July 18, 2012 at 5:00 am
Austin FraktCMS is running a Medicare Advantage (MA) quality bonus payment demonstration under which they will pay out $8 billion more in bonuses to MA plans than was called for in the PPACA. Here’s a look at the difference in bonus payment percentages in 2014 between the demo and the PPACA.
Under the demo, plans receiving 3 and 3.5 stars will get bonuses in 2014 they would not have otherwise received under the letter of the law. The GAO weighed in on the demo with a letter to Secretary Sebelius on July 11. In brief, the GAO finds that the demo lacks a control group. So whatever effect it might have on quality or efficiency will be unmeasurable. In addition, by increasing bonuses for lower quality plans, it is not at all clear that there are sufficient incentives for plans to improve quality. The vast majority of MA enrollees are already in plans with quality ratings of 3 or more stars.
The GAO concludes,
Section 402(a)(1)(A) provides the Secretary broad authority to modify methods of payment under Medicare to establish additional incentives to increase the economy and efficiency of services provided under the program by carrying out experiments and demonstration projects. This authority, however, is not unlimited. Although the payment changes tested under a particular demonstration need not actually result in increased efficiency or economy, demonstrations under which these payment changes are initiated must meet the criteria set forth in the statute, which include providing additional incentives to MA plans to increase the efficiency and economy of Medicare services and enabling the agency to determine whether these changes in payment methods increase the efficiency and economy of Medicare services. However, CMS has not established that either of these elements is present in the MA Quality Bonus Payment Demonstration.
Prior TIE coverage of the MA quality bonus demo is here, here, here, here, and the links therein. In sum, there’s not a lot of love for this demo from official oversight organizations (GAO, MedPAC).
by Kevin Outterson on July 18th, 2012 at 10:01
Imagine the RCTs on health policy we could do with $8 billion.
by Ron on July 18th, 2012 at 10:25
What disgusts me about this is that it’s the insurance companies who get all that cash–not the doctors and other providers who are working so hard to improve the deiivery of health care.
(ed. note: The claim in this comment requires evidence per the comments policy.)
by Ron on July 19th, 2012 at 08:50
My evidence is unable to be posted due to company privacy restrictions. That’s the way Medicare advantage works–the doctors provide the intense care and code higher level diagnoses, and Medicare pays the insurance company more based on those diagnoses, and that’s all the further that cash goes. The providers only get what standard Medicare pays and the insurance gets to keep the rest.
by jamzo on July 18th, 2012 at 11:15
how is it that the healthcare narrative does not employ the word subsidies in regards to medicare advantage….
by Austin Frakt on July 18th, 2012 at 11:42
It doesn’t?
by Mark Spohr on July 18th, 2012 at 11:52
The purpose of the US government is to transfer public resources to corporations. The private sector pays good money to our politicians for this service.
In this case, the insurance companies have purchased a large number of congressmen (and women) to ensure that they can cherry pick healthy people and receive extra profits.
This is true American freedom and free enterprise at its best. If you would question the wisdom of this, you must be a communist.
(ed. note: This comment is chock full of unsubstantiated assertions, which violates the comments policy. Such a thing won’t be approved in the future. If you can’t back your comments up with evidence, consider rephrasing as an opinion.)
by Curtiss on July 18th, 2012 at 13:06
What do you say to the rumors that suggest that this was a ploy by the Obama Administration to keep seniors happy to secure their vote in the upcoming election (see link 1 – yes, I know it’s Fox News, but I think that this time they may have a point)? Obama has opposed Medicare Advantage (see link 2), the PPACA reduces Advantage payments, yet the DHHS does this. They say it may improve the plans yet even your article suggests otherwise. In addition, the GAO has also critiqued the legality of this move (see link 3). I’m seeing this as nothing but politics at its finest.
1.http://nation.foxnews.com/president-obama/2012/07/16/gao-obamacare-timeline-based-election?intcmp=fly
2.http://abcnews.go.com/blogs/politics/2009/09/obama-defends-medicare-advantage-cuts/
3.http://www.washingtonpost.com/business/govt-auditors-question-legality-of-obama-administration-bonus-program-for-medicare-insurers/2012/07/11/gJQApi8SdW_story.html
by Austin Frakt on July 18th, 2012 at 13:33
That’s the best hypothesis I have as well.