The Good, the Bad and the Ugly in Medicare Advantage

In the last two weeks there’s been good, bad and ugly news for Medicare Advantage (MA) plans.  On one hand, the program has never been stronger and quality metrics are surging in the right direction; on the other, the industry is sucking it up on following the rules of its biggest customer, the Centers for Medicare and Medicaid Services (CMS).

First, the good: CMS did its annual data dump on Medicare Advantage and Part D bids and showed the program continuing its robust growth, with higher-than-ever enrollment approaching 17 million, and plans holding premiums and benefits steady during the worst rate environment in decades.  Then, CMS released the MA Star Ratings database for 2015, showing MA quality continues to improve.  The enrollment-weighted Average Star Rating for the industry stands at 3.91 out of 5.  40% of MA contracts were awarded 4+ Stars for 2015, but 60% of enrollees are members of those plans, showing a 30% increase since 2012 and demonstrating the competitive advantage high-performing plans now enjoy.  The 2015 ratings show stable or improved performance in almost 70% of the 46 Part C & D Star measures, 7 of which improved by more than one-half star from 2014 to 2015, and 13 of which earned average ratings above 4 stars in 2015.  There was even an 85% decline in plans receiving the low-quality performance badge of shame.

But then the bad: it’s clear plans have eaten low-hanging Star fruit and are starting to struggle on more complex and outcomes measures, such as managing chronic conditions, managing mental health to improve outcomes, or increasing physical activity and reducing fall risk.  The longitudinal Health of Seniors survey scores are below 3 Stars, and 135 plans remain on the Quality Bonus Payment bubble at 3.5 stars in 2015, meaning almost half of MA plans are circling the financial toilet bowl.  Not good.

And then the ugly: last week’s blistering New York Times story on rampant noncompliance among MA plans. The Times combed through months of compliance action reports and found widespread failures by plans in administering the program, including some common and potentially life-threatening stumbles:

• In more than half of all audits, “beneficiaries and providers did not receive an adequate or accurate rationale for the denial” of coverage when insurers refused to provide or pay for care.
• When making decisions, insurers often failed to consider clinical information provided by doctors and failed to inform patients of their appeal rights.
• In 61% of audits, insurers “inappropriately rejected claims” for prescription drugs. Insurers enforced “unapproved quantity limits” and required patients to get permission before filling prescriptions when such “prior authorization” was not allowed.
• MA plans frequently missed deadlines for making decisions about coverage of medical care, drugs and devices requested by doctors and patients.

CMS officials expressed frustration that they were seeing the same deficiencies year after year.  That these boneheaded infractions are often being repeated makes the news all the more depressing. It’s important to remember if an MA plan with a Star Rating over 3.5 gets sanctioned by CMS for noncompliance, it automatically knocks its rating down to 2.5.  That’s a kiss of death for an otherwise quality company.

What the Stars and compliance data show us is that the plans are doing great on strategy, pricing their benefit designs, selling to Baby Boomers, and managing straightforward quality process measures.  But looking closer, it also shows our industry has a serious execution problem.  We are lagging on performance measures with multiple clinical moving parts, and embarrassing ourselves and endangering our companies and beneficiaries with “101-level” compliance errors.

With both Federal and state governments increasingly relying on MA plans to manage the most complex and expensive patients in the US health system, we can and must do better.

Resources

Listen as John Gorman provides several takeaways from our first review of the terabytes of CMS data and understand why he believes this data shows the triumph of government-sponsored programs. Access the podcast here >>

Gorman Health Group can evaluate your Star Ratings approach and identify tactics you can begin implementing immediately to integrate initiatives, eliminate redundancies, and build an enterprise-wide Star management structure. Visit our website to learn more >>

Save the Date for the Gorman Health Group 2015 Forum. Join us April 7-9, 2015 at the Gaylord National Resort and Convention Center in National Harbor, MD. Learn more about the event >>