More Medicare Advantage Enrollees in 2014 Will Be in Higher-Rated Plans, Official Says

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By Mindy Yochelson  

Sept. 24 --The percentage of beneficiaries in Medicare Advantage plans that are rated four stars on the Centers for Medicare & Medicaid Services' one-to-five-star quality scale will increase substantially in 2014, a top agency official said Sept. 24.

Jonathan Blum, the CMS's acting principal deputy administrator, told America's Health Insurance Plans' 2013 Medicare Conference that 43 percent of MA enrollees will be in plans rated four stars next year, compared with 28 percent in 2013.

The percentage of beneficiaries in five-star plans in 2014 will remain at 9 percent, according to Blum, who also serves as director of the CMS's Center for Medicare.

This means, he said, that more than half of beneficiaries will be in four- or five-star plans.

Lower End of Scale

On the lower end of the scale, in 2014, 43 percent of beneficiaries will be in plans that receive three stars, down from 56 percent in 2013.

“Plans have really dedicated themselves to quality improvement” and put in place changes that would raise their rating, he said.

In addition, the greater percentage of MA enrollees in higher-rated plans means that beneficiaries are making “active switches” from plans that are lower rated, he said. The star ratings are intended to influence beneficiaries' choice of plans with the stars--along with icons for those plans that are high and low performing--indicated on the CMS's website.

The star rating system also allows for the payment of quality bonuses to MA plans with at least three stars.

Blum said that, surprisingly, plans with higher quality ratings didn't necessarily receive higher scores on compliance audits.

The CMS's 2012 audit compliance program didn't reveal the “natural relationship that I had hoped for” between the audit results and the 2011 star ratings, he said.

Therefore, the CMS's strategy will be to focus audits on all plans, not necessarily those with low ratings.

Spending Slowdown

Blum also addressed a recent CMS report that said national health-care spending is expected to continue growing at historically low rates in 2013, as the Affordable Care Act is implemented and the economy improves .

In the Medicare arena, he said, “I personally don't think it's the economy that's driving the overall slowdown.” Instead, it is “fundamental differences in how care is delivered.”

For example, the report indicated that Medicare Part A hospital spending was estimated to grow 4.9 percent in 2012 but slow to 4.1 percent in 2013.

Blum credited the Part A slowdown to a reduction in hospital readmissions.

The report also showed a slowdown in Medicare Part D (prescription drug) spending.

The report said drug spending fell 0.8 percent in 2012 in part due to a drop in the average price paid for prescriptions as some popular brand-name drugs lost patent protection.

Blum said beneficiaries switching from brands to generics was also behind the Part D slowdown.

Part B Rising, Part C Flat

Blum showed a chart indicating that while spending for Medicare Parts A and D is slowing, Medicare Part B (physician) spending is continuing to rise and Part C (Medicare Advantage) spending is flat.

The rise in Part B spending is expected because of the shift away from care in hospitals to physician offices and outpatient departments, Blum said.

However, he was less sure of the reasons why the per capita cost growth in Part C remained flat between 2010-2011 and 2011-2012, despite the ACA cuts for Medicare Advantage.

Before the ACA, Part C plans were paid about 113 percent of fee-for-service Medicare. Even though they are now paid about 103 percent, the lower payments don't appear to be driving lower spending.

The CMS will continue to focus on how all parts of Medicare can contribute to the overall slowdown, he said.


To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Ward Pimley at

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