WASHINGTON — For the first time, private providers of Medicare insurance have one big incentive to improve: money.
The enrollment window opened Saturday for the 2012 Medicare season. The government will begin awarding bonus payments potentially worth millions of dollars to insurance providers that offer plans the government rates average or better.
In Florida alone, more than 1 million people - nearly a third of the state's Medicare beneficiaries - choose a Medicare Advantage plan over original, government-run Medicare. In Palm Beach County, plans earning the quality bonus stand to collect between $312 and $520 per beneficiary.
Private providers of Medicare continue to gain market share. Between 2010 and 2011, enrollment increased by 6 percent.
The federal government has been grading Medicare Advantage plans since 2007, but those one-star to five-star ratings have meant little to the average senior. One reason is that so few plans earn the highest rating. Nationwide, only nine plans received five stars, up from three last year. None was in Palm Beach County.
Providers earn a bonus of 3 percent for three-star plans, 3.5 percent for three-and-a-half-star plans, 4 percent for either four- or four-and-a-half-star plans and 5 percent for five-star plans.
A new focus for seniors
In previous years, most seniors focused on plan costs, prescription drugs covered and doctors in the network rather than the stars, said Sheldon Siskin, a volunteer with the Florida Department of Elder Affairs' SHINE - Serving Health Insurance Needs of Elders - program.
Until recently, Siskin was skeptical of the ratings, which measure the plan's ability to produce positive medical outcomes and user satisfaction.
"My theory was, who calls up their insurance company and says 'I love you, and you're the greatest company in the world'? But if I have a problem with you, I'll tell you 'you're bad' and I'll tell everybody 'you're bad,' " Siskin said.
But with so much money riding on the stars, Siskin said: "I am now going to say that the star should be meaningful."
Those ratings are expected to become even more important to providers because in 2012, under the Affordable Care Act, the government will also begin reining in payments to private insurance companies. The typical Medicare Advantage plan costs the government - and therefore, taxpayers - 11 percent more than original Medicare. During the next six years, the government is phasing in lower payments.
Critics of the health care law predicted that insurance companies would drop out of the Medicare business or pass on the higher costs to beneficiaries. But the Department of Health and Human Services reported last month that premiums would actually go down by an average of 4 percent for the coming enrollment period.
Experts believe the new bonus payments are one reason providers are instead charging seniors less.
"Even though there are costs (to improving quality), you may make it up by having more satisfied customers, and your star rating improves that way," said Doug Goggin-Callahan, director of education for the Medicare Rights Center. "I think this really takes the right tack in terms of incentivizing plans to provide better quality."
The Affordable Care Act provides another powerful incentive for private insurers to offer better plans. Those that earn five stars can enroll beneficiaries all year rather than competing to market their plan during the seven-week re-enrollment period their peers are confined to each year. Even seniors who have chosen a plan during the regular enrollment window can drop another Medicare Advantage to choose a five-star plan.
"The five-star plans have the potential to really grow their membership," Goggin-Callahan said. "If I were a plan, I would think that's a very big marketing advantage."
Quality leads to savings
Improving plan quality will ultimately save taxpayers money, said Renard Murray, Center for Medicare & Medicaid Services administrator for the region that includes Florida.
"If you've got the five-star plan where you've got good outcomes in terms of the health status of our beneficiaries and we're not paying for all those unnecessary tests and unnecessary drugs, overall there are savings," he said. "You've got healthier beneficiaries accessing preventative services. It's going to save us money in the long term (because) we're not paying for high blood sugar leading to diabetes leading to amputation."
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