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Vital Signs Blog

Blog: Bailout for low-quality Medicare Advantage contracts slipped into bipartisan bill

A new bill making the rounds on Capitol Hill has a hospital-centric theme. But private Medicare Advantage insurers with bad quality ratings would also benefit from one surreptitious provision.

Last week, Reps. Pat Tiberi (R-Ohio) and Jim McDermott (D-Wash.) introduced the Helping Hospitals Improve Patient Care Act of 2016. A key component of the legislation would take into account socio-economic factors into Medicare readmission rates for hospitals.

Most of the other provisions call for changes or updates that affect Medicare providers, except for Section 301.

That section would delay for three years the CMS' authority in terminating Medicare Advantage contracts for plans with bottom-of-the-barrel quality scores. In Medicare Advantage, the HMO version of traditional Medicare that has exploded with enrollment growth over the past several years, the CMS has the authority to discontinue a plan's contract if the plan fails to garner at least three stars just once in three consecutive years.

Plans with the lowest scores have argued they cover the sickest of the sick, many of whom have complex care needs. But the termination policy is not exactly the toughest standard to meet, given 97% of Medicare Advantage plans had three stars or higher for 2016. The CMS rates plans from one to five stars on a variety of clinical and care measures, and financial incentives are tied to the highest star ratings.

Yet a few health plans still missed that minimum threshold. When the CMS released Medicare Advantage star ratings for 2016 last fall, six contracts were on the chopping block. For-profit insurer WellCare Health Plans has the most on the line, as it runs two of those contracts, which cover more than 50,000 seniors. Cuatro, Health Care Service Corp., Touchstone Health and UnitedHealth Group managed the other four contracts with poor quality scores.

WellCare manages four other contracts that were hit with a rating of 2.5 stars for 2016.

The CMS has already sent a letter to Cuatro CEO Juan Estevez indicating Cuatro's contract, which covers about 4,500 people, will be axed by the end of 2016. It's unclear if the CMS has threatened to terminate the other five contracts. The agency did not immediately respond to a request for comment.

Other lawmakers have tried to pass similar legislation shielding Medicare Advantage's lowest performers from losing their highly lucrative contracts. Those bills have gone nowhere. However, that could be different now that the protection is melded within a broader Medicare bill that has amassed widespread support from hospitals.






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