May 20, 2024
As the country continues to normalize and correct post-COVID, Medicare Advantage (MA) payers have seen a flurry of changes by the Centers for Medicare and Medicaid Services (CMS) to Star rating methodology, reimbursement criteria, and potential bonus structures.
The pause in ratings during COVID and the leniency for impacted measures resulted in a false inflation of overall Star scores in 2020 and 2021. Many payers were shocked when the 2022 scores plummeted to record lows impacting reimbursements, bonus payments, and overall revenue during open enrollment and annual enrollment periods.
Payers continued to see downward trends in 2023, with many organizations investing heavily in remediation efforts and long-term strategies to mitigate further deterioration. CMS further impacted these crucial ratings by modifying criteria and methodology for 2023 and 2024 plan years to better assess and challenge payers to respond with stronger accountability for specific outcomes, data integrity, and increased transparency.
The measure on contract performance allowing for the deletion of Tukey outliers will continue to challenge payers to meet the performance standards necessary to retain or raise Star Ratings. The impact could be positive or negative depending on where the outlier lands on an outcome curve.
Other key changes include two new Part C measures—Transitions of Care and Follow-Up after Emergency Department Visit for People with Multiple High-Risk Chronic Conditions. CMS is also adding back the Plan All-Cause Readmissions (Part C), a HEDIS measure, after a substantive change in the measure specification. This measure will now track readmissions to the hospital across all diseases and reasons, instead of solely Diabetic or Kidney related readmits, to ensure patients are discharged with the correct level of post-acute care and follow up occurs to prevent high-cost hospital stays.
There will also continue to be a 50% focus on care outcomes and chronic condition management. Several older measures will evolve to focus more on customer experience and satisfaction, as evidenced by 2023 measures that began rating portal interactions, accuracy of provider books, customer contact center metrics, and communication effectiveness.
A closer look at criteria CMS is considering for future ratings shows the increasing need for interactions between payer and their customers, and information shared via all modes of communication must be held to the highest possible standards.
Customer satisfaction will now play an even bigger role in plan performance, and condition management is key to outcome success. However, CMS periodically updates Star ratings methodology to reflect changes in healthcare quality measures, member experience, and other factors to improve the accuracy and relevance of ratings to help consumers make informed decisions about their healthcare options.
Fortunately, CMS is taking pity on payers in this era of low scoring and financial uncertainty. An April 1, 2024, memo noted, “CMS’s goals for MA and Part D mirror our vision for the agency’s programs as a whole: to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program.”
It further stated, “Under this CY 2025 Rate Announcement, payments from the government to MA plans are expected to increase on average by 3.70 percents, or over $16 billion, from 2024 to 2025. The federal government is projected to pay between $500 and $600 billion in Medicare Advantage payments to private health plans in 2025.”
CMS’s actions are encouraging and signal that the government does not plan to move away from Medicare Part C and D plans. We anticipate these plans will see continued growth as the baby boomer population continues to age-in through 2030. Accordingly, payers should continue to focus on transforming their organizational values, structures, operations, technology, and culture to focus on target audiences and meeting enterprise-wide objectives.
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