Medicare Advantage Demo to Use Financial Incentives to Boost Quality

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.

"The five-star rating system helps people with Medicare make meaningful distinctions between high-performing and low-performing health plans. They also allow plan sponsors to see how they compare to other plans and encourage them to improve care and customer service, so their plans are more attractive to Medicare beneficiaries," said CMS Administrator Donald M. Berwick, MD. "The demonstration rewards high performers more than low performers, creating an incentive for all performers to improve."

CMS also announced on Friday that it has proposed regulations to implement several provisions of the Affordable Care Act in improve Medicare and Medicare Advantage prescription drug programs. They include codifying clarifications to CMS authority to negotiate plan bids, expanding restrictions on charging higher cost-sharing than traditional Medicare for certain services, and limiting long-term care pharmacy waste by specifying efficient dispensing practices.

"For 2011, the vast majority of Medicare beneficiaries who wish to enroll in the Medicare Advantage program will continue to see a wide array of plan choices with stable premiums and benefit levels," said Jonathan Blum, CMS deputy administrator, and director for the Center for Medicare.  "The demonstration and proposed rules CMS has announced today continue our commitment to make the program stronger than ever before for our beneficiaries."

More information on this year's current and previous ratings scores is available on a master table at the Federal Register. A link to the proposed rulemaking changes for Medicare drug and health plans cost sharing and bid process can be found here.

The proposed rule has a 60-day public comment period, which closes on Jan. 10. The final rule will be published in early spring 2011.