Millions of seniors signed up for popular Medicare Advantage insurance plans don't get the best quality, an independent study found.
How the private plans score on a quality rating system set up by the government is about to have a direct impact on insurers' finances — not to mention seniors' benefits and premiums. President Barack Obama's health care law ties what the plans get paid by the government to the quality they provide, for the first time.
There seems to be plenty of room for improvement.
The study being released Thursday by Avalere Health, a major consulting firm, looked at the health plans that seniors pick, according to the plans' scores on a government rating system designed for consumers. The ratings, available on Medicare's website, assign one to five stars for quality, with one signifying poor performance and five excellent.
The analysis found that 47 percent of Medicare beneficiaries are in plans that rate three stars or two — medium to fair quality. Just 23 percent were signed up in plans that rate four or five stars — very good to excellent quality. Many of the rest were in plans not yet rated.
"There is obviously a wide variance in performance," said Dan Mendelson, president of Avalere, which specializes in crunching health care data for government and industry. "These ratings are about to become much more important. When you start linking quality to payment, you can bet the plans are going to be very motivated to bring the scores up."
For years, private plans have enjoyed generous payments from the government, currently averaging 9 percent more than the cost of care in traditional Medicare. The government's benevolence enabled most plans to offer lower out-of-pocket costs and extra benefits, compared with traditional Medicare. About 11 million seniors are signed up, nearly one-fourth of Medicare recipients.
That's about to change under the health care overhaul. Payments are being trimmed back starting next year for all plans, to correct what Obama says is wasteful overspending. However, beginning in 2012, the law directs Medicare to award bonuses to plans that score four stars or better.
The payment shift means that high-quality plans will find it a lot easier to keep offering extra benefits, while others will struggle. Indeed, Medicare's own analysts predict an exodus from Medicare Advantage back to the traditional program after the cutbacks begin.
The government's rating system evaluates plans according to several measures, including customer service, prevention and medical care for people with chronic health problems. An insurance industry spokesman did not challenge the Avalere study but raised questions about Medicare's rating system.
"Some of the criteria are not objective, meaning that health plans may not be able to move up in the ratings," said Robert Zirkelbach of America's Health Insurance Plans.
The industry says its own research shows that seniors in private plans receive high-quality care, often better than in traditional Medicare. They spend fewer days in the hospital and run a lower risk of being admitted for avoidable problems.
On the Net:
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