Vantage Health Plan executives saw an opportunity when they realized few of their female Medicare members were being screened for osteoporosis after they broke bones.
The test to identify women at increased risk for fractures is one of 40 measures that Medicare applies to produce its 5-star ratings comparing the private plans chosen by nearly a third of seniors over traditional coverage.
More than $3 billion is in play for insurers. Health plans earning at least four stars qualify for federal bonus payments. Those that don't, lose out.
To improve its score, Vantage last year bought a $10,000 mobile ultrasound unit so it could give bone density screenings to its elderly women members in their homes. The proportion of eligible women tested soared from 13 percent in 2014 to 71 percent in 2015.
"The ten grand we spent on the ultrasound machine was more than worthwhile," said Billy Justice, director of marketing and sales for Vantage, an insurer with 16,000 Medicare members in Louisiana.
Here's why: Vantage lifted its overall star rating to 4 stars from 3.5 and set itself up for as much as $8 million in extra federal funding next year. By law, the bonus money must go to pay for extra benefits, which helps plans attract more members and in turn makes them more profitable.
Many Medicare plans undertook similar initiatives to improve their 2016 ratings, leading more to qualify for bonuses than ever before, according to the latest ratings released in October. Actions included offering members more preventive care, helping them better manage chronic conditions and handling complaints and appeals in more consumer-friendly ways.
For Medicare beneficiaries, the development is good news. "More plans are providing better care," said Stacy Sanders, federal policy director at the Medicare Rights Center, an advocacy group. "To us, the incentives created from the bonus system are leading to quality improvement."
Reducing high blood pressure is one example. The overall share of Medicare Advantage members who have their pressure under control is 71 percent in the 2016 star ratings, six points more than in 2015.
Aetna mailed complimentary blood pressure cuffs to its members to use at home last year. Now, 81 percent of its members have their pressure under management, up from 69 percent in 2013.
Since the bonus payments began in 2012, the percentage of Medicare plans earning 4 stars or more has doubled to 40 percent, reports the Kaiser Family Foundation (KHN is an editorially independent part of the foundation). About 71 percent of seniors in 2016 are in a plan with at least 4 stars, up from 60 percent in 2015, 50 percent in 2014 and 38 percent in 2013, according to the Centers for Medicare & Medicaid Services.
There's a payoff for insurers, too. Bigger bonuses lay ahead for most of the giant companies that dominate Medicare Advantage. United Healthcare, the biggest player in the program, is due for $1.4 billion, up $532 million from the prior year, estimates Wedbush Securities analyst Sarah James. Humana could get $1.5 billion, a $244 million drop because it has fewer plans eligible for bonuses, she said.
The figures are estimates because the plans' 2017 enrollments will determine actual payments.
Cigna's bonus -- $252 million, according to James -- is at risk because CMS sanctioned it in January, suspending all its Medicare plans from doing enrollment and marketing, after finding the insurer failed to provide members with services and benefits that CMS requires. Cigna's star ratings will be lowered and its plans ineligible for bonus payments next year if its deficiencies are not fixed by March 31, CMS said.
The 2016 star ratings are based on 2014 operations and the results determine insurers' 2017 bonuses.
"The quality bonus has given companies a pathway to success," said Sean Cavanaugh, CMS deputy administrator and director for the Center for Medicare. The average monthly premiums that beneficiaries pay are about the same as in 2010 while the benefits offered are up slightly, he said. Some plans have tightened their provider networks, Cavanaugh acknowledged, but not enough to inhibit access to care.
A Secret Of Insurers' Success
New and improved services don't fully explain the membership growth in high-rated star plans. Some insurers shifted members into bonus-eligible contracts as they consolidated plans. Medicare contracts -- which may include one plan in one state or several in different places -- typically vary by state or region. A company with separate contracts in two states can move members from an unrated contract in one state and into a high-rated one elsewhere. That happened to about 900,000 enrollees for 2016 as insurers transferred them into contracts with at least four stars in different states and regions, said Carlos Zarabozo, an analyst with the Medicare Payment Advisory Commission, which advises Congress, at a meeting in December.
The star ratings bonuses have helped Medicare Advantage plans weather cuts in federal funding mandated by the Affordable Care Act in 2010. Some analysts then predicted insurers would have to reduce benefits, diminishing plans' popularity compared with traditional Medicare.
