Declining Medicare Advantage star ratings have led health insurance companies to seek cost savings that are having downstream consequences for healthcare providers.
The quality measurement program applies only to insurers, but their responses to toughened standards and less bonus revenue has implications for providers engaged in risk-sharing arrangements with them, executives said.
Related: Star ratings dim for nearly 10% of Medicare Advantage plans
After relaxing its rules during the height of the COVID-19 pandemic, the Centers for Medicare and Medicaid Services has implemented policies over the past two years that make it more difficult for health insurance companies to earn the top scores that qualify them for extra payments. For example, the member experience metric now carries twice as much weight in the ratings formula, risk-adjustment audits are stricter and the agency modified how it accounts for outliers.
As a result, the star ratings for the 2024 plan year, announced last month, look quite different from the year before. Far fewer Medicare Advantage plans with prescription drug coverage earned at least four out of five stars and earned bonus payments and the average score fell to a five-year low.
Providers such as VillageMD that share upside and downside risk with Medicare Advantage carriers are directly affected by lower star ratings because both partners lose bonus revenue.
Insurers submit the quality data the CMS evaluates, and providers have no control over what transpires next. At least one insurer did not effectively share Walgreens subsidiary VillageMD’s quality data this year, which led a lower score and a financial loss for the primary care company, said Chief Medical Officer Dr. Stuart Levine.
“You get pretty frustrated with the payer and say, ‘Get it together, because we know we're at 4.2 stars with everybody else, and you're reporting us at 2.96,’” Levine said.
Providers can also get dinged when insurers combine patient data from multiple risk-bearing providers, which blurs the distinction between those meeting or exceeding quality metrics and those with average or below-average performances. VillageMD experienced this with one of its insurance partners this year when a weaker overall score meant it got less bonus money, Levine said.
This also means that the best providers don't necessarily get rewarded for their efforts, Levine said.
“I'm getting a lower star rating because you didn't do as well as I did,” Levine said. “That's where the plan has to step in and say, ‘OK, we're going to try to come up with a plan to make up for the poor-performing group,’ or have separate bids that separate the groups so that each of them can maximize their outcome.”
VillageMD is investing in medical management tools to increase its performance under measures CMS introduced this year for all-cause readmissions, transitions of care and follow-ups after emergency department visits, Levine said. But it's expensive, and the only way for VillageMD to achieve a return on investment is to ink full risk contracts with insurers, perform well in the program and collect bonus revenue, he said.
“There's some evolution that needs to take place in the stars program to get everybody oriented to both cost-effective care and measurement of outcomes,” Levine said. “Some of the star ratings are better than others.”