Medicare Advantage quality bonus program failing to meet objectives, report finds

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The Medicare Advantage quality bonus program, established by the Affordable Care Act as part of a package of MA reforms, was expected to reduce payments to MA organizations. But according to a new Urban Institute report, the expected cost savings from the reforms have not materialized.

In part, this is because more than half of MA plans are now receiving bonuses for "high performance" on the star ratings measures that underlie the QBP. Unlike other Medicare pay-for-performance programs, the QBP is upside-only, meaning it does not assess penalties on low-performing MA contracts.

The concern is that the QBP overpays MA organizations and does not achieve its goal of encouraging quality improvement and helping beneficiaries select plans.

Although policymakers' attention to overpayments has focused mostly on gaming of the risk adjustment system, the QBP contributes substantially to overpayment and needs reform, the report found. For example, the Medicare Payment Advisory Commission (MedPAC) has recommended replacing the QBP with a value incentive program that would balance penalties and bonuses equally while focusing more on local population health.

WHAT'S THE IMPACT?

While clinical quality measures account for over half of the measures used in the star rating system, after weighting, about two-thirds of a contract's star rating is determined by beneficiary experience and administrative effectiveness.

There are two main problems with this, according to the Urban Institute: Measures of beneficiary experience don't foster meaningful distinctions across MA contracts, and administrative effectiveness measures don't target the important deficiencies that regulators have identified within MA organizations.

Authors also found numerous problems with the star rating system and the QBP – one being score inflation, which results in overly generous bonuses.

The report also cited limitations in underlying data sets, which lead to measures focused on the needs of younger and healthier beneficiaries rather than beneficiaries facing serious illness. Also, performance is not measured at the plan or local level, limiting the usefulness of star ratings for beneficiaries; and contrary to the QBP's goals, beneficiaries typically do not use star ratings when selecting plans.

MedPAC has suggested a replacement for the QBP that would rely on a small set of population health measures to determine MA plan quality at the local level. It would also assess rewards and penalties to make the program budget neutral.

According to the Urban Institute, this suggested replacement has merit, but authors would adjust the approach to focus more on protecting beneficiaries from poor plan administration rather than attempting to measure MA contracts' effects on clinical quality and population health – which largely reflect provider performance rather than MA organizations' contributions, the organization said.

"While MA plans can choose providers for their networks, many plans are broad-network PPOs and HMOs that do not narrowly tailor their networks to include higher-performing providers," authors wrote.

THE LARGER TREND

The verdict from the Urban Institute is that pay-for-performance programs have largely not achieved their goals, with the QBP being no exception. According to the report, major changes to the MA QBP are needed to create a program more aligned with the goals of helping beneficiaries make informed choices and encouraging MA organizations to improve performance. 

Reforming the QBP could also help reduce Medicare spending, extending the life of the Medicare Hospital Insurance trust fund, the report found.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com