A complete guide to understanding Medicare Advantage 5-Star ratings. How to achieve and maintain a 5-star rating worth MILLIONS.

1. September 2013

2. After years of intense discussion and little
action, outcome-based healthcare has arrived
with a boom.
It’s as if that twinkling little star went
supernova. In fact, stars are driving the new
world of value-based healthcare.
This market shift began in earnest with the
Medicare Advantage (MA) 5-Star Quality
Rating System. The 5-Star Quality Rating
System provides enormous financial rewards
for health plans that improve member health.
Health plans are scrambling to develop
effective initiatives that improve outcomes
and motivate members towards healthy
behavior change. Deadlines are pressing.
Health plan executives are struggling to
answer these questions:
• What impact will Medicare’s Star ratings
have on our revenue performance?
• How do we reshape member relationships
so that incentives are aligned with healthy
behavior change and quality improvement
we can actually measure?
• What 5-star measures should we address
first to increase our rating in short order?
• What tools are available to help us quickly
drive member behavior change?
This edition of iOn Healthy Outcomes
highlights the key elements of Medicare’s
5 -star rating system and provides insights
on how to achieve and maintain a 5-star
rating.

3. Star Rating’s Rebates and Bonus Payments
Factors that determine your CMS revenue.
Get on the Fast Track with Weighted Measures
Health outcome improvements are given the greatest weight.
Double Bonus Counties
For 210 counties the upside is even greater, and should be
leveraged as much as possible.
Members Actively Migrate to High Rated Plans
The Medicare Advantage population selects higher rated
plans.
Stars are Worth Millions of Dollars
Quality improvement is no longer an expense, but a game
changing revenue driver.
Key Benefits of Achieving a 5-Star Rating
Higher ratings provide a compelling competitive advantage.
2012 5-Star Plans
A handful of elite leaders earn 2012 bonuses.
Low Ratings Adversely Impact Member Retention
Strong correlation between complaints and attrition.
The Acceleration Impact
A tale of two plans.
What’s the Impact of Increasing Stars?
With millions at stake; reaching for the stars is well
worth the effort.
Where to Focus to Improve Your Rating
Analyze and prioritize for greater rewards.
You Need Answers for these Five Questions
Turn the spotlight on maximizing your CMS Star
rating.
A Bellwether of Success – Kaiser Healthy Outcomes
Coordinated actions results in enormous gains.
What is your Plan for Action?

4. < Return to Table of Contents >
Domains for Medicare Advantage
(36 measures – 2012)
Domains for Prescription Drug Plans
(17 measures – 2012)
Staying healthy: Screenings, tests and
vaccines (13)
Member experience with drug plan (3)
Managing chronic conditions (10) Drug pricing and patient safety (4)
Plan responsiveness and care (6) Customer service (7)
Member complaints, problems getting
services, and choosing to leave the plan (4)
Member complaints, problems getting
services, and choosing to leave the
plan (3)
Customer service (3)
Quality Bonus Payment (QBP) by Star Rating
YEAR 2.5
stars
3.0
stars
3.5
stars
4.0
stars
4.5
stars
5.0
stars
2012 0.0% 3.0% 3.5% 4.0% 4.0% 5.0%
2013 0.0% 3.0% 3.5% 4.0% 4.0% 5.0%
2014 0.0% 3.0% 3.5% 5.0% 5.0% 5.0%
2015+ 0.0% 0.0% 0.0% 5.0% 5.0% 5.0%
Rebate Percentage by Star Rating
YEAR 2.5 stars 3.0
stars
3.5
stars
4.0
stars
4.5
stars
5.0
stars
2012 66.7% 66.7% 71.7% 71.7% 73.3% 73.3%
2013 58.3% 58.3% 68.3% 68.3% 71.7% 71.7%
2014 50.0% 50.0% 65.0% 65.0% 70.0% 70.0%
QBP for Medicare Advantage organizations
introduced as part of the Accountable Care Act
Percentage of the savings a plan receives from
bidding under benchmark
Factors that determine your CMS revenue.
• Plans are measured on multiple domains, each of which is compose of a series of
individual measures.
• Domain ratings are calculated as a weighted average of the star ratings of the individual
measures within the domain.
< Source: CMS >

