A federal effort to promote health equity will redistribute billions of dollars in Medicare Advantage Star Ratings bonus payments among health insurance companies.
Beginning in 2027, the Centers for Medicare and Medicaid Services will reward Medicare Advantage plans that demonstrate progress addressing health disparities. At the same time, the agency scrapped a bonus policy that benefited insurers that sustained high overall quality ratings over time.
Related: Winners, losers from the latest Medicare Advantage star ratings
The health equity index component of the Medicare Star Ratings program is poised to benefit health insurance companies such as Centene and Clover Health that cover large numbers of underserved Medicare beneficiaries.
Companies such as UnitedHealth Group subsidiary UnitedHealthcare and Kaiser Permanente’s Kaiser Health Plan may see lower star ratings when the reward factor that boosts scores for plans that maintained top quality scores for multiple years goes away.
CMS estimated that eliminating the reward factor will save $5.1 billion over 10 years, an unknown share of which will be paid out to insurers that earn high health equity scores.
Without the reward factor, no Medicare Advantage carrier would have earned a five-star rating this year, according to a data review Baltimore Health Analytics performed on its star ratings software platform for Modern Healthcare. That top score qualifies insurers for bonus payments up to 5% and enables them to market Medicare Advantage plans year-round.
“You’ve got to figure Kaiser hates this. United has some duals and employer groups, so it’s a mixed bag. Same with Humana, too,” Baltimore Health Analytics CEO Jeff Schoenborn said. “There’s also politics. You don’t want to push back against the priorities of the people in charge. It’s also a bad look to say you’re against something intended to build health equity.”
The health insurers named in this article and the industry groups AHIP and the Alliance of Community Health Plans declined or did not respond to interview requests.
The Star Ratings health equity factor represents CMS’ latest effort to reshape how quality is measured and rewarded in Medicare Advantage. The agency has already started collecting health equity data from insurers to implement the policy in three years.
The Star Ratings update is part of a broader CMS push for health equity through Medicare reimbursements and other means, and attempts to tackle long-standing equity issues in its value-based care programs.
CMS will boost scores up to 0.4% for Medicare Advantage plans that perform well on existing Star Ratings metrics and disproportionately cover beneficiaries with “social risk factors,” such as earning low incomes, having disabilities or being dually eligible for Medicare and Medicaid.
Citing plan performance data from 2021 in a proposed rule last year, CMS estimated that 88% of Medicare Advantage plans would have met the population health threshold to receive a health equity index score, and 34% would have obtained bonuses.
Some health insurance companies are already anticipating boons from the health equity factor.
During the J.P. Morgan Healthcare Conference in January, Centene CEO Sarah London said the company is well-positioned to benefit because it covers many dually eligible enrollees. Centene projects that more than 35% of its 1.3 million Medicare Advantage membership would consist of dually eligible beneficiaries by the end of this year.
“Are you good at taking more complex populations who are sometimes harder to reach, sometimes harder to get in for care and getting them in for the care needed?” London said. “Our focus in general really aligns nicely to ultimately get the benefit of the health equity index for the more complex population we’ve chosen to serve.”
At the same event, Clover Health executives likewise told investors that the health equity index would boost its quality ratings because it covers a diverse, underserved population.
Yet some see the population health threshold as too narrow to guarantee an edge to insurers with large dual-eligible memberships, said Sean Creighton, a managing director specializing in Medicare Advantage at the consulting company Avalere Health.
“CMS has made the determination that if your share is below the threshold that they’ve set, then you can distribute those costs across a more advantaged population, both individual enrolled members and group members,” Creighton said. “But for certain plans, they may look at it and just go, ‘Well, we have a lot of dual members enrolled. Why are we not eligible?’”
CMS has developed a two-step process to assess whether plans can participate in the health equity index.
First, the agency calculates the percentage of members with social risk factors in every Medicare Advantage contract to determine the median contract percentage.
Then, CMS determines if an individual contract may qualify for the health equity index by looking at the percentage of its members with social risk factors. If the contract has less than half the national median percentage of beneficiaries with low incomes or disabilities or who are dually eligible for Medicare and Medicaid, it cannot qualify.
Some insurers have pushed for CMS to expand its definition of social risk factors, Creighton said. CMS said it considered including other social risk factors for health equity index measurement, including the area deprivation index, but was unable to find additional measures with predictive values that could be applied nationally.
Broadening the definition of social risk could undercut the entire purpose of the health equity index, Schoenborn said. “When everybody is special, nobody is special,” he said.
