Medicare Advantage Star Rating & the Provider: Rewarding, Complex & Competitive

Posted by Michael Renzi, DO, FACP on May 22, 2018 8:40:27 AM

CMS created the Star Ratings system in 2008 to help seniors compare quality and performance among Medicare Advantage (MA) Part C plans and Part D prescription drug plans (PDPs). Insurance companies also benefit, as a plan’s star rating influences patients and directly affects membership growth. In 2012, CMS upped the ante by linking premiums and bonus payments to each plan’s star rating. Roughly, each half-star change in a plan’s rating affects bonus revenue by 25-30%, with the most significant reductions occurring when a plan drops under 4 stars. In real dollars, a plan increasing their star rating from 3.5 to 4.0 would result in double the annual bonus payment (referred to as a “rebate percentage”). Bonus payments are substantial, with an average amount between $700 - $1,000 per patient per year.

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Topics: CMS, patient experience, payer contracts, quality care, Medicare Advantage

Effective financial incentives drive value-based care (VBC) adoption

Posted by Michael Renzi, DO, FACP on Oct 18, 2016 11:22:00 AM

For years, providers and payers have been at odds with each other. Arguments about reimbursement rates, network inclusion, and claims management created relationships that were, at best, adversarial. The move away from fee for service (FFS) to value-based care (VBC), however, is triggering a shift all its own—new lines of communication are opening between payers and providers. This change is helping control costs and improve how care is delivered.

No matter how you slice it, there’s one clear path to increasing payer satisfaction and provider satisfaction at the same time: increasing the percentage of physician revenue linked to value-based contracts. While there’s critical and wonderful benefits that come along with value based care, such as better quality and outcomes, lower costs, and higher patient satisfaction, the only thing that will make providers adopt new practices is if there’s a strong financial benefit to do so.

Payers should be providing every willing physician with per member per month (PMPM) payments and shared savings, and those PMPM dollars should fund positive innovation in people, technology, and operations. Yet, shared savings programs have two inherent flaws that limit their ability to keep providers focused on the goals of the program: uncertain revenue streams and limited financial potential in terms of FFS revenue. Even a highly successful shared savings program will only yield a few percentage points in top line revenue—meaning that more than 95 percent of revenue is still FFS.

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Topics: Value-Based Healthcare, Alternative Payment Models, payer contracts

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