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A federal judge on Tuesday ruled in favor of the Department of Health and Human Services and against three health plans which had sought to overturn a decision by the Centers for Medicare and Medicaid Services on how Medicare Advantage star ratings were calculated during the COVID-19 pandemic.
Senior United States District Judge John Bates granted summary judgement in favor of HHS. He ruled that Medicare Advantage insurers must submit annual data on patient care and satisfaction to the CMS through standardized measurement systems, including the Healthcare Effectiveness Data and Information Set (HEDIS) and the Consumer Assessment of Healthcare Providers and Systems (CAHPS).
CMS rates plans from one to five stars based on metrics from HEDIS, CAHPS and elsewhere. By statute, higher-rated plans receive higher federal payments.
WHY THIS MATTERS
The three MA plans – AvMed, Prominence HealthFirst, and Prominence HealthFirst of Texas – brought the lawsuit challenging a decision by CMS to issue the Challenged Rule.
This interim final rule was issued on April 6, 2020. CMS modified the data submission requirements and rating methodology for the 2021 Star Ratings “to address the expected disruption to data collection and measure scores posed by the COVID-19 pandemic and also to avoid inadvertently creating incentives to place cost considerations above patient safety.”
CMS suspended the requirement that plans submit HEDIS and CAHPS data, because data collection was unsafe. Instead CMS would compute 2021 Star Ratings using the prior year’s CAHPS and HEDIS data along with new data for metrics derived from other sources.
Plaintiff AvMed’s overall rating declined from 4 stars for 2020 to 3.5 stars for 2021, and Prominence HealthFirst’s overall rating declined from 3.5 stars for 2020 to 3 stars for 2021, according to court documents. These lower ratings reduced payments.
Prominence HealthFirst of Texas received an overall rating of 2.5 for the third year in a row, which meant it has been labeled a “low performing” plan.
THE LARGER TREND
At first, the Star Ratings served two purposes: to provide beneficiaries information on plan performance to consider when choosing a plan, and to assist CMS in identifying low performing plans for compliance actions.
In 2010, Congress added a third purpose. The Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act, introduced the Quality Bonus Payment program, which incorporated Star Ratings into two statutory formulas to be used in determining certain payments to MA plans.
Each year, CMS establishes benchmark rates that represent the maximum CMS will pay an MA plan to cover an average beneficiary in each county.
Plans that perform well get a 5% bonus.
On November 20, 2020, the plaintiffs brought the action against the Secretary of Health and Human Services and the Administrator of the Centers for Medicare and Medicaid Services, alleging that the Challenged Rule exceeded the defendants’ statutory authority, and that it was arbitrary and capricious.
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