A couple of lawmakers want to have their say in how Medicare Advantage plans are rewarded for quality care. As part of reform, the absolute numbers of MA programs have been truncated and budgets increasingly scrutinized. Sen. Orrin Hatch (R-UT) and Rep. Dave Camp (R-MI) support the utilization of bonus payments to high quality private insurers in MA plans, but they want to be the ones who help decide the value and range of distribution of those payments. (Those bonus payments, HHS says, are part of Medicare demonstration projects to ensure quality.)

We have several concerns, however, about the MA quality bonus payment (QBP) demonstration project that CMS announced simultaneously with the release of the proposed rule. Although CMS has not solicited public comment on the demonstration, our concerns are significant enough to bring to the agency‘s attention here. The proposed demonstration is not budget-neutral and will incur significant program costs.

This, and other issues, are addressed in a letter to CMS sent from both lawmakers and their respective committees (via the Medicare Payment Advisory Commission) in which it is alleged the feds’ “improper” use of taxpayer funds to reward MA programs across a broad scale — rewarding marginal programs, as well quality ones while ultimately giving beneficiaries less choice. This action is a subversive one, the lawmakers say, as Congress has no authority in the matter.

The extension of quality bonuses to the vast majority of plans is likely to result in far greater program costs than the reward system enacted in PPACA. Using the 2011 ratings—that is, those currently shown on the CMS web site for the open enrollment season—80 percent of MA enrollees are in plans with 3 or more stars, while 7 percent are in plans with fewer than 3 stars and 13 percent of enrollees are in plans that are not rated. Plans with 4 or more stars enroll about 23percent of MA enrollees (as of November 2010). As compared to the design of the bonus system in PPACA, in which the incentive was for plans to try to achieve the highest possible star ratings, and there was consequently a disincentive for poor performance, the demonstration lessens the incentive to achieve the highest level of performance.

The memo is quite an interesting read and gives the observer a look into just how divisive an issue the cost of implementing reform is ahead of the 2012 presidential and congressional elections. It is clear Republicans will continue to hammer the current administration on this issue of PPACA’s affordability as justification of either partial or full repeal. | LINK [PDF]

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