Medicare Advantage and Lake Wobegon
That is the connection made between Medicare Advantage (MA) Star Ratings under the Quality Bonus Program (QBP) and Garrison Keillor well-known segment on the Prairie Home Companion in a recent paper by Teno and Ankuda (2022). To better understand this linkage, first recall the famous quote from Mr. Keillor:
That’s the news from Lake Wobegon, where all the women are strong, all the men are good looking, and all the children are above average.
Garrison Keillor
In the paper by Teno and Ankuda, they argue that the Medicare Advantage Star Rating system (known formally as QBP) is set up so a majority of plans are above average.
The Affordable Care Act in 2010 mandated the creation of the 5-star rating system for MA plans. Under this system, plans receiving a 4- or 5-star rating would be given a 5% or 10% increase in their benchmark, allowing such plans to increase their contract bid and resulting in increased payments. As of February 2020, among MA contracts with star ratings, 83% of MA beneficiaries were enrolled in plans that received a bonus, resulting in $6 billion per year in QBP costs.1 By 2022, these costs increased to $10 billion.
Part of Teno and Ankuda’s argument rests on their contention that Medicare Advantage policies that allow MA plans to consolidate MA contracts (administered at the local level) and merge lower-rated MA plans with contracts of plans that have higher ratings. Teno and Ankuda’s point of view is that this is inappropriate, but whether or not it is likely depends on your prior assumption.
Consider the case where there are UnitedHealth (or Humana or Aetna or any large MA company) has two contracts, one to cover MA patients in the Southwest and another to cover MA patients in the Northwest. Assume the Southwest contract has a 5 star rating and the Northwest contract has a 3 star rating. If your prior is that quality of care is similar across all UnitedHealth MA contracts, then averaging the quality measures makes sense. This is rational if you think of UnitedHealth as a national organization with consistent quality standards. The difference between the Southwest and Northwest contract quality may just be due to noise and smaller sample and the ‘true’ rating may be 4 stars.
On the other hand, you may think of UnitedHealth as a more bureaucratic organization that subcontracts to specific plans/health systems at the local level. In this case, your prior is that there is significant heterogeneity in MA contract quality, even within the same company umbrella. You may believe that there is no one true UnitedHealth quality measure, but rather UnitedHealth Southwest really is a 5 star contract and UnitedHealth Northwest really is a 3 star contract.
The authors do note that “concerns of the CMS about measurement error with small plans are important,” but remain critical of the current system. Whether or not you agree with Teno and Ankuda probably depends on whether you believe geographic variation in MA contract quality within an MA plan is due mostly to noise or true differences in quality across regions.
