Skip to main content
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HLTH 2024
    • Sponsored Content: Vital Signs Blog
  • Opinion
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • 40 Under 40
    • Best Places to Work in Healthcare
    • Healthcare Marketing Impact Awards
    • Innovators Awards
    • Diversity Leaders
    • Leading Women
    • Best in Business Awards
    • The 2030 Playbook Conference
    • Innovations in Patient Experience
    • Leading Women Conference & Awards Luncheon
    • Leadership Summit
    • Workforce Summit
    • Best Places to Work Awards Gala
    • Diversity Leaders Gala
    • - Looking Ahead to 2025
    • - Financial Growth
    • - Hospital of the Future
    • - Value Based Care
    • - Looking Ahead to 2026
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Skilled Nursing Facilities
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
    • Sponsored Content
MENU
Breadcrumb
  1. Home
  2. Insurance
October 02, 2023 04:00 AM

TukeyGate: Insurers vexed by Medicare Advantage star ratings declines

Nona Tepper
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    stars legal
    MH Illustration/Adobe

    After stoking anxiety in the health insurance industry for three years, the controversy that's come to be known as TukeyGate finally came to fruition last month.

    TukeyGate refers to an obscure change in how the Centers for Medicare and Medicaid Services assesses quality of care for Medicare Advantage enrollees through the star ratings program. The agency previewed the latest scores last month and, while health insurance companies were steeling themselves for lower ratings and smaller bonuses, the scale of the decline caught them off guard. The final ratings are due this month.

    Related: Medicare Advantage insurers brace for post-pandemic star ratings drop

    To blame, industry experts say, is a CMS effort to minimize the effects of outliers on the measurements that determine how many stars a Medicare Advantage plan is awarded. According to a McKinsey report, this methodological change, dubbed the Tukey Outer Fence Outlier Deletion Method, will cost insurers an estimated $800 million in lost star ratings bonuses next year.

    The health insurance industry further charges that CMS fumbled the rollout of this new factor and left them flatfooted when the preliminary ratings came out.

    Three years ago, CMS issued a regulation that would apply Tukey to ratings for the 2024 plan year. In 2022, the Tukey provisions were left out of a new rule. CMS restored them in another regulation published last December and cited an input error for the discrepancy.

    This did not satisfy the industry, said Ana Handshuh, a principal at CAT5 Strategies, a Medicare Advantage consultancy. “There's all these technicalities of how things are supposed to be done, and when there's hundreds of millions of dollars at stake, people like everything followed to the letter,” she said.

    CMS may face a court fight over how it promulgated the regulations. “We know that stars drive both enrollment and revenue, and so it’s not surprising some health plans are interested in litigation,” said Michael Bagel, associate vice president of public policy at the Alliance of Community Health Plans, a trade group for nonprofit insurers.

    Catch a falling star

    CMS rates Medicare Advantage plans on a one-to-five scale using 38 measures of enrollee experience, health outcomes and other factors. The agency uses insurer averages to determine the numerical ranges for each measure that correspond with each star rating, which the agency refers to as cut points. Overall scores are also subject to a weighted industry average.

    The stakes are considerable. Medicare Advantage insurers that score at least four stars receive 5% payment bonuses, which they use to reduce premiums, enhance benefits or both to entice brokers and customers.

    Medicare Advantage insurers opposed Tukey from the start. In 2020, CMS estimated that Tukey would cause at least 16% of plans to lose half a star because it increases the cut point threshold needed to achieve higher ratings. The COVID-19 pandemic disrupted care delivery, patient demand and utilization starting that year, but CMS based its analysis on 2019 data, making it hard for insurers to project the factor's impact on their star ratings, Bagel said.

    “It was very difficult for us to know what actually was going to materialize once Tukey was applied nationally, and once CMS was comparing every plan against each other,” Bagel said. “There definitely were some bigger changes here than I think anyone anticipated."

    In response to insurer complaints about substantial yearly fluctuations in the cut points, CMS last year introduced star ratings guardrails that limit how much most measures' cut points can change to 5% annually. Many insurers argued that would curb Tukey’s initial impact, said Rex Wallace, a principal at RWC Consulting, a Medicare Advantage advisory firm.

    But the preamble to the final Medicare Advantage rule in 2020 stated that CMS would retroactively apply Tukey to 2023 ratings as a way to normalize the comparisons for the 2024 plan year. The agency said it then would implement guardrails to the new, “Tukey-fied” 2024 cut points.

    Because the preamble is not published in the Code of Federal Regulations, however, some insurers did not see that language and were surprised by its consequences, Wallace said. This could the basis for a legal case that the preamble should not be legally binding as regulation, he said.

    “The pressure of the lost revenue, coupled with the confusion around where it was included in the rule, is making some plans consider legal action against CMS,” Wallace said.

    Applying Tukey to star ratings results in dramatic increases in the cut points for measures on call center operations, language translation services, breast cancer screening rates and other factors, said Sean Creighton, a managing director at the consulting company Avalere Health who formerly worked on public policy for Humana and as a CMS official. That alone demonstrates that the Tukey is inappropriate, he said: "It's overkill."

    Instead, CMS should scrap Tukey and commit to the guardrails alone, Creighton said.

    "Clearly, CMS has a preference for more sophisticated techniques, regardless of whether they make any sense or not,” he said. “Tukey is much more sophisticated than guardrails, but there's really no additional value, or very little additional value, to Tukey."

    Related Articles
    Kaiser, UnitedHealth pocket big Medicare Advantage star bonuses: report
    Medicare Advantage insurers brace for post-pandemic star ratings drop
    Pandemic helps quadruple portion of Medicare Advantage plans with five stars
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    UnitedHealth-group-screen-0425
    UnitedHealth Group to cut Medicare drug plan commissions
    410170216.jpg
    UnitedHealth to give Hemsley $60M award in return as CEO
    Most Popular
    1
    UnitedHealth Group to cut Medicare drug plan commissions
    2
    PBM limits could finally pass, if Congress moves its tax-cut bill
    3
    ACOs call on Oz to fix Shared Savings Program benchmarking issue
    4
    Where top executive search firms are seeing changes in demand
    5
    Investors welcome a maturing digital health market
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HLTH 2024
      • Sponsored Content: Vital Signs Blog
    • Opinion
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • 40 Under 40
        • Best Places to Work in Healthcare
        • Healthcare Marketing Impact Awards
        • Innovators Awards
        • Diversity Leaders
        • Leading Women
        • Best in Business Awards
      • Conferences
        • The 2030 Playbook Conference
        • Innovations in Patient Experience
        • Leading Women Conference & Awards Luncheon
        • Leadership Summit
        • Workforce Summit
      • Galas
        • Best Places to Work Awards Gala
        • Diversity Leaders Gala
      • Virtual Briefings
        • - Looking Ahead to 2025
        • - Financial Growth
        • - Hospital of the Future
        • - Value Based Care
        • - Looking Ahead to 2026
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Skilled Nursing Facilities
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing
      • Sponsored Content