Use New Medicare Ratings to Select a 2012 Plan

Rankings of health plans will trigger bonus payments to plans under health reform law.

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Medicare has been rating health plans since 2007, but the health reform law has added new muscle and meaning to the ratings. The 2012 ratings are now available for Medicare beneficiaries who want to buy either Medicare Advantage or standalone prescription drug plans (Part D of Medicare). The enrollment period for 2012 plans extends from October 15 through December 7.

[See 10 Steps to Fine-Tune Your Retirement Plan.]

Under Medicare's 5-star rating system, private health insurers whose plans have ratings of 3, 4, or 5 stars will receive small reimbursement bonuses next year from Medicare, according to Jon Blum, the program's director of the Center for Medicare. Bonuses for 3-star plans will be phased out, he said in a recent interview, while larger bonuses for 4-star and 5-star plans will be phased in over the next several years.

While the eventual scale of the bonuses will not exceed 5 percent of a plan's reimbursements, Blum said, the government plans to aggressively encourage consumers to move their Medicare policies to the higher-ranked plans. And while there are relatively few 5-star plans in the 2012 rankings, he said, the plans that receive that grade will get a big boost from Medicare in adding more customers.

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While health plans have been able to sell to consumers only during each fall's open enrollment period, the rules have been changed for 5-star plans. These plans will be able to sell to consumers throughout the year. Next year, for example, consumers with the choice of a 5-star plan in their service area will be able to change their current plan in favor of that plan at any point in the year.

If that sounds like a big competitive edge, Blum said that Medicare hopes it becomes just that. "We want to get beneficiaries into 5-star plans," he said. Providing the best plans with reimbursement bonuses and year-round marketing rights is designed to encourage health insurers to make the improvements in their plans needed to earn the top grade.

Blum said there are signs the approach is working, with plans and consumers. "We're seeing some positive results," he said. "We're seeing some plans improve their rankings, and we're seeing beneficiaries choose higher star plans at a faster rate" than other plans. "Our observation is that the plan community is paying more attention" to plan quality.

[See Medicare Drug Premiums Won't Rise in 2012.]

Consumers who use the Medicare Plan Finder will find that 2012 plan rankings include three dozen ratings measures for health plans and 17 variables for drug plans. You can look only at the top-level star rank or click on a specific plan and find its rating details.

According to Medicare, nine plans received top ratings for Medicare Advantage plans that include prescription drug coverage: four Kaiser Foundation HP plans, Group Health Cooperative, Security Health Plan of Wisconsin, Gundersen Lutheran Health Plan, Martin’s Point Generations, and Health New England. There were three top-rated plans that offer only Medicare Advantage: Medical Associates Health Plan, Dean Health Plan, and Kaiser Foundation Health Plan. There are four top plans that provide standalone prescription drug coverage: Blue Cross and Blue Shield of Minnesota, Montana, Nebraska, North Dakota, Wyoming; Wellmark Iowa and South Dakota; ODS Health Plan; Excellus Health Plan; and Hawaii Medical Service Association.

Not all plans are offered in all states and counties, and plans with the same name may not have received 5 stars in every state and county where the plan is available. Many areas have very few or even no high-rated plans. Ratings and other details on all 2012 Part C and D plans are included in two very large source files.

In the ratings for 2012, Blum said, Medicare added additional weight to the rating variables that deal with patient outcomes and beneficiaries' satisfaction with their health plan. To push for plans that have good health outcomes and meet consumers' needs, he explained, "we've placed greater emphasis on how well plans take care of beneficiaries and on how satisfied beneficiaries are with their plans."

"Historically, we've given equal weight to all of these measures," Blum said. By providing more weight in the ratings to some areas, "we want to help elevate the overall performance of the care being provided."

Twitter: @PhilMoeller

Corrected on 10/19/2011: An earlier version of this story incorrectly described some health plans as receiving top-quality ratings from Medicare.