Officials target Medicare’spoor-performing drug plans

October 25, 2011

Nationally, federal officials have given negative assessments to more than a quarter of Medicare’s rated prescription drug plans that will be available to seniors in 2012. And in the Washington metropolitan area, 36 percent score unacceptably low, according to an analysis of Medicare data.

The Centers for Medicare and Medicaid Services is notifying the plans that, unless they improve their performance over the next few years, they face expulsion from Medicare.

This month, CMS revised the way it rates Medicare drug plans to focus more on quality, and many plans’ ratings fell from 2011 to 2012. The criteria changed to stress clinical outcomes, such as whether a patient takes his medication the way he is supposed to, in addition to process measures, such as how long a patient is kept on hold when calling the plan. In judging 2012 plans, CMS for the first time considered whether patients kept up with medications for diabetes, hypertension and cholesterol. It also considered complaints lodged against plans and the numbers of people who choose to leave plans.

While the new system labeled more plans as poor performers, CMS says this is likely to lead to better options for the 28 million elderly and disabled beneficiaries who rely on those plans to help pay for their medications.

“We have raised our standards, and we are not apologizing for that,” said Jonathan Blum, deputy administrator and director for Medicare at CMS, who stressed that benefits have not disappeared. “We will push as hard as we can to elevate performance. . . . If plans are getting worse, we expect them to get better.”

Traditional Medicare does not cover most prescription drug costs for beneficiaries, but they can voluntarily buy private Medicare Part D drug plans. CMS rates the prescription plans according to a star system, with five stars indicating the highest quality and one star the lowest. That system is similar to ratings for the private Medicare Advantage health plans that about a quarter of seniors choose instead of traditional Medicare.

This month, CMS proposed a new rule that would allow it to oust plans that score below three stars for three consecutive years.

The low-performing prescription plans are also a problem for many people who qualify for both Medicare and Medicaid, the joint federal-state health-care program for the poor. If they don’t choose a plan, they are by law assigned randomly to drug plans with average or below-average costs. More than half of those drug plans (52 percent) get just two stars, according to Avalere Health, a health-care consulting company.

“There is certainly room for improvement,” said Avalere chief executive Dan Mendelson. “What we want is fours and fives.”

There are nearly 9 million of these “dual eligibles” in the United States. Most are seniors, but about a third are younger people with disabilities, and more than half have annual incomes below $10,000.

Low-income beneficiaries can do their homework and switch plans, but like other seniors most do not look for new options. In an October survey, the public opinion firm KRC Research asked Medicare beneficiaries whether they would shop around for a new plan during open enrollment, but only three in 10 said they were likely to do so.

According to Avalere, 5 percent of the plans available to dual eligibles have a rating of four or five stars, and 43 percent have three stars.

Open enrollment for Medicare drug plans for 2012 began Oct. 15 and closes Dec. 7. Premiums vary widely because some plans cover more drugs than others, or charge higher co-payments and deductibles.

Blum emphasized the importance of comparison shopping every year and said the new performance measures should help. “People pay the most attention to premiums. We want them shopping for the best value and quality,” he said.

Nationally, of the 557 rated drug plans that will be available next year, 24 percent get the top ratings of four or five stars, and about half fall in the middle with three stars. Twenty-eight percent score below three stars; only one comes in below two.

In the Washington area, nine of the 25 rated plans, 36 percent, score two or 2.5, although they have attracted a lower share of enrollees. A quarter of the 178,674 local enrollees are in the lowest-rated plans.

As prescription plans adapt to the new system, they may improve — at least enough to win three stars and remain in the Medicare program. But there is no financial incentive for drug plan sponsors to reach for more stars. In the Medicare Advantage program, plans will be rewarded with higher payments when they achieve better ratings, starting in 2013.

Most of those plans include drug coverage. The same does not apply to stand-alone drug plans, although Blum said that CMS will be watching closely to see whether the bonus money has an impact on quality. If it does, he says, CMS will seek a similar incentive for those drug plans.

— Kaiser Health News

KHN reporter Christopher Weaver contributed to this report.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

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