Featured Health Business Daily Story, Nov. 13, 2012

Stars Demo Woes: Issa Subpoenas Material, SNP Contracts Fare Poorly in 2013 Ratings (with table: More MA Contracts Improved Than Declined in New Star Ratings)

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

November 1, 2012Volume 18Issue 21

While the general trends in the Medicare Advantage star ratings for 2013 are positive (MAN 10/18/12, p. 1), there also are numerous red flags for the MA ratings going forward. Among them is the continued difficulty MA Special Needs Plans (SNPs) and others serving some rural populations are having with the rating system and the ongoing attacks against the legal basis of CMS’s stars bonus demonstration program that ends in 2014.

Those attacks escalated Oct. 22 when House Oversight and Government Reform Committee Chairman Rep. Darrell Issa (R-Calif.) subpoenaed HHS for documents and communications related to the demonstration program. Issa contended in an Oct. 19 letter to HHS Sec. Kathleen Sebelius that the 1,300 pages of documents the department already provided last month in response to his request were “of no assistance to the committee’s investigation.” For example, he wrote, they did not include any documents related to HHS’s decision to exempt the demonstration from the longstanding requirement that CMS’s pilot programs be budget neutral. “This demonstration costs seven times more than the combined cost of the 85 other demonstrations conducted since 1995,” he added.

HHS on Oct. 25 rejected the subpoena as seeking material beyond congressional authority, and Rep. Elijah Cummings (D-Md.), the ranking minority member on the oversight committee, labeled the subpoena as “just for show ahead of the presidential election.” Nevertheless, the situation could be a problem for continuation of the program if Republicans gain control of both houses of Congress and/or the White House in the elections.

And even if the demonstration continues, some types of MA plans have yet to figure out how to get ratings high enough to qualify for its bonuses — which many of them will need to offset part of the effect of the MA payment reductions in the health reform law.

Many of the problem plans continue to be in rural areas, especially in the South and Southeast, although there was clear growth in the number of plans with at least four stars in Florida for 2013. The continued lack of a “geographic adjuster” for standards of care in U.S. regions is a factor in the low ratings in these regions, says consultant Nathan Goldstein, CEO of Gorman Health Group, LLC. CMS consistently has said it expects at least basic care quality as measured by the stars regardless of where an MA plan is located.

The rural-areas problem especially affects SNPs, which are “tremendously challenged” in the stars system, according to Goldstein. He tells MAN that their average 2013 rating is about three stars, partly a result of the way they “really struggle” to keep an active relationship with beneficiaries, “which ultimately is what drives star ratings.” Big problems, he explains, includes that much of the SNPs’ population is “medically illiterate” and “challenged” even in getting to medical appointments.

Transportation to primary care physicians clearly is better in the Northeast, agrees Kristian Marquez, senior director, clinical and quality outcomes at stars data analytics firm Inovalon (formerly MedAssurant). And the SNP-specific stars measures, such as medication reviews, he notes, depend on medical records that are more problematic in a patient population difficult to get into provider appointments.

Beyond the SNP-specific measures, “SNPs are being held to the same standards as other MA plans, and it’s truly a different population,” Marquez’s colleague Dan Rizzo, chief innovation officer at Inovalon, tells MAN. Non-SNP plans’ improvement on star-measure scores is “raising the bar for everybody, and it’s hard for SNPs to keep pace,” Rizzo adds.

Numerous SNPs Got Less Than Three Stars

Indeed, many of the MA plans getting overall star ratings of than three stars for 2013 were SNP operators. A check of the overall ratings by MAN turned up numerous SNPs operated by WellCare Health Plans, Inc.; Molina Healthcare, Inc.; and Amerigroup Corp., among others, with ratings in that category.

Securities analyst Carl McDonald of Citigroup Global Markets calculated that Molina’s star payments for 2014 will fall more than 60% to $2.8 million from the 2013 level as a result of contract star-rating setbacks that led to a decline in its overall star rating from 2.9 to 2.4. Similarly, he reported, WellCare’s star payments will fall about 20% to $28.3 million during the same period as its average star rating dropped from 3.0 to 2.8. The average star rating of another SNP sponsor, Centene Corp., skidded from 3.0 to 2.7, but it had only two contracts measured, so its payment drop is just to $500,000 from $1.3 million, McDonald added.

By contrast, according to McDonald, star ratings will add an average of 3.5% to the payments of all publicly owned plans in 2014, up from 3.2% in 2013, as more non-SNP contracts — along with some SNP contracts themselves — showed gains. The publicly owned plans stand to get $2.96 billion in stars bonuses in 2014, McDonald’s figures show, up from $2.24 billion in 2013. MA plans must have an overall score of at least three stars to qualify for bonus payments, which have to be used either to boost benefits or to reduce out-of-pocket costs of members, under the ongoing CMS stars demo that is slated to expire in 2014. After that, bonuses will go only to plans with ratings of four stars and above under terms of the health reform law.

Taking the CMS data and looking at them another way (see table, below), consulting firm Avalere Health LLC determined that 99 MA prescription drug (MA-PD) contracts will get higher payment bonuses in 2014 than in 2013, while 40 will get lower bonuses.

The total of 63 MA-PD contracts with ratings of 2.5 stars and below for 2013 also shows that CMS has a bunch of contracts it will be following in the next two annual rankings for possible expulsion from the MA program after the 2015 star ratings are unveiled. 2013 ratings are the first that CMS, under a policy it outlined in April (MAN 4/12/12, p. 1), will count in the three consecutive years with ratings below three stars that make plans subject to expulsion.

“It’s not entirely clear whether CMS would then terminate the plan for the 2015 plan year,” Avalere Senior Vice President Bonnie Washington tells MAN, noting that star ratings for 2015 don’t become final until September or October 2014, leaving the timing tight before the start of open enrollment for 2015. “But it seems like they would be able to do so.”

More MA Contracts Improved Than Declined in New Star Ratings

2012 score

Total MA contracts with ratings in 2012 & 2013

Number of MA contracts that improved in 2013

Number of MA contracts with higher benchmark bonuses in 2014

Number of MA contracts that declined in 2013

Number of MA contracts with lower benchmark bonuses in 2014

2

5

5

1

0

0

2.5

58

26

26

0

0

3

139

40

40

16

16

3.5

115

32

32

9

9

4

50

13

0

15

15

4.5

43

3

0

8

0

5

9

NA

NA

2

0

TOTAL

419

119

99

50

40

Notes: MA=Medicare Advantage; NA=not applicable.

SOURCE: 2012 and 2013 Part C and D performance data analyzed by Avalere Health LLC. Data are at www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerforanceData.html.

© 2012 by Atlantic Information Services, Inc. All Rights Reserved.


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