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CMS’ TukeyGate Follow-up: Where Could CMS Go To Save On Medicare Stars?

After the TukeyGate court decisions that struck 2024 Medicare Advantage (MA) Star calculations, many are speculating where the Centers for Medicare and Medicaid Services (CMS) may now go to make up some of the increased costs in the Star program (see the TukeyGate blog here: https://www.healthcarelabyrinth.com/cms-tukeygate-lawsuit-decision-threatens-to-unravel-much-of-medicare-advantage-star-scoring-in-2024-and-2025-and-next-years-bids-and-benefits/ ). The increase in Stars could result in at least $1.3 billion in increased costs to Medicare in 2025.

The lawsuit loss likely caught CMS by surprise, but the agency was right to recalculate and fix the major expected 2025 benefit declines in filed bids and benefits.  I still think benefits will be reined in but the hurt on seniors and those with disabilities will be less.

Given budgetary pressures and the major perception of overpayments in MA, CMS will be under pressure to find savings elsewhere over the next few years. Indeed, they wanted to implement Tukey in 2024 and get the Star bonus savings all at once. The lawsuits said they could not do this due to existing guardrail regulations.

So where might CMS go for savings? There are a number of places, one of them already in regulation and slated to save dollars as well as three other ways that could be proposed.

In Regulation: The Health Equity Index (HEI)

The HEI is slated under regulation for Star Year 2027, with Measurement Years here now – 2024 and 2025. The HEI takes the place of the Reward Factor. Each is worth 0.4 more in Star measures in the aggregate. Analyses suggest that currently about 0.3 of 0.4 is paid out each year for the Reward Factor, which is paid to plans that are consistently high-performing. But when the HEI comes in, latest estimates suggest that the HEI will initially pay out as little as 0.1 of 0.4.  Thus, major built-in savings. CMS says this could be worth $670 million in 2028 in savings, increasing to $1.05 billion in 2033.

Could Be Proposed: Eliminating Cut Points Guardrails Entirely

In a December 2022 draft MA and Part D 2024 rule, CMS proposed to eliminate the guardrails currently in regulation. (The provision is what stopped CMS from implementing Tukey in one fell swoop.)  But the agency did not finalize the proposal in its final 2024 rule in April 2023. Will CMS come back and eliminate guardrails for a future year in its draft 2026 MA and Part D rule due in draft form in December? My read is CMS would need to come back and propose it again since it did not implement it in the 2024 final rule. The guardrails were meant to improve predictability and stability of cut points when they were initially proposed. CMS now argues the guardrails are no longer needed as Tukey will take wide swings in cut points away and also indicated that guardrails are actually making it easier for plans to achieve higher ratings on some measures.

The elimination would have the effect of helping CMS accelerate the Tukey savings it now has to limit due to the court decisions.

Could Be Proposed: Hold Harmless Elimination For Improvement Measures

In the same draft rule above, CMS proposed to remove 4 and 4.5 Star plans from the hold harmless provision related to the quality improvement measures calculation. Currently, any contracts slated to be 4 Star or greater in a given year cannot be negatively impacted by the two 5-weighted quality improvement measures. They get the higher of their calculated score with or without the improvement measures added in. This proposal was not finalized in the 2024 final rule. So again, CMS would have to come back and propose it again to implement it in a future rule. CMS estimated net savings of $2.1 billion in 2027, growing to $3.5 billion in 2033.

Could Be Proposed: 1-Year Guardrail Suspension

Of course, CMS, too, could propose a one-year abeyance in the future of the guardrail rule to achieve the full savings of Tukey that has not yet been realized due to the lawsuit decisions. This would take a new rule.

Conclusion

Some of these could be recommended by CMS. But while the pressure is on to curb perceived overpayments in MA, CMS also could decide that too much change in this time of financial turmoil is risky and hold tight for some time. But the bottom line is that the lawsuits and recalculation of 2024 Star likely gave plans only a temporary reprieve. Further changes will come. Plans need to hunker down to drive achievement in Star to mitigate potential losses in the future.

#medicareadvantage #stars #cms #healthplans

— Marc S. Ryan

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