KHN Staff Writer
OCT 26, 2011
This story was produced in collaboration with
Nationally, more than a quarter of Medicare’s rated
prescription drug plans that will be available to
seniors in 2012 get poor ratings from federal officials.
And in the Washington metro area, 36 percent rate
unacceptably low, according to an analysis of Medicare
The Centers for Medicare and Medicaid Services is
putting these plans on notice that, unless they take
steps to improve their performance over the next few
years, they face expulsion from Medicare.
CMS this month revised the way it rates
Medicare drug plans to focus more on
quality, and many plans’ ratings fell
from 2011 to 2012.
The criteria changed to stress clinical outcomes, such
as whether a patient takes his medication the way he is
supposed to, in addition to process measures, such as
how long a patient is kept on hold when calling the
plan. In judging 2012 plans, CMS for the first time
considered whether patients kept up with medications for
diabetes, hypertension and cholesterol, and it also
considered complaints lodged against plans, and the
numbers of people who choose to leave plans.
While the new system labeled more plans as poor
performers, CMS says this will likely lead to better
options for the 28 million elderly and disabled
beneficiaries who rely on those plans to help pay for
"We have raised our standards, and we are not
apologizing for that," said Jonathan Blum, deputy
administrator and director for Medicare at CMS, who
stressed that benefits have not disappeared. "We will
push as hard as we can to elevate performance. …If plans
are getting worse, we expect them to get better."
Traditional Medicare does not cover most prescription
drug costs for beneficiaries, but they can voluntarily
buy private Medicare Part D drug plans. CMS
rates the prescription plans according to a star system,
with five stars indicating the highest quality and one
star the lowest. That system is similar to ratings for
the private Medicare Advantage health plans that about a
quarter of seniors choose instead of traditional
Earlier this month, CMS proposed a new
rule that would allow it to oust
plans that score below three stars for three
The rule would take effect in 2013, and would also allow
CMS to terminate low-performing Medicare Advantage
health plans on the same timetable.
The low-performing prescription plans are also a problem
for many people who qualify for both Medicare and
Medicaid, the joint federal-state health care program
for the poor. If they don't choose a plan, they are by
law assigned randomly to drug plans with average or
below-average costs. More than half of those drug plans
(52 percent) get just two stars, according to Avalere
Health, a health care consulting company.
"There is certainly room for improvement," said Avalere
CEO Dan Mendelson. "What we want is fours and fives."
There are nearly 9 million of these "dual eligibles" in
the United States. Most are seniors, but about a third
are younger people with disabilities, and more than half
have annual incomes below $10,000.
Low-income beneficiaries can do their homework and
switch plans, but like other seniors most do not even
look for new options. In an October survey,
KRC Research, a public opinion firm, asked Medicare
beneficiaries if they would shop around for a new plan
during open enrollment, but only 3 in 10 said they were
likely to do so.
According to Avalere, 5 percent of the plans available
to dual eligibles have a rating of four or five stars,
and 43 percent have three stars, according to Avalere.
Open enrollment for Medicare drug plans for 2012 began
on Oct. 15 and closes Dec. 7. Premiums vary widely since
some plans cover more drugs than others, or charge
higher co-payments and deductibles.
Blum emphasizes the importance of comparison shopping
every year, and says that the new performance measures
should help. "People pay the most attention to premiums.
We want them shopping for the best value and quality,"
Nationally, of the 557 rated drug plans that will be
available for next year, 24 percent get the top ratings
of four or five stars, and about half fall in the middle
with three stars. Another 28 percent score below three
stars; only one comes in below two.
In the Washington area, 9 of the 25 rated plans, 36
percent, score 2 or 2.5, however they have attracted a
lower share of enrollees. A quarter of the 178,674 local
enrollees are in the lowest-rated plans.
As prescription plans adapt to the new system, they may
improve – at least enough to win three stars and remain
in the Medicare program. But there is no financial
incentive for drug plan sponsors to reach for more
In the Medicare Advantage program, plans will be
rewarded with higher payments when they achieve better
ratings, starting in 2013. Most of those plans include
drug coverage. The same doesn’t apply to stand-alone
drug plans, although Blum said that CMS will be watching
closely to see whether the bonus money has an impact on
quality. If it does, he says, CMS will seek a similar
incentive for those drug plans.
Despite the new ratings, the KRC survey found that
nearly 90 percent of seniors were satisfied with their
Medicare drug plans, and that more than half were very
satisfied. They say that the cost is reasonable, that
the coverage is good, and that their plan works well.