If Congress passes the 21st Century Cures Act, the federal government would be barred from axing the worst performers in Medicare Advantage through 2018.
The provision, Section 17001 in the 996-page bill being floated in Congress this week, flexes the lobbying muscle of private health insurers that could face the chopping block if their Medicare Advantage quality ratings falter. The Cures legislation essentially would ensure the CMS stays on the sidelines.
“It's a stay of execution for crappy plans, and that's just bad policy,” said John Gorman, a former CMS official who now is a health insurance consultant in Washington. “This program works a lot better when there's a level playing field.”
Current law allows the CMS to boot out Medicare Advantage plans—the private managed-care alternative to traditional Medicare—if those plans don't attain at least three stars just once in three consecutive years. The system grades companies on a variety of clinical and care-management measures and dishes out a star rating ranging from one to five. Plans with four or more stars get bonus payments.
Nabbing three stars is a relatively low bar for insurers. Roughly 99% of the 18 million Medicare Advantage enrollees are in plans with three or more stars for 2017, according to CMS data.
In fall 2015, the CMS published its star ratings for 2016, and it said there were three plan contracts that were eligible for termination at the end of 2016. Those three plans were Windsor Health Plan, owned by WellCare Health Plans; Sierra Health and Life Insurance Co., owned by UnitedHealth Group; and Cuatro, a small plan based in New York City's Queens borough.
In April, the CMS sent a letter to Cuatro CEO Dr. Juan Estevez notifying him the insurer was getting tossed out of the Medicare Advantage program because it “failed to achieve a … rating of at least three stars” in 2014, 2015 and 2016.
However, UnitedHealth and WellCare received no such letters, based on publicly available records. The latest Medicare Advantage data from the CMS show both plans had stable enrollment as of Nov. 1. The UnitedHealth contract in question has 3,426 members, and WellCare's low-performing contract had more than 46,000 members—representing millions of dollars in Medicare revenue for those companies. Medicare's annual enrollment ends Dec. 7.
However, a CMS spokesperson said in a statement that “none of the three plans mentioned will be operating in 2017.” UnitedHealth and WellCare, both publicly traded companies, did not immediately respond to interview requests.
Many lower-rated plans contend they have higher proportions of sicker, complex patients with socio-economic issues that are not easily resolved. But experts say lax or nonexistent enforcement on Medicare Advantage star ratings fails to hold insurers accountable, allowing them to skirt penalties and continue to gain financial rewards.
“If you're below four stars, the incentives are exactly the same,” said Gretchen Jacobson, an associate director at the Kaiser Family Foundation who studies Medicare. She added that the government also wants to give plans enough time to turn their quality ratings around.
The Medicare Advantage provision embedded in the latest Cures legislation was not part of last year's original bill. However, many other members of Congress previously introduced separate legislation that would delay the CMS' authority to terminate poorly performing plans. Legislators on both sides of the aisle have framed the issue as preserving seniors' access to their Medicare Advantage plans.
Including the provision in a growing bill that was primarily focused on reforms to regulatory approval of drugs and devices indicates Medicare Advantage insurers can “buy the best lobbyists 'Gucci Gulch' has to offer,” Gorman said.
“I just find it shocking that a Republican Congress that prides itself on competition in healthcare markets wants to issue squirt guns to Medicare's firing squad for quality,” he said.
Updated: The story has been updated to reflect CMS' response and the fact the three low-performing plans from 2016 will no longer be operating in 2017.
