Lawsuits raise questions about the validity of the star ratings system
Big Medicare Advantage insurance companies have filed lawsuits against the federal government, furiously attacking the official "five star" quality ratings system that it uses to evaluate their plans.
Insurance giants Humana (HUM), UnitedHealth (UNH) and Centene (CNC) are accusing the Centers for Medicare and Medicaid Services of "arbitrary and capricious actions" in how it rates many of their plans.
But their lawsuits raise questions about whether the star ratings system is valid at all. These echo criticisms of the star rating system made by the official Congressional watchdog for the program, the Medicare Payment Advisory Commission, which says the current rating system is deeply flawed and needs to be replaced.
The lawsuits come as the annual Medicare "open enrollment" season is in full swing, and tens of millions are struggling to choose among a bewildering array of privatized Medicare options as well as the original government-run program.
Read: Considering Medicare Advantage during open enrollment? Watch out for this trap.
Brokers and insurers say the star system is critically important to how Medicare Advantage plans are marketed. The ratings are displayed prominently on the government's Medicare Plan Finder website. "Stars ratings that are lower and below a three tend to have agents not recommend them or put them in their portfolios to offer," says broker Amanda Brewton, chief executive of Medicare Advantage broker network Medicare Answers Now. Meanwhile, insurance companies bank millions in extra "bonus payments" from federal taxpayers for plans that are rated four stars or above.
"The data and calculations underlying the annual Star Ratings are dizzyingly complex," says Humana in a suit against the CMS filed in the United States District Court for northern Texas. The cutoff points between different star and half-star ratings have moved "abruptly" and "suspiciously," apparently with little reference to any "broader, objective indications" about Medicare Advantage plan quality.
Read: Medicare open enrollment: Keep these three things in mind when picking your 2025 plan
In the case of the insurers, each is suing because some of their plans this year have been allegedly downgraded by half a star, or more, over what they say amount to technicalities. These involve dropped calls - in some cases, a single dropped call, and even that is disputed - made by the government's "secret shopper" testers to the plans' call centers. Among the issues is how quickly some of the plans are able to get an interpreter on the line for a caller who doesn't speak English.
Critics could point out that the insurance companies' complaints go both ways. If it is absurd for a plan to be downgraded half a star simply because a single call was dropped, it must be equally absurd if it is upgraded half a star simply because a single call was answered. And lawsuits over missed or dropped calls ignore all the myriad other measures that have left many plans below "five star" ratings.
Read: Why doesn't America's healthcare system work for older people?
The lawsuits are yet more evidence that, even though millions rely on these star ratings to choose their plans, the entire system is fundamentally flawed.
In a series of devastating reports to Congress, the Medicare Payment Advisory Commission says that the current system is a bad deal for Medicare beneficiaries and taxpayers, does little to promote plan "quality" in any meaningful way and is open to abuse and manipulation by the insurance companies.
It "is overly complex, distributes financial rewards inequitably, and reports inaccurate information on quality," MedPac reported in 2020. The system involves rating plans on 45 different measures, many of them with little or no relevance to patient experience, it said. The system is so bad that it "can no longer provide an accurate description of the quality of care" in the Medicare Advantage program, it concluded.
The CMS technical document on the rating system runs to more than 200 pages. "It's nuts," says Brewton.
MedPac wants Medicare to move to a simpler system involving a fewer number of measures that are more directly related to patients' experiences and clinical outcomes.
Meanwhile, it raises yet another issue for beneficiaries to grapple with if they want to take the plunge into privatized Medicare Advantage.
More on Medicare and Medicare Advantage
Your Medicare Advantage plan is being canceled. Why it's not the end of the world.
Medicare open enrollment will be a doozy this year. Here's how to make smart choices.
Medicare's $2,000 cap on out-of-pocket drug expenses will actually cost most members more money
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