Why Kill the Medicare Advantage Demo?

Earlier this week the General Accounting Office released a report critical of a Medicare Advantage bonus plan that rewards the performance of what the GAO views as just average plans. The cost adds up to around $8 billion over 10 years, with most expenditures occurring during the first three years.

While the GAO study seems fairly complete and certainly nonpartisan, I wish there had been some analysis of what taxpayers are getting for their $8 billion. As the GAO left it—calling for the immediate termination of the program—the report is fodder for every anti-healthcare reform-minded politician, blogger, pundit, columnist, and citizen journalist with access to a keyboard.

The Centers for Medicare & Medicaid Services' five-star star program has been around for about five years. Health plans weren’t initially crazy about the methodology (they still aren’t) and didn’t begin to take the program seriously until the 2010 Patient Protection and Affordable Care Act attached cash and other perks to the star system.

The Affordable Care Act set the minimum bonus standard at four stars on a one- to five-star scale, but six months later CMS announced that it would delay implementation of the ACA bonus plan until 2015. In the meantime, it announced an alternative plan (Medicare Advantage Quality Bonus Payment Demonstration) that extended the bonus option to three-star plans.