Medicare Advantage Demo to Use Financial Incentives to Boost Quality

John Commins, November 15, 2010

The Centers for Medicare & Medicaid Services said it will update its five-star plan ratings in 2011, and use the new metric as the basis for quality bonus payments in a three-year demonstration project for Medicare Advantage health plans that starts in 2012.

The five-star rating system is used by CMS to ensure that health plans meet Medicare quality standards.  The ratings allow beneficiaries to compare the quality of care and customer service that Medicare health and drug plans offer.

In addition, a "low performer" icon will be placed next to plans with fewer than three stars for the past three years. CMS' star rating system considers 53 quality measures, including preventive services, managing chronic illness, and keeping consumer complaints to a minimum.  All ratings can be found on Medicare's Plan Finder.

The 2011 ratings released Friday will serve as the basis for a quality bonus payment in the demonstration for Medicare Advantage plans beginning in January 2012. The demonstration builds on the quality bonus payments authorized in the Affordable Care Act by providing stronger incentives for plans to improve their performance and accelerate quality improvements. Medicare Advantage plans earning the highest performance rating—five stars—can get bonuses equal to 5%, and all plans with three stars or more will qualify for a bonus payment beginning in 2012.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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