5. Measure Type Description Weight Examples
Outcome measures Focus on improvement to a beneficiary’s health as a
result of the care that is provided
3 • Improving or maintaining physical health
• Improving or maintaining mental health
Intermediate outcome
measurers
Concentrate on ways to help beneficiaries move closer to
achieving a true outcome
3 • Controlling blood pressure
• Taking cholesterol medication as directed
Patient experience
measurers
Represent beneficiaries’ perspectives about the care they
receive
1.5 • Members’ overall rating of drug plan
• Members choosing to leave the plan
Access measurers Reflect processes or structures that may create barriers to
receiving needed health care
1.5 Members’ ability to get prescriptions filled
easily when using the plan
Process measures Capture a method by which health care is provided 1 • Colorectal cancer screening
• Annual flu vaccine
The measures with the highest weight, are the
most difficult to improve. This is because
they require member cooperation and often
require change in member behavior.
Improved outcomes depend upon what
happens between medical visits. Proactively
engaging members via mobile device apps,
combined with education, feedback and
rewards are linked to healthier behaviors.
These new tools are an effective way to boost
your outcome scores.
Health outcome improvements are given the greatest weight.
CMS has been shifting to
weighing outcomes and patient
experience measures more than
other measures.
-- Jonathan Blum, CMS Deputy Administrator
< Source: Kaiser Family Foundation >
< Return to Table of Contents >
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6. For 210 counties the upside is even greater, and should be leveraged
as much as possible.
The health reform law required
bonuses to be doubled for plans
that are offered in counties with
ALL these characteristics:
• Lower than average Medicare
fee-for-service costs
• MA penetration rate of 25% or
more as of Dec. 2009
• A designated urban floor
benchmark in 2004
< Source: Kaiser Family Foundation >
< Return to Table of Contents >

7. The Medicare Advantage population selects higher rated plans.
< Return to Table of Contents >
<Source: Centers for Medicare & Medicaid Services >
CMS Announced Increase in Quality
Choices for 2013
• Rapid Growth for Four and Five-Star Plans
• Up from 106 plans in 2012 to 127 Four and
Five- Star plans in 2013 serving 37 percent of
the Medicare Advantage members (an 11%
increase in just one year) .
Ratings make a significant financial
difference:
Kaiser 4.53 stars | $400 PMPY
received 12% of 2012 CMS bonus funds.
Humana 3.08 stars | $220 PMPY

8. < Source: Kaiser Family Foundation >
Quality improvement is no longer an expense, but a game changing
revenue driver.
CMS Paid Out
$3.1 Billion in 2012
Medicare Advantage Plans will receive
$8.2 Billion
over three years
One-third of total bonuses are projected to
be paid to health plans with 4 or more stars.
The financial implications are substantial.
Ignoring them is a painful strategy for
Medicare Advantage organizations.
< Return to Table of Contents >

9. A handful of elite leaders benefited from 2012 bonuses.
2012 Plans
< Return to Table of Contents >
<Source: Centers for Medicare & Medicaid Services >
Note: Kaiser Permanente Leads the Nation with Six 5-star Medicare Health Plans

10. Plans that are first to achieve a
5-star rating secure compelling
competitive advantages.
A health plan with a 5-star
rating can enroll new members
at any time, while competitors
must wait for the standard open
enrollment period.
5-star plans earn significant financial
bonuses.
5-star plans can enroll new members
at ANY TIME during the year.
Member turnover is reduced. Members
select and stay with 5-star plans over
lower rated alternatives.
Higher ratings provide a compelling competitive advantage.
Now that Stars equate to dollars, we have
definitely heard from the finance department,
‘How can you get to five Stars’?
-- Ann Marie Scimmacco, Vice President, Fallon Community Health Plan
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“

11. Engaging your members in a manner that is
relevant to each member’s individual health,
interactive and action based can drive your Star
ratings.
Clinical data mining gives early insight on high
impact opportunities.
Multi-channel member campaigns not only
increase member retention, they can also help
motivate behavior changes.
New member engagement tools can improve
member outcomes, reduce member complaints,
and drive improved Star ratings.
< Source: HealthPocket >
Strong correlation between complaints and attrition.
• Star ratings have started to move the Medicare
market towards higher rated plans.
• 2-star plans lose 22% of members annually.
• Disenrollment data and complaint correlate.
• Data and quality performance become
increasingly important with rollout of insurance
exchanges.
< Return to Table of Contents >

