Medicare to debut quality bonus payment demonstration for Medicare Advantage

The Centers for Medicare & Medicaid Services has updated the star plan ratings for 2011 Medicare health and drug plans, a three-year demonstration to aimed at providing Medicare Advantage plans with financial incentives to provide high-quality care, and proposed regulations for implementing a number of provisions of the Affordable Care Act aimed at improving the Medicare Advantage and Medicare prescription drug programs.

The 5-star rating system is used by the CMS to monitor plans to ensure that they meet Medicare's quality standards and allow consumers with a tool with which they can compare the quality of service of plans. CMS' star rating system considers 53 quality measures, such as success in providing preventive services, managing chronic illness and keeping consumer complaints to a minimum.

"The 5-star rating system helps people with Medicare make meaningful distinctions between high-performing and low-performing health plans," said CMS Administrator Donald M. Berwick, MD. "They also allow plan sponsors to see how they compare to other plans and encourage them to improve care and customer service, so their plans are more attractive to Medicare beneficiaries."

In addition to allowing Medicare beneficiaries to compare MA plans, the 2011 ratings will be used by the CMS as the basis for a quality bonus payment in the demonstration for Medicare Advantage plans in calendar year 2012. The demonstration implements bonus payments authorized health reform that are intended to provide incentives for plans to improve their overall performance.

Under the demonstration, all Medicare Advantage plans that have a score of three stars or higher – there are 348 in the country – will qualify for a bonus payment in 2012. MA plans earning the 5-star rating are eligible to receive the largest bonuses, equal to 5 percent.

"The demonstration rewards high performers more than low performers, creating an incentive for all performers to improve," said Bewick.

The notice of proposed regulations includes other policies that aim to improve the MA and Medicare prescription drug programs. They include codifying clarifications to CMS authority to negotiate plan bids, expanding restrictions on charging higher cost-sharing than traditional Medicare for certain services and limiting long-term care pharmacy waste by specifying efficient dispensing practices.

"For 2011, the vast majority of Medicare beneficiaries who wish to enroll in the Medicare Advantage program will continue to see a wide array of plan choices with stable premiums and benefit levels," said Jonathan Blum, CMS' deputy administrator and director for the Center for Medicare. "The demonstration and proposed rules CMS has announced today continue our commitment to make the program stronger than ever before for our beneficiaries."

More information on this year's current and previous ratings scores is available on a master table at the Federal Register at  www.cms.gov/PrescriptionDrugCovGenIn/06_PerformanceData.asp