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Glitch in the way of pay for performance

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In an  unintended consequence of federal law, some of the highest-performing Medicare Advantage (MA) plans aren’t getting the incentive payments they earned, this HealthAffairs piece reports. These plans stand to lose nearly half a billion dollars in quality incentive payments because of a cap on MA plan benchmarks.

The piece says: “The Center for Medicare and Medicaid Services (CMS) has used quality measurements to adjust its payments to Medicare Advantage plans since 2012. The program, known as the Star Rating System, is intended to provide bonus payments to high quality plans. These bonuses allow plans to provide additional benefits that then attract more enrollees, increasing market penetration for those high performing plans. The impact is clear:

  • “Since Congress attached star ratings to payment, the average rating per contract has increased by almost 1.5 stars — from 2.56 in 2012 to 3.92 in 2015.
  • “Today, 60 percent of Medicare Advantage beneficiaries are enrolled in a 4+ star plan.
  • “Among first-time enrollees, there is a 5 percent increase in likelihood to enroll per 1 star increase in plan rating.”

“However, under a cap that is also part of the law, benchmarks cannot exceed the amount that would have been calculated under the previous methodology. CMS has interpreted this cap to include cuts to quality incentive payments despite clear congressional intent to establish a quality structure that rewards rather than penalizes high performing MA plans.”

The Centers for Medicare & Medicaid Services is being pressed to fix this glitch.




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