12. < Reference: Health Watch, May 2012 >
In 2013, Plan Orange and Plan Green were equally
“average” health plans with 100,000 members, but their
futures are vastly divergent.
The CMS Star rating table below indicates the bonus structure
through 2015. The table reveals the future of Plan Orange and
Plan Green, similar competitors, except one was proactively
improving outcomes.
Star ratings are based on lagged data, and an average
company can quickly find itself out of the running for bonus
payments.
In 2013 Plan Orange and Plan Green both had an average
rating of 3.0 stars. It was business as usual. They didn’t feel a
pressing need to make changes.
Plan Green however began selectively investing in programs
to improve health outcomes for its members.
As a result, in 2014 Plan Green moved up half a star, to a 3.5
Star rating and earned a corresponding bonus of 3.5%. That
was worth close to $60 million in CMS bonus revenue.
These funds were reinvested to build infrastructure to
improve member relationships, build healthy outcomes and
change member behavior. Member satisfaction continued to
increase.
In 2014, Plan Orange sits tight at 3 stars, using their 3% bonus
to offset member co-pays. Everyone is content.
YEAR 2.5 stars 3.0 stars 3.5 stars 4.0 stars 4.5 stars 5.0 stars
2012 0.0% 3.0% 3.5% 4.0% 4.0% 5.0%
2013 0.0% 3.0% 3.5% 4.0% 4.0% 5.0%
2014 0.0% 3.0% 3.5% 5.0% 5.0% 5.0%
2015+ 0.0% 0.0% 0.0% 5.0% 5.0% 5.0%
It is now 2015, Plan Orange launches an emergency program
to boost ratings which results in a half star improvement.
It is not enough. A 3.5 star rating no longer qualifies for any
bonus. Plan Orange missed the window of opportunity and
members begin to migrate to higher rated plans.
The mood at Plan Green is optimistic. They have accelerated
their most effective programs. Plan Green moves up another
half star. The reward is a huge 5.0% bonus which is used to
build deeply engaging relationships that improve health
outcomes and member satisfaction.
Plan Green, an average performer two short years ago, is on
track to be a 5-star leader. Plan Orange is no longer a
competitor of consequence.
A tale of two plans.
CMS Quality Bonus Payment by Star Rating
< Return to Table of Contents >
Plan Orange Plan Green

13. • Identify the most attractive criteria to change – those stars
closest to the next bonus threshold.
• Compare relative “contribution” across CMS measures.
Identify the scope and magnitude of improvement required to
move your score.
• Look for improving processes that enhance your member’s
experience.
• Keep in mind, measures with the highest weight typically
require member cooperation and often require change in
member behavior.
• Evaluate new tools and leverage technology that can help
boost your healthy outcome score.
Analyze and prioritize for greater rewards.
Deploying member relationship applications is one path
to quickly strengthen the link between member care,
healthy outcomes and reimbursement levels.
These applications leverage technology and actively
help members modify their behavior.
< Return to Table of Contents >
1
2
3
Identify the most
attractive criteria for
change.
Compare relative
“contribution” across
CMS measures.
Evaluate and
leverage technology
that can boost scores.

14. < Source: L.E.K. Executive Insights >
With millions at stake – reaching for the stars is well worth the effort.
< Return to Table of Contents >
Analysis from L.E.K. Consulting,
reveals that the difference between a
3 Star and 4 Star Medicare
Advantage plan is worth roughly
$50 per member per month (PMPM).
For any plan with 50,000 or more
members – that equates to a
meaningful contribution to the
bottom line.
$50
PMPM

15. < Source: Accenture 5-Star White Paper >
Turn the spotlight on maximizing your CMS Star rating.
< Return to Table of Contents >
Most health plans have a strategy for
improving CMS Star metrics – but lack the
tools, processes, and organizational skills
to implement quickly and effectively.
-- Richard Stewart, Accenture
1. Have we identified the CMS rating criteria, where our current score is closest
to the next bonus threshold?
2. What initiatives and/or new technologies are we deploying to improve our
performance on these criteria or measures?
3. What is our mechanism for measuring improvement and reporting our
metrics?
4. Where can we improve our member outreach in ways that measurably
improve their experience and our relationship?
5. Are we able to harness new tools and technology to rapidly improve our CMS
Star rating?
Click to read
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16. < Source: Journal of American Medical Association >
Coordinated actions result in enormous gains.
Controlling Hypertension
Member cooperation drives positive change
Action:
• Registry of all hypertension patients
• Doctors receive regular evidence-based guidelines on
medications
• Simplified, single pill therapy
• Free, quick medical assistant follow-up after medication
changes, <4 weeks
• Patients asked to monitor blood pressure at home, and
report results
• Patient involvement encourages medication compliance
Results:
Heart attacks dropped by 24%
Fatal strokes dropped by 42%
2001
44%
80%
87%
20112009
Percent of Hypertensive Kaiser Members
within Blood Pressure Guidelines
< Return to Table of Contents >

17. < Return to Table of Contents >
Medicare Advantage plans that are not operating at bonus
threshold levels are leaving money on the table and could benefit
from a systematic review of plan performance across star ratings
measures.
-- Joe Johnson, Vice President, Healthcare Services, L.E.K. Consulting
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18. This Issue was Sponsored by Mobile PRM
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