- Medicare Advantage’s quality bonus program has had no observable difference in plan quality despite costly federal investments, a new study suggests, bolstering calls from some stakeholders to substantially revise or even eliminate the program altogether.
- The study published in Health Affairs Monday analyzed nine claims-based measures of quality for MA beneficiaries versus a control group of commercial enrollees. Program participation was associated with significant quality improvements among MA beneficiaries on four measures, significant declines on four other measures and no significant change in overall quality.
- The findings jibe with past research suggesting the quality bonus program has had little-to-no effect on quality, despite the government awarding MA plans about $30 billion in quality bonus payments through the program over its first seven years — hinting the American people may not be getting enough bang for their buck.
The government has publicly reported MA plan quality in the form of a star ratings system since 2007. Ratings range from one to a high of five stars based on plans’ calculated performance across dozens of measures relating to preventative care, chronic disease management, patient experience and more.
Medicare introduced the quality bonus program in 2012. The program links financial bonuses to commercial insurers’ quality performance in the increasingly popular MA program, which covers roughly 42% of all Medicare beneficiaries, as measured by star ratings.
Unlike other value-based initiatives in traditional Medicare, which are designed to be budget-neutral or lower spending, the quality bonus program actually sets aside additional funding for payers. The incentives are pricey, totaling $6 billion in 2019 alone and making up 2.3% of aggregate payments to private insurers in MA, according to the Medicare Payment Advisory Commission.
But despite the major investments in the program (and some overhauls to its incentive structure and performance measures), its efficacy has largely been unclear.
The new study analyzed insurance claims from 2009 to 2018, comparing changes in performance between millions of MA beneficiaries and a control group of commercial enrollees. It’s the first evaluating the quality bonus program using a broad swath of performance measures and a control group, researchers said, and they found disappointing results.
The findings were consistent with other studies, including one from two years ago, finding the quality bonus program was associated with minor or no changes in quality.
“Given the massive incentives in the quality bonus program and plans’ focus on star ratings, it is perhaps surprising the program was not associated with improvements in quality,” the University of Michigan researchers said.
There are myriad possible reasons. Plans may be more focused on the nonclinical administrative measures that contribute to star ratings, such as customer service, that they have more control over and still contribute 25% of the weight for star ratings calculation. Or, it may be difficult for plans to pass down incentives to physicians, who may have a more direct impact on quality of care.
The study backs arguments from some Medicare watchdogs, including MedPAC, that the quality bonus program could use a substantial facelift to address key deficits in the current rewards model and move it toward budget neutrality.
That recommendation is further supported by other recent studies finding that doubling bonuses in certain counties didn’t increase enrollment or quality, but did result in payment disparities to plans.
Winnowing unnecessary spending in the Medicare program is looking increasingly important as the trust fund that finances Medicare’s hospital benefit is expected to run dry in just five years, absent legislative action. Currently, program spending is expected to balloon from 4% of the country’s gross domestic product to 6.2% by 2045.
According to Congressional Budget Office estimates, eliminating benchmark bonuses would reduce Medicare spending by $94 billion between 2021 and 2028.