What are MedPAC’s April 2020 Star Ratings Recommendations?

With Medicare Advantage (MA) enrollment soaring, COVID-19 presenting still-developing threats to Medicare, and the Medicare Trust fund approaching insolvency, the Medicare Payment Advisory Commission (MedPAC) continued emphasizing the need for urgently reforming the MA Quality Bonus Program (QBP) during its April 2nd public meeting.

MedPAC first presented concrete recommendations to Congress to redesign the current MA QBP in June 2019. Almost every month since that time—most recently at the April 2020 public meeting—MedPAC has continually refined its recommendations to accommodate enriched thinking and feedback from stakeholders.

In addition, with the current QBP adding an estimated $6 billion in cost to the Medicare program (yes, billion—with a “B”), modifying the program to make it cost-neutral to Medicare (like most other fee-for-service [FFS] quality incentive programs) is likely increasingly enticing as CMS searches for ways to use existing levers to better control Medicare spending. Although MedPAC’s recommendations are nonbinding, they often make it into CMS policies and programs, and thus, should be watched closely, as they may represent the future direction CMS will take with the Star Ratings program.

MEDPAC’s Concerns with the Quality Bonus Program

MedPAC cites the following concerns, which they indicate are inconsistent with the Commission’s principles for quality measurement, as the rationale to redesign the program:

  • The QBP uses too many measures, including process and administrative measures, instead of focusing on a small set of population-based outcome and patient experience measures, which dilutes the goal of assessing and improving healthcare quality.
  • Organizations are rated at the MA contract level. Many contracts cover wide areas, often in noncontiguous states, which means a contract-level rating may not be a useful indicator of the quality of care provided in a beneficiary’s local area.
  • The QBP scores plans’ performance relative to one another rather than in relation to predetermined performance targets. Because performance targets are not known in advance, it is difficult for plans to manage quality improvement efforts.
  • The QBP does not appear to sufficiently capture variation in quality among Medicare population subgroups (such as low-income beneficiaries and beneficiaries with disabilities). Plans serving high-need populations are less likely to be classified as high-quality plans based on the nationally constructed model, regardless of their actual impact on local quality.
  • Unlike nearly all of Medicare’s FFS quality incentive programs, the MA QBP is not budget neutral but is instead financed by added program dollars.

These concerns are exacerbated by the financial implications of the program. The current QBP uses broad-contract quality results that have spurred contract consolidation and unwarranted bonus payments. Past consolidations have given some companies an unfair advantage in certain markets and caused reporting units to not represent market area performance in some cases. As a result, most beneficiaries are currently enrolled in plans that have experienced some level of consolidation. Though recent legislation has limited plans’ ability to use the consolidation strategy to obtain unwarranted bonuses, the legacy of past consolidations continues to result in increased program expenditures.

MedPAC’s Recommendation to Congress

The Commission has recommended Medicare quality programs:

With this as its basis, MedPAC suggests Congress replace the current MA QBP with a new value incentive program that:

  • Scores a small set of population-based measures,
  • Evaluates quality at the local market level,
  • Uses a peer grouping mechanism to account for differences in enrollee social risk factors,
  • Established a system for distributing rewards with no “cliff” effects, and
  • Distributes plan-financed rewards and penalties at a local market level.

MedPAC provides the following illustration of measures which could be used in an MA-VIP:

MedPAC proposes a change in the scoring and payment model to include:

  • Scoring a plan’s performance for enrollees in each local market area
  • Stratifying enrollees into groups with similar risk factors (e.g., fully dual eligible vs. partial dual eligible)
  • A performance-to-points scale, with any change in performance affecting the size of reward or penalty
  • Financing rewards to high-performing plans through penalties paid by low-performing plans
  • Distribution of rewards within each local market based upon local performance

What to Do Now

Though these potential updates undoubtedly look and feel intimidating, and may be difficult to anticipate, there is plenty that can be done to mitigate uncertainty and prepare for these changes to Star Ratings. From assessing readiness for changes like those MedPAC has recommended, to evolving workplans, strategies and tactics to ensure success on these new measures, GHG can help.

For additional questions and inquiries about how GHG can support your needs, please contact me at msmith@gormanhealthgroup.com.

Melissa Smith
Melissa Smith

Melissa Smith is Senior Vice President of Stars & Strategy at Gorman Health Group, LLC (GHG). Melissa’s team helps clients improve performance within quality ratings systems such as Star Ratings, improve health outcomes and the member experience, evaluate market dynamics and opportunities, optimize distribution channels, and supports our clients’ strategic planning needs.

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