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On March 8, 2016, the Centers for Medicare and Medicaid Services (CMS) released a memorandum entitled “Suspension of Policy Providing for Automatic Reduction of Star Ratings for Contracts Operating Under Intermediate Sanction.”

Through this memo, CMS has suspended its policy of lowering the star ratings of Medicare Advantage plans that are under sanction for violations of program rules.  Before this change, plans that did not resolve violations in a timely manner were subject to an automatic lowering of their star ratings, which, in turn, could jeopardize the plans’ bonuses for achieving high star ratings.  As reported by Kaiser Health News and Modern Healthcare (see below), this policy change is estimated to save at least one plan – currently under CMS sanction because its “conduct poses a serious threat to the health and safety of Medicare beneficiaries”  – hundreds of millions dollars based upon its anticipated future high quality ratings.

The Center is deeply troubled that CMS, in an act that was apparently unannounced and not subject to public comment, suspended a policy that removes significant incentives for sanctioned plans to correct their improper behavior in a timely manner.  With one hand, CMS imposes sanctions for widespread and systemic behavior and with the other hand gives a pass to affected plans by ensuring that bonuses via future star ratings remain protected.  This action raises a host of questions concerning both regulatory oversight of plans and the transparency and reliability of plan star ratings upon which Medicare beneficiaries rely.

For more information, see, e.g., “Medicare Advantage ratings proving to be boon to insurers, patients” Phil Galewitz, Kaiser Health News, USA Today, (March 2, 2016), available at: http://usat.ly/1oXgL02; “Cigna could save $350 million from new Medicare Advantage policy shift” by Bob Herman, Modern Healthcare (March 9, 2016); “Cigna Profits as Medicare Softens Penalty Policy” by Phil Galewitz, Kaiser Health News, (March 10, 2016), available at: http://khn.org/news/cigna-profits-as-medicare-softens-penalty-policy/; “Anthem, Cigna enjoy stock boost after Medicare Advantage change” by Bob Herman, Modern Healthcare (March 10, 2016).

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