The Kaiser Family Foundation released this brief examining the national health care reform law’s Medicare Advantage (MA) quality incentive program and demonstration project.  Health reform established a three-year $1.3 billion program which will offer MA plans quality bonuses beginning in 2012.  Under that program, MA plans with a quality rating of four or five stars will be eligible for bonus payments, accounting for 14 percent of MA insurers.  The Centers for Medicare & Medicaid Services (CMS) authorized a demonstration project to expand that program to include bonuses for plans with three star ratings.  Under the demonstration project, 62 percent of MA insurers will be eligible for the quality incentives while four and five star plans will be eligible for larger bonuses.  The brief notes that approximately 25 percent of beneficiaries are currently enrolled in plans with ratings of four stars or higher.  However, the authors caution that policymakers must assess the demonstration project’s impact to ensure that it encourages improvement, rather than rewarding average quality.

From the report:

The Centers for Medicare and Medicaid Services (CMS) posts quality ratings of Medicare Advantage plans to provide Medicare beneficiaries with additional information about the various Medicare Advantage plans offered in their area. The health reform law of 2010 required the ratings to be used to award quality‐based payments to Medicare Advantage plans, beginning in 2012.1 In November of 2010, the CMS posted the agency’s ratings of the Medicare Advantage plans that are available to beneficiaries for the 2011 plan year on the Medicare.gov website. The CMS has proposed a demonstration that would modify the rating system and provide additional quality‐based payments to the Medicare Advantage plans for 2012 to 2014. All Medicare Advantage plans would be included in the demonstration.

Full Report: Reaching for the Stars: Quality Ratings of Medicare Advantage Plans, 2011 (PDF | 669 KB) 

Kaiser Family Foundation. (2011). Reaching for the stars: quality ratings of Medicare Advantage plans, 2011. Jacobson, G., Damico, A., Huang, J., and Neuman, T.