MedPAC wants to redesign MA quality bonus program

By | April 8, 2019

Dive Brief:

  • The Medicare Payment Advisory Commission wants to give the Medicare Advantage quality bonus program a facelift. In its April 4 meeting, MedPAC analysts proposed the new MA value incentive program, or MA-VIP, to address key deficits in the current rewards model and move it toward budget neutrality.
  • A MedPAC analysis found the MA star ratings system isn’t serving its intended purpose of informing beneficiaries about quality. Stars are assigned at the MA contract level, and since contracts can cover noncontiguous geographic areas, stars aren’t an accurate measurement of quality for comparing different plans in the same location. Additionally, MA’s private insurers consolidate contracts to boost their star rating or hide unfavorable ratings, leading to even larger contracts over wide geographic areas as well as unearned bonus payments, MedPAC argues.
  • The commission also voted Thursday to recommend Congress pass legislation to withhold some MA plan payments if an insurer’s encounter data is wrong or incomplete. The withholding, if implemented, would begin in 2021. CMS would subsequently release standards and performance metrics that MA plans can meet to get their payments back. Earlier this week, the agency said it will integrate more encounter data into the methodology for calculating MA payments.

Dive Insight:

The MA star ratings program dates back to 2010, back before the quality bonus program existed. The star ratings are meant to inform beneficiaries about MA plan quality and are used as the basis for calculating the bonus. A star rating of 4 and above results in a quality bonus payment, increasing the federal revenue an MA plan receives.

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A 2018 McKinsey analysis found the MA star ratings program significantly improved plan quality and efficiency. But, under the current quality bonus program, MA payers can collapse or combine plans to boost their star ratings, leading to unwarranted bonus payments.

Between 2017 and 2018, 1.8 million people were enrolled in plans with lower than a 4 star rating. However, 76% of them were covered by a 4-star plan in the 2018 ratings, simply due to plan consolidation, according to McKinsey.

MedPAC also took issue with how the quality bonus program scores measure results. This so-called tournament model, where plans are scored relative to their peers, makes it impossible for MA payers to know quality targets in advance and plan accordingly to meet them.

The advisory group outlined a range of solutions for the new MA-VIP. They include a smaller range of quality measures evaluated at the local (not contractual) level, and scored using absolute performance targets as well as using an alternative peer grouping mechanism to convert performance to rewards and penalties.

MA-VIP quality measures would be largely calculated or collected by CMS to avoid additional burden on providers, and would include readmissions, preventable admissions and ER visits, patient experience and patient-reported outcomes.

To avoid the tournament model, MA-VIP would give rewards based on absolute targets. The model would also change how the quality bonus program adjusts for low-income and disabled enrollees to ensure MA plans with a higher proportion of needy beneficiaries don’t get lower ratings.

Finally, MedPAC wants to make MA-VIP budget neutral, funded by a small percentage of payments from all MA plans. All other Medicare quality incentive programs are budget neutral or involve penalties, whereas the current quality bonus program was financed with an additional $ 8 billion in funds in 2018. Those bonus dollars don’t trickle down to the consumer, either — plans aren’t required to use the money to provide extra benefits.

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“If the dollars go away, that puts financial pressure on the plans,” MedPAC analyst Carlos Zarabozo said. “When there’s financial pressure on the plans, they become more efficient” and lower their bids, he added.

Though many commissioners voiced their support for the changes, others had concerns about setting quality targets in advance, especially in the beginning of the program when outcomes are uncertain.

“I think when we have policymakers setting targets, they’re going to make them too easy,” said Paul Ginsburg, commissioner and Brookings Institution health policy chairman. “It all depends on behavioral response. That’s very hard to predict,” he said.

Another major area of concern was simplifying the quality measures, with commissioners generally agreeing they need to capture more aspects of primary and ambulatory care quality.

“I do think, as some of my colleagues intonated, you might want to add in something that gets at other aspects of primary care and ambulatory care, particularly around prevention,” Dana Gelb Safran, commissioner and head of measurement for the Amazon-J.P. Morgan-Berkshire Hathaway venture Haven, said. “We’ve only focused on some of those avoidance of hospital, avoidance of complications — we’re missing something important in the quality space.”

Based on the commissioners’ feedback, MedPAC analysts will work on a concrete MA-VIP model over the summer for CMS to review and potentially take through the regular rulemaking process. MedPAC’s recommendations aren’t binding, however.

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