GAO reports on the Medicare Advantage bonus program
The non-partisan Government Accountability Office (GAO) released their findings on the interim Medicare Advantage (MA) bonus program last week. This interim bonus program was put into place to help quell the uproar from the initial Medicare Advantage cuts that were initiated with PPACA and is set to run from 2012 to 2014. It was found that the estimated $8.35B program will not improve quality for MA programs due to the distribution of bonuses to plans rated with 3 or 3.5 stars (out of 5). While this program does reward plans rated with 4 and 5 stars, it does not incent lower rated plans to improve their quality. It is estimated that the majority of spend with the MA Quality Bonus Payment Demonstration will be paid to these plans that are rated with 3 and 3.5 stars. Under the PPACA plan roughly 30% of all MA plan sponsors would be eligible for bonus in 2012 and 2013. With the interim system almost 90% of MA plan sponsors will be eligible for bonus payments. If lower rated plans are receiving bonuses, what is left to incent them to improve the quality to their members?
The GAO recommends that the Secretary of HHS terminate the interim bonus plan and implement the bonus plan that was set to begin in 2014 with PPACA. The plan, to be enacted in 2014, includes much more stringent benchmarks for Medicare Advantage plans and only rewards based on ratings higher than 4 stars. A MA bonus program is considered crucial to maintaining the quality and affordability for these products that cater to a largely economically sensitive population. Over-compensation with the current bonus program does not help the subscribers or the overall fiscal reputation of the Medicare trust, where these bonuses are funded.
About the Author
Alyssa Martin is a Vice President at William Gallagher Associates (WGA,) providing proactive service, effective decision-making and advanced problem-solving capabilities to a number of national clients in the mid-sized to large markets. She also works with key WGA clients to assist their employees with their individual Medicare choices as they are approaching retirement.