Cancel Medicare Advantage Demo, Says GAO

The Office of the Actuary at CMS estimated that the reforms in the Affordable Care Act would result in reduced payments to Medicare Advantage plans, which in turn could cause plans to offer less robust benefit packages.

To counter that outcome, CMS announced that instead of implementing the ACA bonus payments, it would implement a three-year demonstration project that would expand the bonus program to three-star health plans, accelerate bonuses for four and five-star plans, and increase the bonuses for 2012 and 2013.

Based on 2011 star ratings 84% of the 446 Medicare Advantage plans representing 90% of enrolled beneficiaries will qualify for some type of bonus. Keeping the original ACA bonus standards would mean only 24% would receive bonuses.

Keeping the ACA bonus plan is exactly what the report authors recommend. "The Secretary of Health and Human Services should cancel the MA Quality Bonus Payment Demonstration and allow the MA quality bonus payment system established by PPACA to take effect."

The report was prepared at the behest of Congress. In addition to cost, the GAO report cites these concerns about the demonstration project:

• It's not required to be budget neutral.
• The program design precludes a credible evaluation of its effectiveness.
• The bonuses and increased enrollment benefit average performing plans (3 and 3.5 star plans)