In a traditional healthcare system, providers receive payment for each service they provide to a patient. Even though basic service quality metrics have been around for the last 200 years, they didn’t always correlate to profitability.
As a result, the volume and speed of service became a primary focus – at times this came at the expense of quality care. According to IHI Senior Director Molly Bogan, “In the past, the traditional business model was, ‘the more you do, the more you’ll get paid.’”
However, with the introduction of the Star Ratings system in 2008, healthcare’s business model changed. In this article, we’re going to break the medicare Star Ratings system down, examine the shift to value-based care, and see how health plans can increase their ratings by focusing on KPMs.
Value-based care vs. volume-based care
Let’s start by quickly recapping the shift from volume-based to value-based care. For decades, the healthcare system in the United States was based on volume. But over the last ten years or so, the entire system has shifted towards a value-based care model.
Volume-based care refers to the payment a healthcare provider receives for services a patient might need. The type of service and quality of service does not make much of a difference in the amount of reimbursement a provider might receive. This is volume-based care in a nutshell, which many refer to as a fee-for-service model.
Incentives were driving healthcare providers to focus on the ‘number of patients cared for’ rather than the value provided. Success rates were primarily focused on profits, placing an emphasis on speed to deliver a service. This resulted in some healthcare providers speeding through patient visits at the expense of quality care.
Value-based care is often referred to as accountable care or fee-for-value. This type of system focuses on getting value from quality services. Payments are based on this specialized care and other factors, such as cost reduction, which could lead to an increased emphasis on preventative care.
In an effort to capture this “patient first” approach, the Centers for Medicaid & Medicare Services (CMS) created the Five-Star Quality Rating System.
Star Ratings aren’t performance measures
Introduced more than a decade ago, the Five-Star Quality Rating System was designed to help medicare users compare different plans, based on cost, features, and medical coverage. CMS designed the rating to hold plans accountable for the quality of the service they provide.
The rating incentivizes health plans to provide the highest quality of care through awards for high-ranking plans and penalties for low-ranking ones. Rewards for high ratings include financial bonuses and the ability to enroll users all year round.
CMS Quality Measure Development Plan (MDP) summarizes plan performance into four categories:
- Customer service
- Member complaints and changes
- Member experience
- Patient safety and accuracy
Information about the quality of a particular plan comes from billing, monitoring, user surveys, and other data plans submit to Medicare. However, health plans need to fully comprehend the differences between Star Ratings and performance measures.
Health plans can impact approximately 50% of their Star Ratings by working directly with clinical pharmacists. Perhaps more surprising is that many health plans attempt to provide these clinical pharmacy services in-house at the expense of their Star Rating or high overhead costs.
Other health plans have found it easier and more cost-effective to outsource MTM and other clinical pharmacy services.
Performance measures fall into one of three categories:
- Medication adherence
- Medication safety
- Medication therapy management (MTM)
What health plans need to know about CMS Star Ratings
The Medicare Star Rating system is a part of CMS’s plan to push the entire healthcare industry to focus on value. Initially, their goal was to have 90% of Medicare expenditures tied up to their value by 2020, but the COVID-19 pandemic slowed those plans down.
Health plans that have at least four stars have a major advantage when it comes to marketing. They can market their business year-round without worrying about open-enrollment periods. Not to mention that beneficiaries can switch to these plans at any time.
It’s in a health plan’s best interest to ensure that they achieve the highest Star Rating possible. A rating can directly be affected by clinical pharmacists working with health plan members, in fact, a recent study shows that 80% of Star Ratings are directly influenced by medication therapy.
These benefits of high Star Ratings are in addition to the obvious benefits for member health. Programs addressing Star Ratings also ensure medication adherence, chronic condition management, and member health education.
How Star Ratings are calculated
A Star Rating is calculated for each measure based on information collected from multiple sources, including CAHPS, HEDIS, HOS, IRE, and CTM. These individual Star Ratings are then taken and averaged to generate a single rating.
For health plans, it’s important to note which individual ratings can move the needle the most. For example, CMS increased the weight of experience/complaints and access measures from a weight of 2 to 4. This is very significant since the weights were just increased to 2 from 1.5 in 2020. Previously, the highest weight was a 3, so CMS places substantial emphasis on member experience.
This change means a pharmacist can impact member experience and the perception of their plan significantly – which ultimately impacts the overall Star Rating.
Star Rating is determined based on 39 different metrics. Standalone Part D prescription plans are evaluated based on 12 performance metrics. Included in the evaluation of both plans are 5 additional metrics, all of which are related to medication utilization.
These metrics can be affected by pharmacists directly. Pharmacy performance measures:
- Percentage of members with diabetes who take statins
- Percentage of members with diabetes that takes their medication 80% of the time
- Percentage of members that take cholesterol medication 80% of the time
- Percentage of members who take their blood pressure medication 80% of the time
- Percentage of eligible members who completed a comprehensive medication review
High Star Ratings vs. low Star Ratings
A bad Star Rating can cost health plans. Millions of dollars in fines are paid every year, from pharmacy benefit violations to poor service for members who are unhappy with their plans. Health plans that maintain high Star Ratings, on the other hand, receive significant awards for it. Here are some of the most common rewards and penalties for Star Ratings:
| REWARDS FOR GOOD RATINGS | PENALTIES FOR BAD RATINGS |
| Eligibility for incentives | Ineligibility for incentives |
| Qualifying for yearly bonuses | Bonus disqualification |
| Ability to enroll patients year-round | Ineligible to provide Medicare plan option |
In conclusion
Ensuring member enrollment rates and Star Ratings are high, health plans can expect to stay profitable for years to come. Recent studies have shown that the ability to work directly with plan members is one of the most important factors in improving health plan Star Ratings.
Leveraging technology and outsourcing services where Star Ratings are weak enables health plans to provide better care to members and, ultimately, improve profitability.
In addition, in the world of Star Ratings, healthcare technology is leveraging connectivity and advanced algorithms to provide increasingly successful matching between pharmacists and patients.
If history has taught us anything, it’s that as healthcare-focused technology platforms continue to evolve – the health plans that embrace these new technologies will be the ones left standing when the dust settles.
Interested in learning what services a pharmacist can provide to improve your Star Ratings? Read our latest article here to learn what a pharmacist can really do.
