CMS’s Star Ratings Firing Squad Gets Squirt Guns
Last week, in a surprise move, the Centers for Medicare and Medicaid Services (CMS) reversed its threat to terminate all Medicare Advantage and Part D health plans with 3 or fewer Stars for more than 3 consecutive years. Roughly a dozen health plans were lined up in front of the firing squad as an example to the industry for months — and then CMS issued squirt guns to the executioners.
It’s a one-year stay of execution, with the one year of course being an election year. Importantly, CMS said it will terminate contracts if plans do not achieve at least a 3-star rating by 2016. Our favorite agency maintains the authority to deny applications submitted by poor performers, and to deny an application if it has terminated an MA or PDP contract within the past 38 months. There is a 14 month “grace period” for new plans to comply.
CMS Medicare Chief Sean Cavanaugh made the surprise announcement (beginning at 20:30 on the YouTube video) Thursday along with a September 8 policy letter that went to a handful of media outlets, but strangely isn’t posted on the CMS website or communicated to Medicare plans via the Health Plan Management System. The memo noted:
“In delaying the terminations of these low performing contracts, CMS expects all contracts that have for at least three years received…a Rating of less than 3 stars to concentrate on improving the quality of care provided to their enrollees. These contracts must focus on the overall health care needs of their individual enrollees, including improving enrollee experiences and ensuring that their enrollees receive needed clinical care. These efforts should improve CAHPS, HEDIS, HOS, patient safety, and adherence scores. Organizations and sponsors should focus on all areas where the contract has received less than 3 stars. Organizations and sponsors must take into account their enrollee populations and target any interventions to improve quality to the specific needs of their enrollees. In many cases, a one-size-fits-all approach for interventions will not work.
“CMS may be following up with contracts designated as having a low performing icon (LPI) to discuss their performance and will determine whether enforcement or compliance measures other than contract termination pursuant to §§ 422.510(a)(4)(xi) and 423.509(a)(4)(x) should be utilized to ensure that the contract comes into compliance with CMS’ requirements.”
Barclay’s eminent analyst Josh Raskin pointed out that “WellCare is the biggest beneficiary of this change with 9.5% of its total Medicare Advantage members enrolled in plans with consistently (i.e., three consecutive years) less than 3-stars.” Raskin looked at how publicly-traded Medicare Advantage plans’ 2.5 and 2.0 star enrollment trended over the past two years. He concluded over 200,000 Medicare Advantage lives are at risk when the stay of execution is over next year. “Among the companies with the greatest risk, Centene is most exposed, with roughly 19% of its membership in plans below three stars, followed by Universal American with 16% and WellCare with roughly 12% of its membership in plans below three stars,” he said.
On the positive side, Raskin noted Humana continues to makes strides with the company’s “at risk” enrollment declining from roughly 550K lives in 2011 to 25K last year, and that Molina has also made progress, improving the rating of its sole 2.5-star plan above the 3.0-star threshold last year. All of UnitedHealth’s sub 3-star plans increased to a 3-star plan last year, leaving the company with very little “high risk” enrollment.
So, we’ll have to wait another year for a public hanging in Star Ratings Square. But all of this serves as further evidence of what a game-changer Star Ratings have become in government programs, from the crappy consumer information tool they were just 4 years ago.
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