Bonuses Fail to Improve Clinical Quality in Medicare Advantage

December 24, 2021

Summary: A new study finds that financial incentives failed to raise clinical quality measures in Medicare Advantage plans. This completes HJM Medicare Advantage week, in which we highlighted the numerous serious problems arising from using private insurers as intermediaries for public health insurance.

Next week we’ll relax our usual blogging pace. We’ll offer some reflections on the year past and what lies ahead. Happy Holidays! – JGK

The Medicare Advantage Quality Bonus Program Has Not Improved Plan Quality
Health Affairs
December 6, 2021
By Adam Markovitz et al.

In 2012 Medicare introduced the quality bonus program, linking financial bonuses to commercial insurers’ quality performance in Medicare Advantage (MA). Despite large investments in the program, evidence of its effectiveness is limited. We analyzed insurance claims from the period 2009–2018 from the nation’s largest MA claims database for 3,753,117 MA beneficiaries (treatment group) and 4,025,179 commercial enrollees (control group). Using a difference-in-differences framework, we evaluated changes in performance on nine claims-based measures of quality [for disease screening & monitoring, medication adherence] in both groups before and after the start of the bonus program and with adjustment for differential pre-period trends. We observed no consistent differential improvement in quality for MA versus commercial enrollees under the quality bonus program. Program participation was associated with significant quality improvements among MA beneficiaries on four measures, significant declines on four other measures, and no significant change in overall quality performance (+0.6 percentage points). Together, these results suggest that the quality bonus program did not produce the intended improvement in overall quality performance of MA plans.

Comment by: Isabel Ostrer

Despite the federal government pouring $6 billion dollars into the quality incentive program for Medicare Advantage (MA) plans, the effectiveness of the program is sorely lacking. 

A new study in Health Affairs finds that despite this huge investment, the program failed to actually improve the quality of MA plans. The authors state, “In this national study of the impact of the Medicare Advantage quality bonus program, we observed little evidence that the program was associated with incremental improvements to quality performance for MA beneficiaries.”

42% of Medicare beneficiaries, which translates to millions of elderly Americans, are now enrolled in MA plans. These plans are often billed as cheaper, more robust, and higher quality than other health plans. In his HJM piece earlier this week, Don McCanne debunked the claims that MA plans are cheaper than traditional Medicare plans and provide better benefits. This study debunks the final claim – even when offered billions of dollars in incentives, the quality of care in MA hasn’t budged.

It’s time to eliminate the MA quality incentive program. And while we’re at it, we should turn our focus towards streamlining health care delivery in the U.S. As Don wrote, “What we need is an equitable, publicly administered and publicly financed health care program for everyone: a single payer, improved Medicare for All.“