DKP e-Alert: CMS: Medicare Announces 5-Star Ratings for 2011 Program, MA Quality Bonus Payment Demo, ACA Provision Implementation

Nov 12, 2010

The Centers for Medicare & Medicaid Services (CMS) made three significant announcements in a November 11 press release:

(1) updated star plan ratings for 2011 Medicare health and drug plans,
(2) a 3-year demonstration to provide Medicare Advantage plans financial incentives to provide high-quality care, and
(3) proposed regulations to implement several provisions of the Affordable Care Act to strengthen and improve the Medicare Advantage and Medicare prescription drug programs.

Medicare Advantage 5-Star Rating Program

The 5-star rating system is used by CMS to monitor plans to ensure that they meet Medicare’s quality standards. The ratings provide Medicare beneficiaries with a tool to compare the quality of care and customer service that Medicare health and drug plans offer. In addition, a “low performer” icon is to be placed next to the names of plans that have received less than three stars for the past three years. CMS’ star rating system considers 53 quality measures, such as success in providing preventive services, managing chronic illness, and keeping consumer complaints to a minimum. In the past, the 5-Star program was intended to help guide Medicare beneficiaries to the highest quality Medicare Advantage plan. However, research showed that Medicare beneficiaries selected plans primarily based on whether their providers were in the network and their prescribed medications were on the formulary.

As part of the Affordable Care Act, the 5-Star program will now be used to direct CMS payments to Medicare Advantage plans, in the form of bonuses, with the requirement that plans achieve at least a 4-star rating to obtain bonuses (see Demonstration information below regarding a test to motivate 3- and 3 1/2 – Star rated plans). Achievement of a highest level quality rating – and receiving CMS bonuses – will likely drive whether payer organizations are able to financially remain in the Medicare Advantage system.

Medicare Advantage Quality Bonus Payment Demonstration

A Demonstration Project will be implemented, starting in 2012, to look at alternatives to quality bonus designations for Medicare Advantage plans. This is a nationwide three-year demonstration that will be in effect from 2012 to 2014. The demonstration accelerates the phase-in of quality bonus payments, and also looks to identify bonus options for plans with a rating of 3 or 3.4 stars, which currently is not an option under the law. The Demonstration Project tests whether providing scaled bonuses will lead to more rapid and larger year-to-year quality improvements in Medicare Advantage program quality scores, compared to the current law bonus structure.

Affordable Care Act Provision Implementation

Key Affordable Care Act provisions in the Proposed Rule include the following (we have highlighted those that may have implications for you):

• Limiting cost-sharing under MA and section 1876 cost plans for specified services – this will have significant implications for oncology
• Prohibiting MA and section 1876 cost plans from charging cost-sharing for in-network preventive services for which there is no cost sharing under Original Medicare.
• Clarifying that the Secretary is not required to accept any or every Parts C and D bids and to clarifying the Secretary’s authority to deny bids that propose significant increases in cost-sharing or decreases in benefits.
• Codifying in regulations the voluntary de minimis policy for subsidy-eligible individuals enrolled in MA-PD Plans and standalone prescription drug plans (Section 3303(b) of the Affordable Care Act)
• Developing regulations to implement a monthly adjustment amount for higher income Part D beneficiaries due to the Income Related Monthly Adjustment Amount.
• Eliminating Part D cost-sharing for Medicare beneficiaries who are eligible for full Medicaid benefits and who are receiving home- and community-based services instead of being institutionalized.
• Codifying statutory changes to close the Part D coverage gap (Section 1101 of the Reconciliation Act)
• Describing the methodology for using quality ratings to determine MA bonus payments provided for in section 1102 of the Reconciliation Act.
• Implementing policies to reduce wasteful dispensing of Part D drugs for beneficiaries in long-term care facilities

The full CMS press release can be accessed at: