5-star Medicare plans get $4B combined bonuses


Nine of the 569 private Medicare plans received top marks on the five-star government rating system for 2012, and they will be receiving big cash bonuses and other rewards for their high scores under a new program created by the health reform law.

Health plans overall improved their ratings to an average of 3.44 stars in 2012 from 3.18 stars this year. Kaiser Permanente operates four of the nine five-star plans while smaller, regional plans make up the remaining top performers. Although the Centers for Medicare & Medicaid Services (CMS) didn't disclose the total value of the bonuses, an analysis of publicly available Medicare data suggests they will exceed $4 billion nationwide, reports Kaiser Health News.

Starting in January, plans with three stars or better will get bonuses of 3 to 5 percent of their total Medicare payments. Five-star plans also can market to and enroll members year-round, while all other plans' enrollment is limited to Medicare's annual open period. What's more, CMS will aggressively encourage consumers to move their Medicare policies to the higher-ranked plans, giving them a big boost in additional customers, according to the U.S. News and World Report.

Now "the stars equate to dollars," Ann Marie Scimmacco, vice president of Fallon Community Health Plan in Massachusetts, told KHN. "We have definitely heard that from the finance department, 'How can you get to five stars?'" she said. And since many Medicare Advantage plans operate on a 3 percent profit margin, even the smallest available bonuses are a huge benefit, according to John Gorman of Medicare Advantage consulting firm Gorman Health Group.

CMS uses several different measurements to calculate the ratings, including whether plans cut call waiting times, their rates of disenrollment, and how aggressively they encourage preventive medical care, according to the New York Times Prescriptions blog.

In the 2012 ratings, CMS "placed greater emphasis on how well plans take care of beneficiaries and on how satisfied beneficiaries are with their plans," Center for Medicare Deputy Administrator John Blum told U.S. News and World Report. "Historically, we've given equal weight to all of these measures," but by providing more weight to some areas, "we want to help elevate the overall performance of the care being provided."

The big insurers are taking note of the new ranking incentives. Although no UnitedHealth plans received five stars this time, it has a new goal of having all of its 2.3 million members in four star or better plans by 2014, Dr. Rhonda Medows, UnitedHealth's chief medical officer, told KHN. Launching a new web tool that allows doctors to track quality measures that can boost the rankings, among other steps, has increased the portion of United members in 3.5 star-or-better plans by 10 percentage points this year, she said.

To learn more:
- visit the Medicare ratings website
- read the Kaiser Health News article
- see the New York Times Prescriptions blog
- check out the U.S. News and World Report article

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