The healthcare landscape is constantly evolving, and ensuring accurate information and access to care is paramount. A recent legal victory for SCAN Health Plan against the Department of Health and Human Services (HHS) highlights the critical importance of precise calculations in Medicare Advantage Star Ratings and their subsequent impact on beneficiary care and plan funding. This ruling underscores how even seemingly technical details can have significant real-world consequences for healthcare access and resource allocation, areas where clear communication, even via a simple health care phone call, is crucial.
Seniors Searching
SCAN Health Plan, a non-profit based in California, successfully challenged the Centers for Medicare & Medicaid Services (CMS) over the methodology used to determine its Medicare Advantage Star Ratings for 2024. U.S. District Court Judge Carl Nichols sided with SCAN, finding that CMS had indeed erred in its calculations. This decision not only means SCAN will receive a substantial $250 million bonus payment initially withheld but also opens the door for other Medicare Advantage plans to potentially reclaim federal funds denied due to unexpectedly low star ratings.
The Significance of Star Ratings in Medicare Advantage
Medicare Advantage Star Ratings are more than just performance metrics; they are a cornerstone of how CMS incentivizes quality and efficiency within private Medicare plans. These ratings, released annually in October, directly influence the financial health of these plans. Plans achieving higher star ratings become eligible for bonus payments from CMS. These crucial funds are then reinvested to enhance beneficiary benefits, reduce out-of-pocket costs, and ultimately attract more enrollees. For beneficiaries, star ratings serve as a vital tool for comparing plans and making informed decisions about their healthcare coverage. Understanding these ratings is often the first step for many seeking the right plan, prompting them to reach out via a health care phone line to inquire and clarify details.
Judge Nichols emphasized the weight of these ratings in his ruling, stating, “The upshot is that star ratings are quite important for private Medicare plans.” This importance stems from both the financial incentives and the reputational impact that star ratings carry in the competitive Medicare Advantage market.
Delving into the Lawsuit: SCAN’s Challenge and the Court’s Decision
SCAN Health Plan initiated the lawsuit asserting that CMS had improperly calculated their 2024 star ratings. The core of the dispute lay in CMS’s interpretation and application of regulations concerning two specific rules: the Guardrail Rule and the Tukey Outlier Rule. Judge Nichols agreed with SCAN’s argument, concluding that the only reasonable interpretation of existing regulations mandated a different calculation method than the one employed by CMS. Consequently, the court granted summary judgment in favor of SCAN, effectively setting aside SCAN’s initially assigned 3.5-star rating for 2024. CMS is now barred from using this “unlawful” rating to determine SCAN’s eligibility for the $250 million quality bonus payment. Instead, SCAN’s star rating reverts to 4 stars, unlocking the previously denied funding.
This legal victory has broader implications beyond just SCAN. The ruling could compel regulators to re-evaluate the star scores of all Medicare Advantage carriers for the 2024 plan year. This potential recalculation could lead to significant shifts in bonus payments and plan ratings across the industry.
Understanding the Star Calculation Controversy: Guardrail and Tukey Rules
To grasp the intricacies of the lawsuit, it’s essential to understand how CMS calculates star ratings. The process involves evaluating quality measures and converting them into a star score on a five-star scale. CMS employs a statistical clustering analysis, grading plans on a curve to group data sets based on similarity within groups and dissimilarity between groups. Cut points are then identified to delineate these groups and assign star ratings accordingly. A weighted average of all measures determines a plan’s overall star rating, presented in half-star increments.
The lawsuit specifically targeted two recent modifications in CMS’s star rating methodology:
-
The Guardrail Rule: Introduced to enhance the predictability of cut points, this rule, implemented in October 2022 for the 2023 star ratings, capped year-over-year cut point changes at 5%. This aimed to stabilize the system and make it more predictable for plans striving for high ratings.
-
The Tukey Outlier Rule: This rule, concerning the extreme ends of data sets, was implemented in October 2023 for the 2024 star ratings. It mandated the removal of outliers from raw data before cut points were calculated.
The crux of the issue was the sequential implementation of these rules. CMS applied the Guardrail Rule before the Tukey Outlier Rule. Since lower-end outliers are typically more frequent, removing Tukey outliers led to notable increases in certain cut points, often exceeding the 5% limit imposed by the Guardrail Rule. Ideally, the Guardrail Rule should have mitigated the impact of the Tukey Outlier Rule by linking cut points calculated without outliers to older cut points calculated with outliers. However, this effect would take years to fully materialize.
To address this immediate discrepancy, CMS opted to waive the Guardrail Rule for a single year. Instead of applying the rule to actual previous-year cut points, CMS applied it to hypothetical previous-year cut points, calculated using the prior year’s data but without Tukey outliers. The court highlighted that CMS announced this crucial change in the Federal Register but “never amended its regulations to reflect that decision, at least not expressly.” This lack of formal regulatory amendment formed a key part of SCAN’s legal argument.
SCAN’s Case: The Impact of Calculation Discrepancies
Between 2019 and 2023, SCAN consistently achieved a 4.5-star rating, benefiting from corresponding bonus funding. However, in September 2023, CMS informed SCAN of a降至 3.5-star rating for 2024. SCAN determined that CMS’s decision not to apply the guardrail to the previous year’s actual cut points was a contributing factor to this decline. SCAN contended that had CMS adhered to what SCAN believed was the correct regulatory interpretation, they would have received higher ratings on two measures, resulting in an overall 4-star rating and eligibility for the $250 million bonus.
Despite SCAN’s request for a review, CMS maintained its calculation was regulation-compliant. CMS argued that SCAN should have raised this issue during the rulemaking process and that any errors were harmless because SCAN was informed of CMS’s intent to apply the guardrail based on hypothetical cut points and had the opportunity to comment. Unconvinced, SCAN filed suit in December 2023, culminating in the recent court victory.
Broader Implications and the Future of Star Ratings
The SCAN lawsuit and its outcome arrive at a time when fewer Medicare Advantage plans are achieving the coveted 5-star rating for 2024. Many plans have attributed this decline, at least in part, to these regulatory changes and specifically the Tukey Outlier Rule. This context amplifies the significance of SCAN’s victory and the potential for wider recalculations.
Star ratings are not merely an internal metric for CMS and health plans; they are also a crucial piece of information for consumers. Beneficiaries rely on these ratings to evaluate plan quality and make informed enrollment decisions. Star ratings provide a standardized and accessible way for individuals to assess plan performance, empowering both consumers and CMS to monitor and evaluate the effectiveness of Medicare Advantage offerings. For many seniors navigating the complexities of Medicare, understanding star ratings often begins with a simple health care phone call to a plan or a trusted advisor, seeking clear and concise explanations.
Conclusion: Accuracy and Transparency in Healthcare Information
SCAN Health Plan’s successful lawsuit underscores the critical need for accuracy, transparency, and adherence to regulations in the complex world of Medicare Advantage Star Ratings. The court’s decision not only benefits SCAN directly but also potentially sets a precedent for other plans and highlights the importance of meticulous regulatory interpretation and application by CMS. As star ratings continue to play a vital role in shaping the Medicare Advantage landscape, ensuring their integrity and understandability remains paramount for both plans and the millions of beneficiaries who rely on them for quality healthcare coverage. Whether accessing information online or through a health care phone, accurate and reliable data is the foundation of informed healthcare decisions.
