Medicare Advantage Risk Adjustment for SES is Delayed

A plan to down-weight Medicare Advantage star ratings to reflect the impact of beneficiary socioeconomic status has been put on hold, prompting strapped health plans to press for relief.

Federal officials are stuck at the drawing board.

Since last year, the Centers for Medicare & Medicaid Services has been mulling risk-adjustment of Medicare Advantage star ratings to reflect the impact of beneficiary socioeconomic status on health plan performance. In February, CMS proposed down-weighting a half-dozen Medicare Advantage star ratings, partly on the basis of statistical evidence linking disadvantaged socioeconomic status to relatively poor clinical outcomes in star-rating metrics such as hypertension control.

In the final 2016 MA payment rate and "Call Letter" rules announced Monday, CMS dropped the plan to down-weight six MA star-rating metrics. The agency "believes additional research into what is driving the differential performance on a subset of measures is necessary before any permanent changes in the Star Ratings measurements can be developed and implemented."

In a conference call Monday with reporters, CMS Deputy Administrator Sean Cavanaugh said federal officials remain committed to "adjustments in the future" to help create a level playing field for MA health plans with high percentages of disadvantaged beneficiaries.

For regulators, the key hurdle is gaining a better understanding of the causal relationships between socioeconomic status (SES) and delivery of healthcare services, Cavanaugh said. "There's not yet a consensus on what is driving the observed differences."

The differences are real and have a price that MA health plans are paying, Lois Simon, president of Boston-based Commonwealth Care Alliance (CCA), told me Tuesday. "Star ratings are lower in Medicare Advantage plans that are serving high percentages of 'dual-eligibles,'" she said, using the common designation for disadvantaged seniors who are eligible for services under both Medicare and Medicaid.

She says it takes more optimization of resources to serve these individuals. "It is harder to reach them. It can be harder to establish trust with them. You need to expend more resources to achieve good health outcomes with this population."

MA health plans garner reimbursement bonuses if they can cross the four-star threshold in MA's five-star rating program. CCA's MA health plan, which serves about 5,600 seniors with a high percentage of dual-eligible beneficiaries, has been able to achieve an overall 4.5-star rating through an expansive and expensive approach to team-based care, Simon says.

CCA assembles larges teams of caregivers around beneficiaries ranging from primary care physicians to geriatric social workers. "All of them work collaboratively on a baseline assessment. Many of those baseline issues are not medical, and we identify resources in the community that can make a difference in people's lives: finding safer housing; helping people apply for assistance programs like food stamps; arranging for mental healthcare services; and monitoring the medications for frail elders – we check to see who's going to go to the drugstore and actually pick it up," she says.

"These are the kinds of things I do as a daughter for my mother," Simon adds, "but not everyone has that kind of family support."

'Outside the Control of the Plans'
Richard Bringwatt, president of the SNP Alliance, a Washington, DC-based trade association that represents special needs plans, says CMS has to find a way to offset the costs tied to providing healthcare services to dual-eligible seniors or risk driving the payers who serve this population out of the MA market.

"By not risk-adjusting for SES, you create incentives to avoid the poor," Bringwatt says. "Before risk-adjustment [was adopted in healthcare], there was an incentive to avoid sick people and to avoid the people with complex cases."

He thinks CMS has made the right call to delay the modest proposal to risk-adjust MA star ratings for SES, but he wants federal officials to act soon.

"The stars program still disadvantages dual-eligible beneficiaries served by specialty care plans. CMS needs to keep itself on the hook for providing meaningful relief in the short term while it seeks to find a more workable solution for the long term."

Last month, the SNP Alliance and Bowie, MD-based Inovalon released a data-heavy study on the impact of beneficiary SES on Medicare Advantage star ratings. The study, which includes claims data from 2.2 million MA beneficiaries, used the largest data set available, says Christie Teigland, PhD, Inovalon's senior director of statistical research.

Inovalon researchers worked closely with CMS officials to establish that several SES factors have a demonstrable impact on MA star-rating performance. "This kind of analysis was never available before," she told me.

Bringwatt says one of the key findings of the study is that underlying factors associated with disadvantaged neighborhoods such as shortages of physicians are driving weak performance in MA star ratings for health plans with high percentages of dual-eligible beneficiaries. "The differences are outside the control of the plans [and] independent of the design of the plans."

Teigland says the Inovalon study found wide variation in the impact of SES on Medicare Advantage star ratings, including geographic variation and different blends of SES factors affecting star metrics in varying degrees. "Different factors influence different measures."

The study focused on seven MA star metrics, including breast cancer screening rates. Poverty rates were associated with performance for most, but not all, of the seven MA star metrics. Teigland says breast cancer screening rates demonstrated geographic variation due to "different standards of practice across the country."

CMS faces "a long process" establishing the mix of SES factors that are impacting star metrics and crafting an appropriate solution, Teigland adds.

"If you're going to do it right, you have to go through a process that has a lot of variables to it," she says. Time is of the essence for MA health plans that serve populations with high percentages of dual-eligible beneficiaries because "the plans can't wait that long. Plans are bleeding and losing dollars."

Alternative Approach to Level Playing Field
Teigland says the risk-adjustments to MA star ratings for SES that were proposed in February were not adequately targeted to have a significant impact.

"We ran those numbers and there was zero impact on the average star rating. The aggregate result was zero change," she says. About 15 out of 500 MA health plans her team studied would have posted star-rating gains under the CMS plan to down-weight six MA star metrics to reflect SES impact.

Simon says a better option to account for the higher costs linked to serving dual-eligible MA beneficiaries is to add an adjustment factor to the overall payment methodology that would offset the financial burden of serving a high-risk population. "It would be cleaner to make the adjustment on the payment methodology and let the stars ratings fall where they may."