The quality bonus program (QBP) that rewards Medicare Advantage (MA) plans fails to achieve its two main goals: fairly rewarding MA insurers that actually improve quality and encouraging beneficiaries to use the rating system when shopping for healthcare coverage, according to a new report (PDF) by the Urban Institute.
Instead, because the average enrollment weighted star rating across MA plans lands at 4.15 stars out of a possible five stars, the program overpays MA plans billions of dollars because benchmark bonuses begin with four stars.
“In short, the QBP is a windfall for insurers that does not provide valuable information to beneficiaries or protect them from poor performance,” the report states.
The Centers for Medicare & Medicaid Services (CMS) should ensure that MA plans that perform exceptionally well get bonuses and perhaps be used as models for plans not fairing as well; poor performing plans should be penalized, according to the report.
“Such a system would protect beneficiaries from low-performing plans and reduce Medicare spending on the QBP by using penalties against low-performing contracts to pay for rewards to exceptional contracts,” the report states.
In addition, researchers suggest that the quality measures used to gauge MA plan performance need to be reorganized. Several are limited to beneficiaries up to age 75 because most clinical guidelines stop advocating for population-based prevention services at that point. Three measures—special needs plan (SNP) care management; care for older adults, medication review; and care for older adults, pain assessment—stress clinical quality for more than just prevention but only apply to SNP beneficiaries.
“While some condition-specific prevention measures are included in star ratings, few address important clinical issues such as multi-morbidity, polypharmacy, depression, loss of cognitive functioning, cancer, and patients on renal dialysis,” the report states. “In short, the current clinical measure set CMS uses for star ratings is irrelevant to the clinical quality concerns of many Medicare beneficiaries, particularly those older than 75.”
Past efforts by CMS to make adjustments to the QBP not only failed to curtail overpayments but in two instances at least increased overpayments. That happened in a pilot program that ran from 2012 to 2014 and again when CMS allowed flexibility in reporting by MA plans in 2021 and 2022 because of the COVID-19 pandemic, according to the authors of the Urban Institute report, Robert A. Berenson, M.D., and Laura Skopec.
Berenson and Skopec list ways in which they believe the QBP can be fixed, including having CMS change the ratings system to one that relies on contract- and state-level reporting rather than multistate contracts with an MA plan, thereby making the QBP more user-friendly for beneficiaries.
CMS should also adjust the point system to lower the share of MA plans receiving a star rating of four and above. Some of these proposals would require congressional approval, but the report cites widespread agreement among policymakers and government researchers that MA plans are overpaid.
“While insurers and MA enrollees benefit from this overpayment, Medicare beneficiaries enrolled in MA and traditional Medicare face higher Part B premiums, and beneficiaries and taxpayers face higher Medicare taxes and Hospital Insurance trust fund depletion,” the report concludes. “The effectiveness and excessive rewards of the MA QBP should be part of ongoing discussions to improve the longevity of the Medicare trust fund.”