by Mike Coyne

September 2011 – The rules of the game have changed. Under the Patient Protection and Affordable Health Care Act, payments to Medicare Advantage (MA) plans will decrease on average an estimated 12 percent by 2017. To offset this lost revenue, MA plans must now focus efforts on demonstrating healthcare quality and efficiency through the Star Rating Program.

Launched in 2007 by the Centers for Medicare and Medicaid Services, the Star Rating program was initially developed to help consumers choose among competing plans. The legislation now dictates that, starting in 2012, health plans that achieve four or more stars will receive substantial bonus dollars and higher rebates. Plans that achieve less than three stars within a three-year period will be penalized and identified as low quality.

In these changing times, to gain an edge on the competition, Medicare Advantage plans will require a focused, data analytic strategy that identifies opportunities for improving quality, efficiency, and member satisfaction and, ultimately, increases its star power.


The Knowledge is in the Data

It is often said that the healthcare industry is data rich and information poor. Disparate sources of data (e.g. claims, lab values, chart information) are vastly available but often underused. These resources can be transformed into a wealth of actionable knowledge to drive strategic decision making and measurable results.

To maximize performance and achieve the coveted 5-Star Rating, health plans must focus on delivering proactive—not reactive—high quality healthcare. Using knowledge-rich data analytics, health plans can improve quality compliance by identifying areas of improvement and quickly implementing an action plan for maximizing adherence to clinical guidelines.

For example, health plans can proactively review HEDIS measures (e.g., Annual Flu Vaccine, Diabetes Care – Kidney Disease Monitoring) throughout the year, monitor changes in adherence, and focus resources on improving those outcomes. Understanding where the gaps are—and which quality rates are lacking compliance—will support proactive outreach initiatives focused on optimizing quality and demonstrating value to the membership and the network.

The Rules of Engagement

Knowledge alone may not be enough to achieve high clinical performance. Turning that knowledge into action is crucial to an effective 5-Star road mapping strategy, and engaging members and providers in the quality and compliance process is a fail-safe step towards achieving that goal.   

Using technology, health plans can quickly and easily stratify large populations to identify those not compliant with clinical standards. Furthermore, this knowledge can uncover relevant information (demographics, conditions, prescription drugs, and other gaps in care) that can be used to facilitate outreach initiatives—and optimize the results of member-level touch points.  

Informing patients on their own gaps in care and providing incentives for appropriately managing their health can empower consumers to take charge of their own wellbeing, support care management initiatives—and ultimately—maximize Star Rating potential.

Data analytics can also be used to inform providers and aid their efforts to maintain and improve population health status. Providing member lists along with associated conditions, compliance rates and other patient-level detail will enable physicians to coordinate care services and focus resources on those patients that need it most.

Performance score cards based on member gaps in clinical care—along with incentives for improving those outcomes—can also drive powerful results.  


The New Healthcare Strategy

In 2010, three years after the initial launch of the Star program, the average rating for MA health plans was 3.32 stars—not enough to meet the new legislative standards for bonus dollars and higher rebates. In the not so distant future, to maintain a profitable business model, MA health plans will have to achieve and demonstrate the highest level of quality care.

Strategic planning in this new era must focus on proactive and coordinated care delivery. Maximizing adherence to clinical guidelines, managing and preventing chronic disease, and improving customer satisfaction are crucial to an effective strategy. The improvement and management of population health will also be a catalyst for increased member retention, medical cost control, and revenue optimization.

About the Author

Mike Coyne is the President of Verisk Health, a subsidiary of Verisk Analytics.  Verisk Health’s broad solution suite helps clients leverage healthcare data in order to better understand their medical and financial risk for the purpose of managing costs and clinical outcomes more effectively.  Verisk Health’s primary focus is to identify actionable risk management strategies at both the individual and population levels across the entire care continuum including fraud, waste and abuse, claims editing, Medicare and Medicaid revenue management, and care management optimization.  For more information, please visit


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