You Will Not Believe This

The CMS, as you know, rates things. One of the star rating categories is Medicare Advantage privately managed plans. It is a 5-star scale which is a composite score incorporating the following categories:

  • Staying healthy: Access to preventive services, like physical examinations, vaccinations, and preventative screenings.
  • Chronic conditions management: Care coordination and services for long-term health conditions.
  • Member experience: Overall satisfaction with the health plan.
  • Member complaints: How frequently members submitted complaints or left the plan, whether members had issues with access, whether performance improved from one year to the next.
  • Customer service: Quality of call center services and processing appeals and new enrollments.

The CMS then doles out financial bonuses for plans that are rated 4-star or higher (the categories increase by 0.5 stars from 1-5). Now by law, the bonus money must go to pay for extra benefits. This may reduce out-of-pocket premiums for members or add covered services. But, this clearly helps plans attract more members, which in turn makes them more profitable. If we look at the most recent cohort of plans for 2018, there were 384, of which 44% received a rating of 4-stars or more. The media has reported that although there was a reduction in 4-star and up plans, from 49% to 44% from 2017 to 2018, not to worry; the number of Medicare Advantage enrollees in 4 or more star contracts is increasing. So that’s good right? The number of patients with better quality plans is increasing. Or not.

Have you heard of “crosswalking”? This tactic allows Medicare Advantage plans to merge groups of members to increase star rating and boost bonus payments. It works like this. United has 2 groups, one with 162,000 members with star rating of 3.2, and another group with 1,729 members with star rating 4.5. Based on quality bonus payment methodology, United should receive a $600,000 bonus payment for the second group and $0 for the first group (the more members in a group with star rating 4.0 and higher, the bigger the bonus). However, United “crosswalked” the first group into the second group, with a merger that created one group of 164,000 members. The methodology for bonus payment does not use a weighted average but rather a simple declaration of the higher star rating for the new merged group. Thus, the new group has a star rating of 4.5, and bonus payment is $64.3 million! Humana will benefit this year from crosswalking to the tune of $600 million! Sorry, but WTH?

This is legal and approved by the CMS. It boils down to simply gaming the system. Now, you would think that the CMS would create policy to end this immediately. But no, a provision in the 2-year budget law recently signed is expected to decrease the practice, which doesn’t affect payments until 2020. Insurers will still be able to game the system and benefit some from crosswalking. I know that much of these funds are returned to members in some form or another, but it doesn’t mean that members are benefiting from the above categories being better. And Humana keeps a cool $90 million in profits this year from crosswalking alone. That’s just one way that the system can be gamed. No wonder our Medicare program is unsustainable.