With the election ACOs are here to stay as the bedrock contracting vehicle for the evolution and enrichment of forward-looking providers.
While it ended up a "status quo election" it gave the Affordable Care Act an indelible kiss of life and ushers in one of the biggest changes in our domestic policy in a generation. Now it's time to get down to the real work of implementing it.
The Impact of the Election On Medicare Private Plans
Now that President Obama has been re-elected, the Affordable Care Act (ACA) will not be repealed and the ACA provisions impacting Medicare Advantage (MA) plans and Prescription Drug Plans (PDPs) will continue to be implemented.
• For MA plans, 2013 will be the last year of the phase-in of the ACA four quartile payment reform, although some counties have a longer transition period. The star bonuses will continue under the demonstration (which rewards plans with 3 or more stars) through December 2014 and in 2015 the ACA formula (which rewards plans with 4 or more stars) will apply. The coding intensity adjustment will continue and MA plans will be required to meet the 85 percent Medical Loss Ratio in 2014.
• Part D plans will continue to phase in coverage in the donut hole until 2020 when the beneficiary coinsurance will reach 25 percent. And employers will continue shifting their retiree coverage to MA plans and PDPs when the tax benefits of the Retiree Drug Subsidy (RDS) expire in 2013.
The ACA payment formula already reduced MA rates by $132 billion over 10 years, but these reductions have been offset by the higher quality bonuses in the CMS demonstration that according to GAO have "masked" the intended ACA cuts. Next comes the possibility of sequestration which is current law that will cut 2 percent off MA rates in 2013 unless it is repealed. While both parties support repeal, the path to get there by January 1 with a lame duck Congress is not clear and it is possible that the 2 percent cut could take place. More likely is a legislative agreement that will replace sequestration with more targeted budget cuts to avoid the "fiscal cliff". Various budget proposals discussed last year including the Simpson Bowles proposal and previous Obama budgets (which included an additional $248 billion cuts to Medicare and $72 billion to Medicaid) will form a starting point for the new discussions. These additional Medicare and Medicaid cuts included provider cuts and increased beneficiary cost sharing. While additional MA cuts were not on any lists that we saw last year, it is certainly possible that they will be included. For example a CBO report that came out two days after the election included an option to reduce Medicare payment rates across the board in high payment areas.
Stay tuned.
Well, thank God THAT'S over
Our long national stimulus for political consultants and media companies has finally ended. What do we have to show for it? An electoral map that is still nearly identical to the national schism during the Civil War, a lot of BuzzFeed slide shows, a "theater of the absurd" moment as Karl Rove blew up Fox's coverage and Megyn Kelly's legs literally ran away… and for some, a hangover of epic proportions.
In my view, while a little morning-after gloating can be expected, any talk of a mandate for the Dems' philosophy of government is overstated. Tell your friends as much. The President barely won the popular vote. The composition of Congress didn't change much. As noted by the New York Times this morning, most counties actually shifted right in 2012. Moreover, thirty statehouses are occupied by GOP governors. That's not the result you get when you win decisively on the issues.
More interesting to me than the talk of mandate is the coalition that the President has put together. Lindsey Graham, the GOP Senator from South Carolina, famously remarked this summer, "We're not generating enough angry white guys to stay in business for the long term." Or as Matt Lewis reported GOP strategist Chuck Warren said to him "To be frank, we're a Mad Men party in a Modern Family world." That proved true last night. The coalition that elected Obama in 2008 re-elected him in 2012. The GOP's erosion among non-elderly, non-white constituencies concerns them deeply, as it should. The way out is not clear. But that's not the news, in my view. The news to me is that our quadrennial national debate continues to substitute identity politics for an actual discussion at great cost to the system. That's what a coalition is, of course. And coalitions are much more important to the "ground game" at get-out-the-vote time. We're not unique as a country in this regard. What is unique (and ironic) for a nation such as ours, is that this appears to be so because we will seem to do anything to not talk about class, even by reducing our elections to generalizations about race and gender. Our elections become about mobilizing the Hispanic vote, or about "soccer moms---" as if the issue of providing day care to the Gomez family so that mom can work doesn't impact dad too.