Instead, the opposite has occurred. Enrollment in Medicare Advantage has soared from 11 million in 2010 to 17 million last year.
At the same time, the government pushed insurers to get better by toughening its standards for bonus eligibility. Starting with the 2015 ratings, it stopped paying bonuses to plans with 3 and 3.5 star ratings, forcing insurers to shoot for 4 stars.
Here's how it adds up.
Plans are paid about $10,000 per member annually on average, although the precise amount varies by county and other factors.
For plans with 4, 4.5 or 5 stars, bonuses bring in an extra 5 percent a year per member -- about $500 each, said Monisha Machado-Pereira, a partner at consulting firm McKinsey & Co. A four-star plan with 1 million members would earn $500 million in bonuses.
"Getting to 4 stars is really, really critical," said Michael Kavouras, vice president of star ratings at Aetna.
Past bonuses helped Aetna retain zero premium plans in many markets and offer options such as dental and vision coverage, he said. Those benefits help attract more enrollees.
Plans with 4 or more stars increased dramatically the past four years -- there are 167 plans with 4 or 4.5 stars -- but five-star plans are no more plentiful. There are 12 of them in 2016. Two possible explanations are that 5-star standards are difficult to achieve and plans get the same bonuses for 5-star plans as they do for 4-star ones.
What sets 5-star plans apart is they can take new beneficiaries year-round. All others are restricted to a two-month enrollment period ending in early December.
Star ratings are available for all to see on Medicare's website when comparing costs and benefits, but they don't reveal everything a consumer might want to know, as a recent CMS audit of a major insurer shows.
Strong Ratings Can Obscure Problems
Cigna's performance looked impressive on Oct. 8 when CMS announced 2016 star ratings. One Cigna contract earned a rare 5-star rating and five others got 4 or 4.5 stars out of 14 Cigna contracts that CMS rated.
And that was all the public had to go on during the annual Medicare Advantage enrollment period from Oct. 15 through Dec. 7.
A lot more was learned in late January when CMS sanctioned Cigna after auditing its Medicare operations. In a 12-page enforcement letter, CMS accused the insurer of "widespread and systemic failures" affecting Cigna enrollees' ability to obtain medical services and prescription medications. Prior to the audit, Cigna had received "numerous" notices of noncompliance, warning letters and corrective notices over the previous several years, the letter said.
In employing more serious enforcement powers against Cigna -- that is, an audit followed by sanctions -- CMS's disciplinary action threatens to drop all of Cigna's 2016 star ratings to below bonus-eligible levels. CMS disclosed that its audit started Oct. 5 -- three days before the center announced its 2016 star ratings -- and ended Oct. 20, according to the letter. CMS did not publicly disclose findings for more than a month after 2016 enrollments ended.
David Lipschutz, managing attorney for the Center for Medicare Advocacy, said the Cigna sanctions raise questions about the validity of the Medicare star-ratings system.
"This doesn't look good from a consumer perspective," he said.
CMS' sanctioning of Cigna so soon after Medicare's open enrollment season ended, he said, raises questions about whether the government should have told the public about Cigna's deficiencies when seniors were choosing plans.
Star ratings do take into account how health plans handle consumer appeals and grievances -- a problem area uncovered in CMS's audit of Cigna, Lipschutz pointed out.
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"When you have a high-rated plan that is given enrollment sanctions, that could have the effect of undermining the trust the public has in the ratings system," he said.
Cigna said it is working with CMS to resolve its issues. CMS, addressing questions from KHN about the conflict between Cigna's high star ratings and audit results, said the two reviews look at different things.
Star ratings measure members' quality of care and the plan's customer experience, the center said, while the audits look at "operational areas" that impact beneficiary access to drugs and services.
Improved ratings have prompted skepticism about whether the industry's progress is real or the federal government is grading easier. McKinsey officials said their analysis shows today's plans really are better than in the past, which has made the biggest difference. "What this means is seniors are effectively in position to get improved quality of care," Machado-Pereira said.
For all the attention paid to star ratings by insurers and the government, their influence on consumers may not be great.
Most advocates say seniors still choose plans based on cost and whether their doctor or hospital is in the network. A McKinsey & Co. study in 2015 found that only 21 percent of those who had enrolled in a Medicare Advantage plan knew their plan's star rating.
Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.