Medicare Advantage Quality Grades Subject to Comment Soon

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By Mindy Yochelson

Oct. 20 — A top Medicare official said Oct. 20 that the agency will be seeking comments soon on possible changes to Medicare Advantage's five-star quality grades and will be issuing potential changes to the MA risk adjustment program.

The Centers for Medicare & Medicaid Services by early November will publish possible solutions to its risk adjustment system in response to complaints that MA (Medicare managed care) plans that enroll a substantial portion of beneficiaries who are dually eligible for Medicare and Medicaid or receive the Part D low-income subsidy weren't receiving adequate funding, according to the CMS's Sean Cavanaugh.

This is because the payment system “did not sufficiently adjust for the higher cost of dual eligible beneficiaries,” Cavanaugh said. Under risk adjustment, the Medicare program reimburses managed care plans based on the health status of their members as well as other demographic factors.

Cavanaugh, deputy administrator and director of the Center for Medicare at the CMS, spoke at a Medicare conference sponsored by America's Health Insurance Plans.

Comments on Stars 

Later in the fall, the agency will propose possible policy changes on the impact of high enrollment of duals on the MA five-star quality rating system as part of the agency's annual request for comments on star rating changes.

CMS research showed that outcomes for dual eligibles were systematically worse as compared to higher-income beneficiaries who were enrolled in the same contract on 19 quality measures.

These plans would be disadvantaged when compared to their peers in terms of the number of stars received and in the area of bonuses offered to plans rated highly, at four and five stars.

Sharp Part D Growth 

Overall, however, Cavanaugh said the 2016 outlook for the program is bright with a projected 17.4 million enrollees, up by 1 million since last year, and comprising 32 percent of beneficiaries.

He said that 70 percent of beneficiaries are in four- or five-star plans.

At the same time, the Medicare Advantage and the Part D drug benefit programs are facing various challenges in advance of the 2016 contract year.

For example, as total Medicare costs per capita grew by 1 percent, Part D drug benefit costs grew by 8 percent and are forecast to grow by 15 percent next year, he said. This means, Part D “is growing faster than what is sustainable,” he said.

In MA, per-capita costs are higher than what they would have been if the enrollee had remained in fee-for-service, he said. A challenge is to “restore some balance” between MA and fee-for-service, he said.

Delivery System Reform 

Also upcoming are considerations on the role of MA in delivery system reform, he said.

The Department of Health and Human Services in January announced a timeline to move the Medicare program toward paying providers based on the quality, rather than the quantity, of care.

The HHS set a goal of tying 30 percent of fee-for-service payments to quality or value through alternative payment models, where the provider is responsible for the total cost of care, by the end of 2016.

The CMS needs to decide the role of MA in this goal, as it's important to have alignment across payers, Cavanaugh said.

Congressional Requirement 

In addition, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which replaced the sustainable growth rate formula with alternative payment models for physician Medicare payments, has a similar requirement.

The law requires that by July 2016, the CMS report to Congress on “how we align what is happening in Medicare fee-for-service alternative payment models with what's going on in Medicare Advantage,” Cavanaugh said.

The agency will be asking for suggestions from the industry, he said.

Network Adequacy

Asked about a recent Government Accountability Office report that criticized the CMS's oversight over the adequacy of MA plan medical networks, Cavanaugh said the agency has “taken some steps internally so we can enforce our provider network adequacy rules more frequently.”

He cited the possibility of having one place in which physicians could report their status in various MA plan networks.

However, he added, “when you consider the number of plans, the difference in markets and the number of things a network has to be adequate for, it's remarkable how well it does work.”

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

To contact the editor responsible for this story: Nancy Simmons at


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