Even more concerning to me is that once again the election was still one giant pander to the actively voting middle class. The only mention of the 45 million Americans who live under the poverty line was to blame them for crimes of dependence perpetrated against the rich. Too much Medicaid. Not enough bootstraps. It begs the question: what would a campaign that was genuinely about "the least among us" even sound like these days? We used to have them. But that language would be stale and borrowed now. For an ex-political wordsmith, it's a serious question even if it is also a rhetorical one. Our politics are only ugly because we have forgotten how to be beautiful. It is beautiful to have cares for others beyond yourself because empathy is part of what makes us human, as is weeping at a piece of music or leaping to cheer a touchdown. These are things that belong in politics.
As a result, this election was the triumph of tactics over inspiration. Given the very lack of mandate, what can be said is that the Republicans got out-smarted and out-worked in the battle ground states. (Let's also not forget outspent, despite the idiot's tax levied on Sheldon Adelson and others thanks to Citizens United.) I don't think laypeople understand just how sophisticated the Obama operation was. (A primer here). What they experimented with in 2008 leapt forward in 2012. Once again, the man made history. Only this time, he didn't do so with the color of his skin but with the content in his databases. The only comparison one can make from recent years is what Google did to the advertising industry--- destroying 100 years of clichés and assumptions while creating a new, superior reality for matching people with their material desires. There was advertising before AdSense and after AdSense. The Obama operation took trillions of pieces of consumer data, a la Google, and then married it to behavioral economics to create engagement strategies that left the GOP looking positively… 2004. One couldn't help note it when listening to Romney Ohio Chair Ted Strickland proudly talk about the "many thousands of doors" the GOP's Ohio teams had knocked on. The Obama crew did too, but when you opened the door, they already knew what magazines you read and whether you liked to Supersize your value meals. If that spooks you out, turn off your computer. Because it's the way the world works now.
A final first note: speaking of 2004, my friends with whom I served on John Kerry's campaign have noted just how similar this campaign was to that one. An embattled incumbent (is there any other kind?) A challenger emerges from a fractious field because he "looks good on paper." He is charismatically challenged. By spring, he emerges cash poor from a hard-fought primary. The money starts to come in, but not before the incumbent's surrogates label him with a devastating critique that neutralizes his natural advantage: "Swift-boating" in the case of Kerry, "Bain" in the case of Romney. The 47% comment would come later, but it stuck in part because of how effective the early critique had been.
So, while I am glad to get back to the work of reforming health care, today is not a day of celebration for me. I want to finish what we have started with the ACA, flawed as it may be. But the far bigger project is to finish reforming our politics. I sense we'll be done with Health Reform first.
Public and Private Exchanges
It appears that Medicare beneficiaries who use the most health care services and are often considered the least able to shop over the internet for health insurance may have been the trailblazers for how health insurance will be purchased in the future. Medicare took a first step in the 1990s when it created a voluntary online marketplace where Medicare beneficiaries could select a Medicare Advantage private plan from the government run internet site "Medicare Compare". Medicare expanded the experiment when it implemented the Part D prescription drug plan benefit in 2006. At that time, all seniors and disabled beneficiaries who were not covered by an employer drug plan were required to shop and select from an online menu of new prescription drug plans during a short open enrollment period.
The automobile industry can be credited for targeting Medicare retirees in 2008 when it began a major shift from group health insurance plans to individual plans offered through a private Medicare exchange operated by Extend Health. The financially strapped auto industry cushioned the move from defined benefit plans to defined contribution health plans by offering cash to cover additional benefits and Extend Health "coordinators" to help Medicare retirees choose an individual insurance policy from a menu of private plans. Other private sector employers cautiously followed and the Extend Health private exchange serves 130 employers and 200,000 retirees. Employers report savings of $400 million annually in retiree health insurance costs and a substantial reduction in administrative burden.
