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Florent Moise 
Principal,
ZS

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Peter Manoogian
Principal,
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Jeff Traenkner 
Strategy Insights & Planning Manager,
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Colin Russi 
Strategy Insights & Planning Manager,
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Shreesh Tiwari 
Principal,
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Harbinder Raina 
Associate Principal,
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Latest Posts

How Health Plans Can Land on the Right Side of the $2 Billion Stars Shuffle

Posted by Anand Rampuria on Thu, Oct 17, 2019

3830_StarRating_BlogShreya Raghuraman co-wrote this blog post with Anand Rampuria.

Autumn is typically a time for harvest and gratitude. For Medicare Advantage plans, however, the season can bear an equal amount of fruit and spoil. The CMS Quality Rating System results were recently released, which rewards organizations with a Stars rating (one through five) for achieving quality, health outcome and experience standards. Plans in the quality-based payout (QBP) range of four stars and above could earn up to $600 of additional reimbursement per member annually. For a 100,000-member Medicare Advantage plan, that’s upwards of $60 million of possible gained—or lost—revenue.

The 2020 Stars results will impact the Medicare Advantage landscape in a number of ways. First, high-performing health plans are growing their membership (often faster than the market), which increases the size of their bonus. Second, health plans are improving quality and entering the QBP range. And third, health plans are simultaneously dropping in quality and losing their bonus. We estimate the net impact of this movement in 2022 will be approximately $1 billion gained for health plans that maintained at least a four-Star rating and achieved membership growth, approximately $1.6 billion gained for health plans entering the QBP range, and nearly $600 million lost from health plans dropping below four Stars. This results in $2 billion moving due to 2020 Stars results.

The Stars program is also a reflection of the current state of affairs. In a market with 11,000 older adults with increasingly diverse healthcare needs aging in every day, we can learn a lot from this year’s CMS Stars results. Here are four key trends this year:

1. More members are enrolling in higher-rated plans. Eighty-one percent of Medicare Advantage enrollees are covered under plans above four Stars today, compared to about 74% last year. Sixty-two new plans earned a four-Star-plus position this year. However, this doesn’t necessarily mean that all Medicare Advantage plans are improving in quality each year. Twenty-two plans lost their four-Star-plus position this year.

2. Industry-wide member experience has room to improve. The average Stars ratings for patient experience measures have inched forward slightly around 3.7 this year. This year is the first where CMS increased weights for “access” and “experience” measures from 1.5 times to 2 times, which means that health plans will need to continue making significant improvements in this category going forward. Recent efforts by Cigna to listen more closely to their members and by Humana to invest in expanded virtual benefits are good examples of how health plans are thinking about this.

3. Health plans that specialize in Part C or D benefits and health plans with greater scale are better suited to differentiate member experience. Patient experience ratings for plans specializing in only Part C benefits were higher than ratings for plans offering both Part C and D benefits (4.3 and 3.7, respectively), and health plans with more than 300,000 members earn higher ratings on many experience measures than smaller plans.

4. Cut points became favorable for many measures, but some health plans struggle to keep up. Continuous improvement is table stakes to maintaining Star ratings. For example, 73 plans lost their position on Care coordination when the four-Star cut point increased. A drop in measure ratings impacts overall Stars scores, which in turn impacts overall QBP earnings.

These trends point toward three key opportunities for health plans as they advance their Stars program management strategies:

  • Starting small rather than boiling the ocean: Health plans that start with a balanced, nimble approach may have an easier time achieving ambitious goals. Plans can do this by selecting measures that can move more quickly within a year, like screenings and certain outcome measures. Operational or experience measures can be a longer-term investment. Another option is to narrow down on a specific contract or plan type, especially when approaching higher-weighted operational or experience measures. For example, some health plans may take a benefits-level approach and focus on specific elements of their PPO plans rather than addressing disparate needs of members across plans.
  • Uncovering and measuring the experience that members actually want: It’s time to retire trial surveys and blanket incentive programs as a vehicle to improve member experience. The health plans best suited for success are taking the time to learn about their members’ challenges, perceptions and engagement preferences. They’re using this information to craft focused, personal engagements and then deploying these engagements on small groups of members to assess impact before broadening the investment.
  • Building an ongoing monitoring and prediction function: As health plans look to become more proactive in Stars management, the first steps they can take are to set organization-wide objectives and establish a mechanism to track progress throughout the year. Evaluating the data ecosystem that upholds the program and creating a process for ongoing forecasting allows plans to incorporate the quality program into their monthly planning and prioritization efforts.

The Stars ratings will continue to be an important marker for the Medicare Advantage landscape, but health plans that focus on these three areas can ultimately use the program not just as an indicator for success but as a driver for change.


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Topics: medicare stars

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