Medicare Advantage plans are rated on a star system, and these ratings significantly impact both the plans and their beneficiaries. Recently, SCAN Health Plan, a non-profit based in California, achieved a notable legal victory against the Department of Health and Human Services (HHS) concerning the calculation of these crucial Star Ratings. This article delves into SCAN’s lawsuit, the implications of the ruling, and why understanding these ratings is important for Medicare beneficiaries who might be looking for information, perhaps even a Scan Health Care Phone Number to learn more about their options.
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The Heart of the Matter: Star Ratings and Federal Funding
The Centers for Medicare & Medicaid Services (CMS) uses a Star Ratings system to evaluate Medicare Advantage plans. These ratings, ranging from one to five stars, are based on various quality measures. Higher star ratings are not merely a badge of honor; they directly translate to financial benefits for the plans. Plans with better ratings are eligible for quality bonus payments from CMS, which they can then reinvest to improve benefits, lower costs for members, and attract new enrollees. These ratings are released annually in October and are a key factor for Medicare plans. As U.S. District Court Judge Carl Nichols emphasized in his ruling, “star ratings are quite important for private Medicare plans.”
SCAN’s Legal Challenge and Court Victory
SCAN Health Plan contested CMS’s methodology for calculating its 2024 Star Ratings. SCAN argued that CMS had improperly applied certain rules, leading to a lower-than-expected rating of 3.5 stars. Judge Nichols sided with SCAN, ruling that CMS had indeed erred in its calculations. The court agreed with SCAN’s interpretation of the regulations, granting summary judgment in their favor.
This ruling effectively sets aside SCAN’s 3.5-star rating for 2024. CMS is barred from using this “unlawful” rating to determine SCAN’s eligibility for a quality bonus payment, which amounts to a substantial $250 million. SCAN’s star rating is now reverted to 4 stars. This legal win could have broader implications, potentially leading to a recalculation of star ratings for all Medicare Advantage carriers for the 2024 plan year.
Decoding the Star Rating Calculation Dispute
The lawsuit revolved around two specific changes CMS made to its star rating calculation process: the Guardrail Rule and the Tukey Outlier Rule.
The Guardrail Rule: Setting Limits on Cut Point Changes
Introduced in October 2022 for the 2023 ratings, the Guardrail Rule aimed to increase the predictability of cut points, which are the dividing lines between star rating groups. This rule capped the year-over-year change in cut points at 5%. This was intended to make it more predictable for plans to achieve and maintain high star ratings.
The Tukey Outlier Rule: Removing Data Extremes
Implemented in October 2023 for the 2024 ratings, the Tukey Outlier Rule focused on data stability. CMS decided to remove outliers—extreme high and low values in a data set—before calculating the cut points. This was meant to create more stable and predictable ratings by reducing the impact of extreme data points.
The Conflict and CMS’s Waiver
The issue arose because CMS implemented the Guardrail Rule before the Tukey Outlier Rule. Removing outliers, as the Tukey rule does, tends to increase cut points. If the Guardrail Rule were applied to cut points calculated after removing outliers and compared to the previous year’s cut points with outliers, it could limit the intended effect of the Tukey rule.
To address this, CMS decided to waive the Guardrail Rule for one year. However, instead of applying the guardrail to the actual previous year’s cut points, they applied it to hypothetical cut points – those calculated using the previous year’s data but with Tukey outliers removed. The court found that CMS did not properly amend its regulations to reflect this waiver, announcing it only in the Federal Register.
SCAN argued, and the court agreed, that CMS’s approach was inconsistent with its own regulations. Had CMS applied the Guardrail Rule to the previous year’s actual cut points, SCAN would have received a 4-star rating and the $250 million bonus.
Broader Implications and the Importance of Star Ratings
The outcome of this lawsuit is significant for several reasons:
- Financial Impact: SCAN will receive the $250 million bonus, and other Medicare Advantage plans denied funding due to similar rating calculation issues might also be able to claim federal dollars.
- Regulatory Clarity: The ruling highlights the importance of agencies like CMS adhering strictly to their own regulations and properly amending them when making changes to processes.
- Industry-Wide Recalculation: Regulators may need to recalculate star scores for all carriers for the 2024 plan year, leading to potential shifts in ratings and associated bonus payments across the Medicare Advantage landscape.
- Consumer Impact: Star ratings are a crucial tool for beneficiaries when choosing a Medicare Advantage plan. They offer an assessment of plan quality and performance. Understanding these ratings empowers consumers to make informed decisions about their healthcare coverage.
For beneficiaries seeking to understand their Medicare options or current SCAN Health Plan members with questions about their coverage or star ratings, knowing how to get in touch is essential. While this article focuses on the Star Rating legal battle, for direct assistance regarding plans, benefits, or any personal healthcare needs, finding the SCAN health care phone number through their official website is the recommended first step. This ensures access to accurate and personalized information.
Email the writer: SMorse@himss.org
