Study: Medicare quality ratings may be ‘counterproductive’

Medicare’s effort to push seniors toward high-quality plans is not working, according to a new study from the American Action Forum.

The Centers for Medicare and Medicaid Services (CMS) grades private Medicare Advantage plans on a scale of one to five stars. Plans with three or more stars receive bonus payments, as CMS tries to steer seniors toward higher-quality plans.

But the American Action Forum, a conservative think tank led by former Congressional Budget Office Director Douglas Holtz-Eakin, said the star ratings aren’t working. The system isn’t serving CMS’s goals and could even be counterproductive, the Forum said in a paper released Tuesday.

“The goal of incentivizing quality health plans is legitimate and admirable; that goal will not be achieved by the rating structure currently being put into place,” the paper states.

For example, the paper says, CMS actually measured Medicare Advantage plans in late 2010 and early 2011, then published the star ratings so seniors could choose their plans in 2012, and it will award bonuses to five-star plans in 2013. The delays make it hard for Medicare Advantage plans to adjust to CMS’s criteria, the report argues.

President Obama’s healthcare law sought to link payments to star ratings in several ways, including a direct bonus to plans with four or five stars. CMS opted instead to use a demonstration program that extends bonuses to three-star plans, among other differences.

The Government Accountability Office said in March that CMS should cancel the demonstration program.

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