Gorman Health Group

I don’t often pick fits with the GAO…But when I do, I prefer it’s about Medicare Advantage

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The non-partisan GAO doesn’t much like the demonstration plan that accelerated the MA Quality based payment initiative, known as the Star Rating System.  You can read why here, here, or here.  For my colleague John Gorman’s great summary, visit us over here

I can save you the linkage: the gist is that (much) too much of the $8 billion in bonus money goes to average plans.  A secondary theme to the criticism—articulated by politicians and commentators, not the GAO—is that the bonus money was cannily used by the Obama administration to soften the blow of the payment cut to MA plans that was a large source of funding for Obamacare.

Let’s dispense with the second point first: The bonus program is at present worth $8B per year (that’s about to change).  The cuts to MA were over $130B.  Soften?  Not exactly up to his standards.

The first point is more interesting.  It’s true that on the bell curve most plans are average.  And it’s true that the demonstration program extended bonuses to these plans for three years.  It’s also true that the bonuses go away in 2015, when only the 4+ star plans will see any bonuses.  So that $8B number will drop, and fast.  Take a look at the best performing plans: they are by and large small, dense, local and affiliated with a dominant provider system in their home market.  Further, the rating system is getting harder every year.  Many measures are graded on a curve and the class is getting smarter.  And as the industry masters certain measures, they are retired and replaced with new measures that are predominantly outcomes oriented— hard things for the plans to manage.

And perhaps most critically, it has also been lost in the discussion that CMS has sent out dozens of letters to low-performing plans (those sub 3 stars for 3 years) reminding them that CMS has the authority to terminate that plan’s contract.

That’s a big stick to go along with all those carrots.

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