Top Rated Medicare Plans Inaccessible to Some Economically Disadvantaged Beneficiaries

By Mindy Yochelson and Madi Alexander

Nov. 30 — Beneficiaries who live in lower-income counties are more likely to enroll in low-rated Medicare Advantage plans, even though nearly half of all Medicare managed care contracts will have 4-star ratings or higher next year, according to a Bloomberg BNA analysis.

Slightly more than two-thirds of Medicare Advantage enrollees next year will be in plans rated at four or more stars on a 5-star scale, about the same as in 2016, the CMS has projected. However, high-rated plans remain inaccessible to some low-income Medicare beneficiaries, according to the analysis.

Medicare Advantage enrollment for 2017 ends Dec. 7. The program is expected to be a focus of attention in 2017 by the incoming Trump administration and Congress, who are eyeing a Medicare premium support system as an expansion of Medicare Advantage.

Average Rating

The average rating for the 364 Medicare contracts nationwide is four stars on the 5-star scale, according to the Centers for Medicare & Medicaid Services.

A rating at that level is highly sought after because contracts that achieve it get a 5 percent Medicare bonus on top of monthly per-member payments to fund increased services to beneficiaries or reduce enrollees’ costs.

On the other hand, Medicare Advantage contracts are rated below three stars when they demonstrate poor performance across a range of measures. The CMS allows beneficiaries who are enrolled in plans that get a low rating for three consecutive years to request a special enrollment period to move into a higher quality plan.

However, not all enrollees are able to make the switch.

Mississippi is the only state where any county is projected to have an average rating of less than three stars, the analysis found. No other state in 2017 will have a single county with a 2.5-star average rating, the analysis found.

In 10 Mississippi counties, Medicare Advantage beneficiaries will be enrolled in plans that altogether have an average rating of 2.5 stars. That’s the bottom of the CMS’s yardstick.

Medicare Advantage's Enrollment Inequity
One County’s Experience

In one Mississippi county—Washington County—two-thirds of approximately 1,700 Medicare Advantage enrollees chose a 2.5-star plan in 2016. The remaining third enrolled in 3.5-star plans. Washington County beneficiaries were offered six plans in 2016, two of which had 2.5-star ratings.

Even if a beneficiary wanted to enroll in a plan rated higher than 3.5 stars, there was only one option—a 4-star private fee-for-service plan with a $97 monthly premium. With a median household income of about $26,000, fewer than 10 people in Washington County chose that plan this year.

Most chose the cheapest plan that still offered drug coverage: a 2.5-star plan with a $40 monthly premium. Neither of the two $0-premium plans in Washington County offered drug benefits this year.

Next year there will be seven plans offered in Washington County: three 2.5-star plans, three 3-star plans and one private fee-for-service plan rated at 3.5 stars.

Minnesota No Twin

The low ratings in Mississippi sharply contrast with the availability of high-rated plans in Minnesota.

Every county in Minnesota has an enrollment-weighted average rating of 4.5 stars, meaning that everyone projected to be enrolled in a Medicare Advantage plan in Minnesota next year will be enrolled in a plan with an average rating of 4.5 stars.

In one Minnesota county—Dakota County—about 70 percent of Medicare Advantage beneficiaries will be enrolled in a plan with 4.5 stars next year. Dakota County’s median household income is about $75,000—nearly triple the median household income of Washington County, Miss.

Of Dakota County’s approximately 12,000 MA enrollees, about 70 percent chose a 4.5-star plan and 28 percent chose a 3.5-star plan. Two percent of MA beneficiaries in Dakota County, Minn., chose a 4-star plan last year.

In 2017, beneficiaries in Dakota County will have even more high quality plan choices.

The number of 4.5-star plans offered in Dakota County next year will jump to 19 from four. The number of 5-star plans will increase to 10 next year, up from eight this year. The total number of plans offered will increase to 32 from 31. Out of the 32 plans available, only three will have ratings of less than 4.5 stars, down from 11 in 2016.

Ratings Gap for Low Income Beneficiaries
Enrolled in a Low-Rated Plan

“It is a serious deficit for any American retiree to be in a low-rated plan,” Ceci Connolly, president and CEO of the Alliance of Community Health Plans, told Bloomberg BNA. The Washington, D.C.-based alliance has 21 community-oriented health insurance organization members.

The star ratings “tell a lot about the doctors you get, the coordination of your care, the importance of medication therapy management and a whole host of services,” she said.

Enrollment in a low-rated plan could mean a beneficiary’s benefits are less rich in terms of what the medical plan covers and the member’s cost-sharing responsibility, Connie Hwang, vice president of quality for Evolent Health, a D.C.-based health-care system consultant, told Bloomberg BNA. Enrollees could have a smaller pool of network providers to choose from, or there could be a difference in members’ experiences with customer service and timely benefit administration.

Having a high proportion of low-income beneficiaries “makes it harder for MA plans to perform well on certain MA stars quality measures,” Hwang said.

Language barriers, transportation and cultural norms can make it challenging to deliver care in some populations, Connolly said.

Risk Model

Medicare is trying to fix the inequities in the star ratings experienced by plans that enroll a large percentage of low-income enrollees. The agency in 2017 will implement a risk adjustment model to the star ratings of these plans to account for socioeconomic status.

The goal is to avoid penalizing MA plans for taking care of low-income members, Hwang said.

The risk adjustment model is important because “higher plan ratings lead to higher financial bonuses that could help MA plans offer richer benefits to members from poorer communities,” she said.

However, the adjustments made for 2017 “appear to be fairly modest and will require further enhancement in coming years,” Hwang said.

Gretchen Jacobson, an associate director with the Kaiser Family Foundation’s Program on Medicare Policy, agreed.

“My understanding is that it didn’t change the scores for that many plans,” she told Bloomberg BNA. The agency is still trying to work out the appropriate amount of weight to apply, she said.

Geographic Disparity

“There definitely are differences in the geographic availability of plans with different star ratings,” as well as in the national health system in general, Jacobson said. In certain parts of the country, medical systems are more accustomed to meeting quality benchmarks, she said. As quality of care varies across the country, it’s reflected in MA star ratings.

There are many reasons for the discrepancy between Mississippi and Minnesota, Hwang said.

Minnesota’s population is nearly twice that of Mississippi, as is its MA penetration, she said.

“If more plans want to enter the Minnesota market, there’s more competition, which means plans need a better product to compete,” she said.

Minnesota, in particular, has long been viewed as a state with high quality care across the board, Connolly said.

Avoiding Generalities

Insurance industry officials and health policy observers cautioned against generalizing based on income.

Connolly said not all states with a high proportion of low-income residents have low-rated MA plans. Alabama and Arkansas, for instance, have highly rated MA plans, she said.

Another factor in the variation among locales is that brokers drive sales, and they’re motivated to sell whatever plan is going to pay them the most in commissions, Hwang said. If a 2.5-star plan pays a higher commission than a 4-star plan, it could influence how plans are sold.

There can be multiple contributing factors involved, including that lower income beneficiaries are attracted to Medicare Advantage plans for their affordability, Alan Mittermaier, president of HealthMetrix Research, a Columbus, Ohio, research organization, told Bloomberg BNA.

Differences in Medicare’s county-based payments can help determine how much MA plans can spend on improving member outcomes and satisfaction, he said.

Lower income counties have lower premium base rates, Hwang said. “After subtracting a percentage for underwriting profit” and a fee for administrative expenses, the plan is left with proportionately less to spend on benefits, she said.

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

To contact the editor responsible for this story: Kendra Casey Plank at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.