CMS Message to Medicare Advantage is in the Stars

In an assessment of the recent rate announcement from CMS, Oliver Wyman government experts conclude that despite the rate reprieve the key success factors in MA are even more critical: MA plans that are better managers of care, more efficient, more focused on quality, and better at properly coding risk will be disproportionately rewarded.

The prize for those that succeed is significant: The MA market is large (over 13M members) and has been growing over 10% per year, with powerful underlying drivers – a tidal wave of Baby Boomers and current seniors already familiar with managed care. With two-thirds of Stars measures driven by clinical performance, the need for payer-provider collaboration is greater than ever.

Post-reform Success in Medicare Advantage

Three key factors will increasingly drive Medicare Advantage success in the post-reform era. Oliver Wyman has developed an optimization tool to evaluate the impact of the various interventions across Stars rankings, care management, and revenue management.

1How important are Medicare Stars ratings to Medicare Advantage plans?

Very. It’s right at the top of the list of MA success factors, right alongside risk adjustment and managing the cost of care. For one thing, there’s a lot of money involved. Starting in 2015, a plan with four stars will get a bonus that works out to $5 million per 10,000 members. A plan with three stars gets nothing. And that’s not even counting the marketing advantage of being officially designated a high-performing MA plan.
2What aspect of Stars is hardest for MA plans?

Pretty clearly it’s the focus on the clinical. Most MA plans are fine with the idea that they’ll be judged on how well they do their jobs and how satisfied their customers are. But Stars goes much further: About two-thirds of the measures are clinical. You’re judged on how well the healthcare providers in your network are doing their job. And that’s new territory for most plans. It forces you to work across the traditional line between payer and doctor, and that makes both sides uncomfortable.
3And what about individual members?

They’re important, too. In the long run, if you want to hit your goals for outcomes, you can’t sit around and wait for patients to go to the doctor, no matter how carefully you have adjusted physician incentives. There are some people who simply don’t use their doctor until things have gotten serious. You need ways to connect with them earlier—ways that enhance rather than detract from the relationship with the provider.
4What would you say to an MA plan that’s already achieved a four-star rating?

I’d say, “Congratulations. Now get back to work.” It’s important to realize that CMS isn’t looking for a simple one-time boost in quality. They plan to raise the bar every year for the foreseeable future. The metrics will shift—with a greater emphasis on outcomes—and the standards will rise. Ultimately, you are competing against the benchmarks CMS sets and with other plans for the highest ratings.
5So what are CMS’s goals?

They want to use their economic clout to create change—not just for MA plans, but for the doctors who contract with the plans and the patients who go to the doctors. And they’ve set up a system that seems likely to create winners and losers based on quality and value. I don’t know if anyone truly understands yet how Stars will work in the long run, but for now it really does change the game for health plans.