Healthcare Business News

Performance scores for dual-eligibles can drag down Medicare Advantage ratings, study says

By Paul Demko
Posted: January 2, 2014 - 12:01 am ET

Low-income and disabled people who are dually eligible for Medicare and Medicaid and belong to Medicare Advantage plans consistently score worse than other Medicare Advantage enrollees on the performance measures that determine plan eligibility for bonus payments from the CMS, according to a new study (PDF).

The results suggest a significant association between Medicare Advantage plan performance and the socio-economic status, demographics and severity of illness of subscribers. Experts say dual-eligible beneficiaries are a uniquely challenging population to serve, given the high percentage with multiple chronic conditions including physical and mental disabilities and substance abuse issues; also, a significant percentage are homeless. Some argue that it's difficult or impossible for even conscientious health plans serving large numbers of dual-eligibles to achieve Medicare's benchmarks of quality.

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The report by the research firm Inovalon scrutinized 10 health plan performance variables used by the federal government to determine star ratings. It found that on nine of the 10 metrics, plans performed significantly worse with dual-eligible beneficiaries than with other Medicare Advantage enrollees. For example, dual-eligibles are less likely to get screened for breast cancer or glaucoma and are more likely to require readmission to a hospital within 30 days following treatment.

The star rating system is important because it determines if plans are eligible for bonus payments. Plans earning at least three stars are entitled to higher payment rates. Each half star is worth between $15 and $50 each month per enrollee, insurance consultant John Gorman estimates. That potentially adds up to a substantial amount of money hinging on star ratings.

“Star ratings are critical to the business performance, perhaps even business viability, of a Medicare Advantage plan,” said Dan Rizzo, Inovalon's chief innovation officer. “It gets into a spiral if … they don't earn star bonuses and then don't have the funds available to continue to serve these dual-eligible populations.”

The Inovalon study looked at data from 80 different Medicare Advantage contracts. Those included 1.3 million dual-eligible beneficiaries for 2011 and 1.6 million such individuals for 2012. Nationwide, there are just more than 9 million people who receive benefits from both Medicare and Medicaid. Many duals are low-income seniors with chronic health problems and/or cognitive impairments, or adults under age 65 with severe physical disabilities and/or substance abuse or mental health issues.

Due to a lack of interest from health plans, states are struggling to launch managed-care plans for dual-eligibles under a federal initiative to coordinate benefits and care for them. Insurers have cited financial risk and inadequate payment as a chief reason they've been reluctant to offer such coverage.

There are roughly 50 metrics by which the Medicare Advantage star ratings are determined. While the Inovalon study only looked at a small share of these, Dr. Christie Teigland, the firm's director of statistical research, pointed out that the measures examined were clinical factors that have disproportionate influence. “Several of them are triple-weighted measures,” she said. “So even though we only looked at 10 measures, their contribution to the star rating is much greater than that proportion would indicate.”

The CMS doesn't take into account the proportion of dual-eligible beneficiaries enrolled in a plan in determining the star ratings. Rizzo said the financial incentive to increase star ratings could lead insurers to reduce coverage options for such individuals. “They might pull out of offering Medicare Advantage in certain counties,” Rizzo said. “That's really what ultimately could happen.”

The report concluded that the study results suggest a need for further research into the refinement of star quality measures to assure fair comparisons of performance across Advantage plans serving different populations.

Follow Paul Demko on Twitter: @MHpdemko

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