UPDATED: Friday, June 14 at 10:20 a.m.
The Centers for Medicare & Medicaid Services (CMS) will rework Medicare Advantage (MA) quality ratings for this year.
Private insurers will treat the decision as good news, as some health plans could receive “hundreds of millions in additional payments,” The Wall Street Journal first reported June 13.
SCAN Health Plan and Elevance Health recently took CMS to court over a misapplication of the new star ratings methodology. They believed CMS improperly calculated star ratings for the 2024 plan year. In both cases, judges sided at least partially with the insurance companies over the federal government. In a memo released Friday night, CMS said it was taking action "in light of recent court decisions."
Because insurers recently submitted plan bids for next year, plans will need to resubmit quality ratings based on the new calculations if they earned at least 3.5 stars and increased their ratings by a half a star or more under the recalculations. Plans have a window from June 26 to June 28 to submit revised bids.
If a plan scores worse under the recalculations, CMS will not decrease a contract's quality bonus payments rating.
National health plans have taken issue with the federal regulator's approach toward a star rating and risk adjustment redesign. Plans are rated on a scale of one to five stars, with insurers financially motivated to score as well as possible.
Federal judges told Medicare to recalculate star ratings for SCAN’s plans and one Elevance plan. The new CMS guidance would recalculate quality ratings industry-wide, likely increasing bonus payments for many insurers.
SCAN President of Medicare Karen Schulte told Fierce Healthcare at AHIP 2024 that the company is proud of its decision to challenge CMS in court and its eventual success.
“We went to other health plans and said, ‘this is something that we should all be up in arms about,’ and they said ‘good luck with that,’” she said. “So we went out it alone. That’s a huge risk.”
The successful challenge increased payments to SCAN by $250 million. If the lawsuit failed and the original calculation was upheld, more benefits for members would have been cut, said Schulte.