Will The GAO Doom Medicare Star Ratings?

I’ve talked about the Medicare Star Ratings several times before.  This is a critical framework for beginning the shift in payment from a fee-for-service world to a outcomes based system.  I’m sure there are many issues with it, but being in the trenches, I certainly noticed that many companies began to look differently at programs over the past 18 months.  So, from an attention getter, it worked.

We all know rates were getting cut in Medicare so this shifted some of that pain to make companies focus on what matters in terms of quality and outcomes.

Now, the GAO has put out a report that questions whether the expansion of the Star program to include 3 Star plans was a good idea.  (see Gorman’s comments here)  I think this is a fair question.  Should we reward mediocrity?  I think there are ways to do this.

1. You could pay 3 and 3.5 star programs but only if they show improvement year-over-year.
2. You could lower the payments or only reimburse them for investments made (i.e., no profit).
3. You could do it for one year then move the line up to 3.5 stars and then move it to 4 stars to give plans some time to implement, learn, and improve.

Right now, very few plans earn 5 stars, but dropping it to include 3-star plans makes almost 90% of plans get bonuses.  Maybe this is a case for some time of GE program where the top 10% get the biggest bonus; the bottom 10% have to stop offering a program; and the remaining funds get divided up based on some time of rating system.

The key here is not to throw the baby out with the bathwater.  The framework is good.  It’s taking time to understand the program, implement changes, and see an impact.  But, let’s not reward people that can’t continue to innovate and improve and do it in a way that rewards members based on outcomes and satisfaction.