This year Towers Watson bought Extend Health with plans to broaden the private exchange to serve employers in the commercial market. Aon Hewitt also announced plans to expand its private exchange to serve the commercial market. On September 27, 2012 the Wall Street Journal in a front page article discussed how two large employers, Sears Holding Group and Darden Restaurants Inc. are "planning a radical change in the way they provide health benefits…giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace". This shift is different from the auto industry shift since employees will still remain in employer group plans and will not select from plans in the individual market. The online marketplace operated by Aon Hewitt will offer 150,000 Sears and Darden employees 5 plans which is substantially fewer than the up to 30 plans offered by Medicare. The Journal reported that this move will be closely watched since it "might parallel the transition from company provided pensions to retirement 401k". Several recent surveys of employers find that 40 percent expect to participate in a private exchange over the next three to five years driven largely by the CFO's interest in cost savings.
On a separate track, health care reform is building health exchanges or marketplaces that will be available in October 2013 for individuals and small employer groups to purchase health insurance. The ACA exchanges are projected to provide insurance to 16 million persons. Large employers will not be eligible to participate in the ACA exchanges until 2017.
The developments under the ACA are spurring large employers to rethink their current retiree health care options. With the loss of the tax benefits from the Retiree Drug Subsidy in 2013, many employers are moving their Medicare eligible retirees into Employer Group Waiver Plans, either Medicare Advantage or Prescription Drug Plans. This trend will continue. Other employers will consider private exchanges. The 2012 Retiree Health Care Survey conducted by Aon Hewitt reports that 63 percent of employers have either made or plan to make retiree strategy changes in the near future.
So the trend is clear - increasingly Medicare retirees and active workers and their families will be using health exchanges, either public or private, to select their health care insurance in the future.
Open Enrollment and Star Ratings for 2013
Open enrollment season has started and CMS has posted the star ratings for each Medicare Advantage (MA) plan and Prescription Drug Plan (PDP) on the Medicare.gov website, which is the official site beneficiaries use to get information on their plan choices. Five star plans get a special gold star icon and have special enrollment periods. Higher performing MA plans also receive higher bonuses. Low performing plans are also designated by a special icon on the Medicare website. Most MA plans whose rating fell will see a decrease in their payments in 2014.
The good news is that overall plan ratings improved in 2013 compared to 2012. 127 MA plans had four or five star ratings compared to 106 in 2012. These represent 23 percent of all MA plans and 37 percent of all MA enrollees. The average MA-PD star rating weighted by enrollment is 3.66 percent compared to 3.44 percent in 2012. Five star plans are marked with a gold star on the Medicare Plan Finder and these include: Kaiser Foundation Health Plan (6 separate plans), Group Health Plan, Group Health Cooperative, Gunderson Lutheran Health Plan, Humana Wisconsin Health Organization, Health New England.
PDPs also improved in 2013 compared to 2012. 26 PDPs had four or five star ratings compared to 13 in 2012. The average star rating in 2013 is 3.30 compared to 2.96 for the 2012 ratings. 30 percent of PDPs received the highest ratings and these served 18 percent of enrollees. Five star PDPs with gold star ratings on the Medicare website include Excellus Health Plan in New York, Hawaii Medical Services Association Wellmark/Blue Cross Blue Shield in the upper Midwest and Northern Plains, Catamaran Insurance of DE.
The number of low performing plans declined for 2013, For 2013, 26 contracts received 2.5 stars or lower for the last three years of which 10 are MA plans and 16 are PDPs. In 2012, 30 plans were designated as low performing. 20 of the low performing plans from last year either improved their ratings, withdrew their contract or consolidated.
MA plans and PDPs have a number of concerns about the methodology used to establish the star ratings, including the age of the data (e.g. the 2013 ratings are based on 2011 data), the frequent changes in methodogy and the difficulty in improving scores from year to year. For most plans these ratings are good news and the star rating has gone up for most measures from 2012 to 2013. Three new measures focused on care coordination and improvement. For MA-PDs, the national average for the care coordination measure was 85 percent or 3.4 stars. Non-SNPs performed better on this measure than SNPs. The measure for net improvement showed that MA contracts on average achieved a score of 3.1 for Part C and 3.4 for Part D while PDPs achieved an average score of 4.1. However approximately 10 percent of the plans will see a lower bonus as a result of their new lower ratings and plans with 2.5 stars or less for three years in a row face the possibility of termination from the program.
http://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData.html