Top Medicare Plans Cash in on 5-Star Rank

Big changes to Medicare’s ratings system mean more choices for patients as private plans compete for beneficiaries.

The 2011 Medicare open enrollment season kicked off last Saturday with renewed focus on quality, thanks to a new star ratings system put in place by the Centers for Medicare & Medicaid Services (CMS). Although the agency has been ranking Medicare Advantage (Part C) and prescription drug (Part D) plans since 2007, next year will be the first that the 5-star distinction is tied to financial incentives for private insurers offering the plans.

Part C and Part D plans that receive a rating of 3, 4, or 5 stars for 2012 will receive bonus reimbursements of 3% to 5% beginning in 2013. In the future, bonuses for 3-star plans will be phased out to allow larger bonuses for 4- and 5-star plans. A proposed rule introduced October 4 would also give CMS the authority to eliminate plans that fail to earn at least 3 stars for 3 consecutive years.

In addition to the payments, 5-star plans will have a much bigger edge over their competitors: exemption from the limits of open enrollment season, which runs this year from October 15 to December 17. Beneficiaries will be able to switch to a 5-star plan at any point during the year, giving patients more choice and insurers more freedom to aggressively market their plans year-round.

The advantage is meant to spur competition among Medicare Advantage plan providers, who are facing $136 billion in cuts over the next decade as health care reform kicks in. Jonathan Blum, Deputy Administrator and Director of the Center for Medicare, said the desired effect is already taking hold. “We’re seeing some plans improve their rankings, and we’re seeing beneficiaries choose higher star plans at a faster rate,” Blum told US News.

Choosing a 5-star plan

The rankings are based on more than 50 criteria that weigh members’ experience and quality of care using a combination of survey data and other details provided by health plans.

For example, Part D plans will be rated in part on how easy beneficiaries say it is for them to fill prescriptions or resolve issues related to their medications under the plan. Because the new quality measures emphasize preventive care, plans that offer screenings, vaccinations, and disease management services can earn higher ratings.

Only a handful of plans performed well enough in all areas to earn 5 stars. According to the 2012 star quality ratings, released October 12, CMS awarded 5 stars to just 19 of the 446 rated Medicare Advantage plans and 12 of the 560 rated Part D plans. Patients can find a 5-star plan in their region or learn how their current plan fared using the Medicare Plan Finder.

Top-rated plans are indicated with a gold star—a symbol CMS hopes will promote consumers’ awareness of the ratings system. “Over the past year, we have worked to improve health coverage choices for people with Medicare, and make it easier for people to find a plan that is both a good value and meets their health care needs,” said CMS Administrator Donald Berwick, MD, in a statement.

Meanwhile, 5-star plan provider Kaiser Permanente reports that few seniors have even heard of the rankings. In a recent survey by Harris Interactive, only 18% of Medicare-eligible seniors said they were familiar with the system, and just 2% knew the star rating of their current plan.

“The Medicare Star Quality Rating System offers seniors an easy, objective resource to identify quality health plans in their community,” said Amy Compton-Phillips, MD, associate executive director for quality the Permanente Federation. “We hope more seniors and their families are able to use this tool to make informed choices about their health care.”

For other articles in this issue, see:

• Medco CEO Under Fire for Anti-Retail Remarks
• Kids' Use of Asthma Controller Drugs Doubled