Carrots, not Sticks: Focusing on Quality Performance

While policymakers in both parties argue over how to reshape Medicare for the future, the Medicare Advantage (MA) program is quietly and effectively getting the job done.

Consider these facts:

  • Today, nearly 1 in 4 Medicare beneficiaries have chosen to enroll in a MA plan — 12.8 million of Medicare’s 49 million beneficiaries.  I’m proud of the fact that ACHP member plans that offer Medicare Advantage enroll about 15 percent of the almost 13 million MA members.   MA plans are doing a better job at preventing unnecessary readmissions to hospitals by improving coordination of care and care transitions (also see ACHP’s recent Transitions of Care report);[1]
  • Beneficiaries with chronic conditions often get better care if they are enrolled in an MA plan —  for example, diabetics who are enrolled in MA plans see their doctors more often and go to the hospital less frequently than those who are in traditional fee-for-service Medicare;[2]
  • The number of beneficiaries enrolling in MA plans is rising at a rate of five to ten percent a year and the number of plans participating in the program is also rising.

Sadly, Medicare Advantage is often a political football, tossed and kicked in different directions by both parties. But such political contentiousness belies the true value of the program. By creating the combination of quality and payment incentives for patients and their providers to get the right care at the right time, Medicare Advantage has helped to manage costs and improve quality.  Health plans have led the way in the movement toward value-based purchasing by adding preventive health care and care coordination for high risk patients to the typical array of benefits.

The Medicare Advantage program’s  capitated payments promote cost savings and allow for flexibility to manage chronic disease and complex patient cases.  In addition, Medicare Advantage allows health plans to provide social supports and to fill in gaps where patients need care.

The benefits to patients are clear: with Medicare Advantage, beneficiaries’ total out-of-pocket costs are much more predictable and typically less than they would be using fee-for-service.  Moreover, MA members have guaranteed access to a network of qualified providers.  In an MA plan the problems that some fee-for-service patients face, such as limited access to providers, simply don’t exist.

And there’s another important difference between Medicare Advantage and traditional fee-for-service Medicare:  quality measurement.  Since 1997, MA plans have collected and reported data on their performance and the performance of their providers using evidence-based quality measures. This information helps to guide plans’ quality improvement efforts and provides Medicare consumers with detailed data about the performance of MA plans. That data forms the basis for Medicare’s “Five-Star” quality rating system that provides consumers with summary information about plans and their providers’ performance, as well as detailed drill-down data.  As a result, beneficiaries and the general public have robust information about the quality of the care delivered by MA plans and can choose the plan that best suits their health care needs.  This stands in stark contrast with traditional Medicare, which until recently has collected very little information about quality and customer service and provides consumers with much less comparative data.

The Affordable Care Act established a new program to reward plans that consistently provide high-quality care and service to their Medicare members. Under the law, MA plans that achieve either four or five stars for their performance are eligible for additional payments that reflect their investment in quality and service.  These quality incentives must be spent directly on enrollees to expand benefits, making it clear that the additional funding ultimately is intended to improve the health of members.  To incentivize more plans to improve, a demonstration program that provides incentive payments to Medicare Advantage plans with a star rating of three stars or above is in place for 2012, 2013 and 2014.

ACHP member plans have performed extremely well under this ratings system:  Seven of the MA plans offered by our members received 5 stars in 2012.  In fact, 98 percent of Medicare beneficiaries enrolled in a 5-Star Medicare Advantage plan are in an ACHP member plan.  And 70 percent of beneficiaries in plans with a star rating of 4.5 or better are members of an ACHP plan.

Medicare’s quality payments address three of the toughest problems in health care today:  by tracking performance on clinical measures that matter to consumers, such as consistent  care for diabetes patients, health and health care are improved; by grouping these clinical ratings with customer service ratings, consumers can make choices about where they will get the care and service they need; and by aligning payment with higher performance on clinical, satisfaction and access measures, we’re spending our Medicare dollars more wisely.

In short, health plans in Medicare Advantage have an incentive to provide high-quality services and to do so efficiently.  These quality-over-quantity incentives promote better care; they also give patients clear, evidence-based information about their health plans and providers.  Medicare beneficiaries can use the star system to help them select a high-quality plan that also emphasizes customer service.

What’s more, highly rated plans can, and should, be used as learning laboratories for Medicare innovation and program reform. Medicare Advantage provides a model for reform of traditional fee-for-service Medicare, transforming the way in which patients and providers access and deliver health care.  Let’s use it.

– Patricia Smith
President and CEO, ACHP

[1] “Hospital Readmission Rates in Medicare Advantage Plans.” American Journal of Managed Care. 2012; 18(2):96-104.

[2] “Medicare Advantage Chronic Special Needs Plan Boosted Primary Care, Reduced Hospital Use Among Diabetes Patients.”  Health Affairs, January 2012 31:1110-119.

(Image courtesy of Green Growth Cascadia)


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