From Tom's Desk
"Five Star" Ratings Now Worth Less
The recently passed Omnibus Budget Act of 2018 contained myriad Medicare Advantage provisions.
One may give you pause.
It decreases the value of your high STAR rating---the one you worked so hard to achieve.
The greatest benefit of a high STAR rating isn't the additional revenue you receive from the bonus payment---it's the fact that highly rated plans can sign up beneficiaries year-round, without having to wait for the open enrollment period.
And just which beneficiaries would those highly rated plans sign up? After all, beneficiaries who "age in" to Medicare can sign up within a few months of their birthdays, no matter what month of the year it falls on.
Those high performing plans would have the privilege of signing up those patients left without coverage once the contracts of low-rated plans were terminated by CMS.
If your STAR rating was low, if you were a low-quality plan, CMS was supposed to be able to terminate your contract with Medicare Advantage---leaving your former beneficiaries free to sign up with the higher quality competition.
That's what the STAR rating was supposed to do, encourage the flow of patients from high rated to low rated plans.
Well, never mind.
The omnibus legislation gave low-performing plans a 10 years extension to improve their quality scores before CMS pulls their plug.
10 years---so essentially never.
The return on capital for all of the money invested in STAR ratings just took a big hit.
Sure, "Five Stars" is an effective marketing gimmick---and it goes a long way towards encouraging new beneficiaries to choose your plan.
But new beneficiaries are only part of the story. If your Medicare Advantage Organization only grows at the rate new beneficiaries are aging in, then you're really limiting your potential for outsized returns.
As you allocate your resources in the upcoming year, looking for the greatest return, remember that Congress just took a big chunk of change out of your pocket.
The STAR ratings and their objective monetary worth can and will change.
I suggest you invest in systems that Congress can't modify without fundamentally altering the Medicare Advantage program.
Clinician education, physician alignment, improved specialty access.
The return on those investments will always be high---no matter what budget bill is passed.