Some Medicare Stars Program Updates and the Overlap with Population-Based Care and Disease Management

The Disease Management Care Blog is back from grandly named "Healthcare Education Associates' and the Risk Adjustment Initiative And Society for Education's (RISE)" CMS Star Ratings Master Class conference. The day-long Miami meeting was all about succeeding in the CMS quality-based bonus program called "Stars."

The DMCB listened closely to one speaker.  First are its notes, which are followed by three take-aways.

The notes:

CMS had tried posting Medicare Advantage (MA) Plans' quality measures online, but they were generally ignored by consumers.  That's when CMS decided to change course and use its Demonstration authority to launch the current Stars program. It incents the MA as well as other contracting plans with bonus payments based on a complex weighted formula that includes satisfaction, quality of life and clinical outcomes.  The latter measures are dominated by chronic conditions.

While the measures' minimum payment thresholds are constantly changing, In 2012, 11 MA plans achieved the coveted "5 Star" our of 5 rating, while 127 achieved a respectable rating of 4 or better our of 5. Success appears to be associated with:

1. HMO-type physician network structure,
2. Not for profit status,
3. An enrollment of more than 90,000,
4. An established marketplace presence,
5. A track record of pursuing quality,
6. A track record of physician integration and
7. Advanced informatics including a data dashboard (tracking outcomes), physician level tracking and providing care gap information at the point of care

While the calculation and translation of a particular Stars rating to a particular bonus amount surpasseth the DMCB's understanding, the big picture is impressive.  In 2012, health plans with government contracts spent over $1 billion on their quality programs, while CMS is projected to award $3.1 billion in bonus payments.  This works out to a payment of $281 per beneficiary, or approximately $23 per member per month (PMPM).

The DMCB take-ways:

1. You call it "Stars" but the DMCB calls it population health management: CMS is basically paying its contracted health plans $23 PMPM to develop or outsource programs targeting chronic illness, quality of life and satisfaction, much of which is old fashioned PHM. The DMCB confidently assumes a lot of that $23 PMPM is paying salary and benefits for non-physicians (such as nurses), who are engaging members and doctors using risk stratification and outreach that includes the old fashioned telephone.

2. How generous: Compared to many population health management vendor fees, $23 PMPM seems high. What's more, an industry-wide return on investment of approximately 3:1 ($3.1 billion in payments vs. a cost of $1 billion) is lavish, especially because the DMCB suspects most MA plans were already willing to spend a billion to reduce their claims expense by even more.

3. We've changed our minds: An emerging Medicare "whisper" "fiscal cliff" savings target is $250 billion, which may be partially attained by cutting back on the Stars bonus payments.  While it could be argued that the MA plans have been amply rewarded by the program, the Fed's fickleness remains a considerable business risk, especially for the smaller not-for-profit MA plans