GAO on the Medicare Advantage Quality Bonus Demo

CMS 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).



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