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Arizona Medicare Advantage Providers Will Benefit From Bonus Plan

A recently announced bonus plan designed to reward outstanding Medicare Advantage Plans will also give a boost to average Arizona Medicare Advantage plan providers.  The original design for the bonus structure offered additional incentive payments for plans that achieved a four- or five-star ranking from the Centers For Medicare and Medicaid Services (CMS) beginning in 2012.  Changes to the bonus structure will enable three star plans to receive some incentive payments as well.

The change to the bonus structure comes in response to fears that three-star Medicare Advantage plans in certain high-enrollment areas (such as southern Arizona) would exit the CMS Medicare Advantage provider network due to reduced reimbursement rates for Medicare Advantage providers. The reduction in reimbursements is scheduled to begin in 2012, and is part of CMS’ mandate to bring expenditures on Medicare Advantage plans in line with expenditures on traditional Medicare Part A and Part B plans.

Medicare Advantage providers are very sensitive to changes in Medicare reimbursement rates. Significant drops in the Medicare reimbursement rate in the late 1990’s caused many Medicare Advantage providers to exit the market. By changing the bonus structure to include “average” providers, Medicare hopes to entice providers to stay in the program.  Major reductions in the number of Medicare Advantage providers would require many Medicare Advantage enrollees to either switch providers or return to the traditional Part A/Part B Medicare plan.

The bonus plan was proposed as a way to meet changes required by healthcare reform laws to Medicare reimbursements. The reforms require Medicare to reduce payments to Medicare Advantage plan providers by 15% between 2012 and 2015, but allow CMS to provide higher reimbursements for Medicare Advantage plan providers that consistently score well on the agency’s “star” scale of quality measurement.

Currently, Cigna operates the only four-star Arizona Medicare Advantage plan, which is available to eligible Medicare beneficiaries in Maricopa County.  SCAN is rated as a 3.5-star plan. AARP; Any, Any, Any; Secure Horizons; Health Net; and Humana operate several three-star Medicare Advantage plans, all of which will now benefit from the changes. Several other plans operate within the state but CMS does not yet have enough satisfaction data to assess a star rating for them yet. Most Medicare Advantage plan enrollees in Arizona currently use three-star or three-and-a-half-star plans, but not all MA plans are available in all areas of the state.

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