CMS lifts star rating reductions for sanctioned Medicare Advantage plans

Hubert H. Humphrey Building, DHHS Headquarters

The Centers for Medicare and Medicaid Services is scrapping its policy of automatically reducing the star ratings for contracts under sanction, a decision that affects the bonus payments and rebates for plans in a state of penalty.

For Cigna, and its Cigna-HealthSprings plan, under sanction since January 21, the CMS decision means the protection of millions in bonus money, according to a published source.

Cigna did not comment on the monetary amount, but said in a statement: "We continue to address the matter in full partnership with CMS."

CMS released the somewhat unexpected decision in a March 8 memo to all Medicare Advantage and Part D plan sponsors.

The star rating system provides a relative quality score to Medicare Advantage organizations on a five-star scale that determines whether bonus payments and/or rebates for will be paid.

CMS said it made the policy change after receiving numerous comments suggesting that it revise its policy of automatically reducing the star ratings of sanctioned contracts to 2.5 stars, or reducing by one star the ratings of those contracts already rated at 2.5 stars or lower.

[Also: CMS releases first star ratings for home health, few earn 1 star; See the list]

Commenters raised several concerns, including an objection that high-rated contracts can be subjected to a more severe penalty than low-rated contracts as their rating can be reduced by multiple stars to reach 2.5 stars, while low-rated contracts face a rating reduction of only one star, CMS said.

When CMS announced this part of the star ratings policy in 2012, relatively few contracts achieved ratings of four stars or above and fewer than 30 percent of Medicare Advantage plan enrollees were in such highly-rated plans, CMS said.

Currently, close to half of Medicare Advantage contracts, 49 percent,  representing 71 percent of plan enrollees, have achieved ratings of four stars or above, compared to an estimated 17 percent in 2009, CMS said

"Having considered these comments and the growth in the number of highly rated contracts, CMS agrees that we should reassess the impact of intermediate sanctions on the calculation of Star Ratings," said Jennifer Shapiro, acting director of Medicare Drug Benefit and C and D Data Group. "Consequently, effective immediately and on a prospective basis, CMS is suspending the automatic sanctions-based reduction in Star Ratings."

CMS retains the right to impose civil money penalties where appropriate, she said.

For Cigna, the policy change means a savings of $350 million in taxpayer funded bonus money, according to Modern Healthcare.

Cigna has been under sanction - barred from marketing efforts and from enrolling new customers to its Medicare Advantage and stand-alone prescription drug plans - since CMS found deficiencies in an audit of Cigna-HealthSpring operations. The deficiencies, resulted in enrollees experiencing delays or denials in receiving medical services and prescription drugs, or in increasing their out-of-pocket costs for medical services and prescription drugs, according to CMS.

[Also: Cigna barred from enrolling new Medicare Advantage, prescription drug plans]

The policy move comes as federal regulators are currently scrutinizing Anthem's proposed $54 billion takeover of Cigna.

[Also: UPDATED: Anthem to buy Cigna for $54 billion]

CMS said in the memo that it will re-examine the relationship between sanctions and star ratings and will propose a revised approach for 2018.

CMS announced the change in advance of the 2017 final call letter so that it can be applied prior to the deadline for making adjustments to a contract's star ratings based on its sanction status as of March 31, 2016. 

Twitter: @SusanJMorse