Each fall, at Annual Enrollment Period (AEP), people compare Medicare plans by contrasting their current Medicare Advantage Plan (and/or Medicare Prescription Drug Plan) with other plans on the market. Besides looking for plan’s cost and coverage, you should consider the plan’s quality and performance, but how do you measure quality? It was quite difficult, but not anymore thanks to Medicare Star Ratings (also known as CMS Star Ratings).
The CMS star rating is the overall plan summary score, expressed as a certain number of stars. The star rating system was introduced as a part of health care reform to improve the quality of care provided by private plans that they contract with Medicare. Each plan gets rated between 1 and 5 stars. Some plans may be too new to be rated. A plan’s star rating is calculated each year, and updated results are published in the fall.
What do the Medicare Plans’ Star Ratings measure?
Medicare Plans’ stars measure how well Medicare plans perform on more than 50 items grouped into different categories. The star rating provides the overall measure of it. You always may ‘drill down’ to the category details, if needed.
Medicare Advantage Plans
The overall score for Medicare Advantage plans cover 36 topics in 5 different categories:
- Staying healthy; screening, tests, and vaccines
- Managing chronic (long-term) conditions
- Member experience with the health plan
- Member complaints, problems getting services, and improvement in the health plan’s performance
- Health plan’s customer service
Medicare Drug Prescription Plans
The overall score for Medicare Drug Prescription plans cover 17 topics in 4 categories:
- Drug plan’s customer service
- Member complaints, problem getting services, and improvement in the drug plan’s performance
- Member experience with the drug plan
- Patient safety and accuracy of drug prices
How to Compare Medicare Plans using CMS Star Ratings
The introduction of the CMS Star Rating provides simplicity in Medicare plan comparison. Any tools used to compare Medicare plans (such as Medicare Plan Finder) has a star rating associated with any Medicare Advantage or Prescription Drug Plan. Plan’s quality and performance comparison never were easier!
Why Medicare Star Ratings are so Important?
Star Rating Bonuses
Many Medicare Advantage plans cost more than Original Medicare but do not provide better results for the patients. It triggered the 2010 federal health law cutting plan payment to Medicare Advantage providers by $136 billion over ten years. The star rating bonus payment actually restores some of these losses to high-performance plans. The range of bonuses for 2012/2013 is the following:
- 0% for less than 3 stars plans
- 3% for 3 stars plans
- 3.5% for 3.5 stars plans
- 4% for 4 stars plans
- 4% for 4.5 stars plans
- 5% for 5 stars plans
Because the profit margins of many Medicare Advantage plans are about 3%, the bonus numbers above are quite significant.
Plans can use bonuses to increase plan benefits for their members, or to reduce their premium. As a rule of thumb, a 1% bonus would equate to about $10 per member per month. As it stands today, the bonus difference between 3 and 4 star plans today is 1%. That equates $10 per member per month. This number is doubled for some selected “double bonus” counties. In 2014 the bonus for 4 and 4.5 stars plans will change from 4 to 5%, therefore the difference between 3 and 4 stars plans will be 2%. Consider what will happen starting in 2015. 3.5 stars and lower plans will get no bonuses and only 4 stars plans and above will get quality bonuses! The difference between 3 and 4 stars plans will be 5% ($50 per member per month), and for double bonus counties – 10%. The appeal of high-performance plans will increase dramatically!
5-star Special Enrollment Period
5-star Special Enrollment Period (SEP) provides an additional incentive for high-performance plans. You may switch to a 5-star Medicare Advantage plan without prescription drug coverage, a 5-star Medicare Advantage plan with prescription drug coverage, or a 5-star stand-alone Medicare Prescription Drug Plan at any time during the year. In other words you are not under the constraints with AEP anymore. This SEP may be used only once between December 8 (the day after AEP is over) and November 30 of the following year. You also may switch from one 5-star plan to a different 5-star plan.
Encouraging use of High-Performance Health Plans
Medicare is trying to discourage seniors from using Medicare Health Plans that are performing poorly. It identified 26 Medicare Advantage and Prescription Drug Plans that received low ratings (less than 3 stars) for three consecutive years. Recently Medicare sent a letter to a half million beneficiaries of those plans urging them an opportunity to switch to a better plan (with 3 or more stars). Officials also warned that poor performed plans may be cancelled in the future.
In addition Medicare makes it difficult to sign for one of those plans. For example, using Medicare Plan Finder you may access and join the plans electronically, but to enroll in one of the 26 poor performed health plans the seniors must contact the insurance company directly.
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For help finding the best Medicare or Individual Health Plan for you, please contact Liberty Medicare or call us at 877-657-7477.