In its February 20, 2015 Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter, CMS addressed a variety of issues relating to its Star Ratings system. The three most notable being (1) changes and new considerations in the Star Ratings system, (2) an announcement of the quality bonus payment percentage, and (3) the establishment of the timeline under which plans will receive notification that their contracts will be terminated as a result of having three consecutive years of star ratings below three stars. The topics themselves demonstrate that the information in the Call Letter sets the stage for plans to be very big winners or very big losers.

Changes to the System

The most noteworthy announcement related to Star Ratings in the Call Letter is CMS’s discussion of whether plans with a high percentage of dual eligibles and/or low income subsidy (LIS) enrollees are disadvantaged by the current Start Ratings system when compared to plans that do not serve a large duals or LIS population. CMS had previously released a Request for Information that gave interested parties the opportunity to provide analysis and research that demonstrated that dual status negatively impacts Parts C and D quality measures. CMS received multiple comments from a variety of entities relating to this topic and conducted its own extensive research, and while it seems to still be questioning the causal link, has proposed to reduce the weight of six Part C measures and one Part D measure for all plans. The affected Part C measures are: breast cancer screening, colorectal cancer screening, diabetes care – blood sugar controlled, osteoporosis management in women who had a fracture, rheumatoid arthritis management, and reducing the risk of falling. The affected Part D only (not MA-PD) measure is medication adherence for hypertension. CMS recognized that after additional research, it may be appropriate in the long term to adjust Star Ratings where scientific evidence supports that certain measures are impacted by factors including comorbidities, disability, or duals/LIS status. CMS also announced that it is considering developing an integrated Star Ratings system for the Financial Alignment Initiative Medicare-Medicaid Plans (MMPs).

Like last year, CMS included a detailed discussion of changes that will be made to certain measures that comprise the Star Ratings system. Significantly, as proposed in the 2015 Call Letter, CMS has decided to remove pre-determined 4-star measure thresholds for the 2016 Star Ratings. This change impacts 22 Part C and 5 Part D measures. CMS explained that it has seen plans achieve greater improvements in measures without pre-determined 4-star thresholds and believes that the thresholds can sometimes skew ratings when plans are close to the threshold but fall on different sides of the line.

Some of the measures that are being added, returning, or adjusted include the following categories: MTM completion rate for comprehensive medication reviews (Part D), breast cancer screening, beneficiary access and performance problems (Parts C and D), controlling blood pressure (Part C), timely decisions about appeals (Part C), all-cause readmissions (Part C), complaints about plans (Parts C and D), and certain medication adherence measures relating to diabetes medications, hypertension, and cholesterol. The Call Letter also lists measures that are being retired or temporarily removed.

Quality Bonus Payments

For CY 2016, MA plans with four or more stars will receive quality bonus payments that will result from the eligible plans being able to bid against their service area benchmark adjusted to include a five percentage add on to each county rate in the service area. This should benefit most 4 and 5 star rated plans, although rates are capped at what the benchmark would have been under the pre-ACA rules, so some plans may not benefit as much as others depending upon the benchmarks in a given service area.

Contract Terminations

CMS has the authority to terminate a Part C or D contract if an organization has failed to achieve at least a three star rating for three consecutive years. CMS has yet to exercise this authority but in the Call Letter, CMS has set a timeline informing plans when they will receive their termination notices. If based on the CY 2016 Start Ratings an organization meets the regulatory criteria for termination, CMS will provide the organization a non-renewal notice in February of 2016 with an effective date of December 31, 2016. Beneficiaries in the affected plans will receive notices in March of 2016.