Medicare Advantage Reform: Addressing the Flaws of the Quality Bonus Program

The Medicare Advantage Quality Bonus Program (QBP) was born out of the Affordable Care Act and carried the expectation to revolutionize Medicare Advantage (MA) plans by reducing payments to MA organizations. However, according to the Urban Institute report, the program must still meet these expectations. The report highlights several instances where the QBP is found to overpay MA organizations, undermining its objective of enhancing quality improvement and assisting beneficiaries in choosing plans.

Understanding the Overpayment and Performance Issues

At the heart of the matter is a discrepancy in the incentive structure of the QBP. Over half of MA plans are receiving “high performance” bonuses based on star ratings, a method that does not assess penalties for low-performing MA contracts. This one-sided approach has led to concerns about overpayment to MA organizations, a sentiment shared by the Medicare Payment Advisory Commission (MedPAC).

In their opinion, the QBP needs a significant overhaul. They suggest replacing it with a value incentive program offering a more balanced approach, incorporating penalties and bonuses, and emphasizing improving local population health.

The Impact and Problems with the QBP

Two-thirds of a contract’s star rating, which ultimately influences the bonuses under the QBP, is determined by beneficiary experience and administrative effectiveness, even though clinical quality measures constitute over half of the measures. This presents two problems.

Firstly, the measures of beneficiary experience do not create meaningful distinctions across MA contracts. Secondly, administrative effectiveness measures do not target the significant deficiencies that regulators have discovered within MA organizations. In layperson’s terms, there is room for improvement when measuring performance and incentivizing quality within the QBP.

MedPAC’s Replacement Proposal: A New Direction

MedPAC believes that a more fruitful approach to measuring plan quality would focus on a small set of population health measures at the local level. They have suggested a replacement for the QBP that would incorporate such measures, alongside balanced rewards and penalties, to create a budget-neutral program.

The Urban Institute has spoken in favor of this proposed replacement but also highlighted that more focus should be on protecting beneficiaries from poor plan administration rather than attempting to measure the effects of MA contracts on clinical quality and population health.

Broader Trends and Recommendations for QBP

The broader verdict from the Urban Institute is clear: Pay-for-performance programs, including the QBP, have largely not lived up to their promise. Major changes to the MA QBP are needed to realign it with its goals of helping beneficiaries make informed choices and encouraging MA organizations to improve performance.

Reforming the QBP could also have significant economic benefits. It could reduce Medicare spending, extending the life of the Medicare Hospital Insurance trust fund, a crucial element of the Medicare program.


What is the Medicare Advantage Quality Bonus Program (QBP)?

The Affordable Care Act established the QBP as part of a package of Medicare Advantage (MA) reforms. It was designed to encourage MA organizations to improve quality and help beneficiaries choose suitable plans.

How does the QBP measure performance?

The QBP measures performance primarily through star ratings. Various factors influence these ratings, including clinical quality measures, beneficiary experience, and administrative effectiveness.

What problems have been identified with the QBP?

Concerns about overpayment to MA organizations have been raised, limitations in underlying datasets leading to measures focusing on healthier beneficiaries rather than those facing serious illness, and score inflation resulting in overly generous bonuses. The program is also viewed as failing to encourage quality improvement or help beneficiaries select plans effectively.

What is MedPAC’s proposal for improving the QBP?

MedPAC has suggested replacing the QBP with a value incentive program that balances penalties and bonuses equally while focusing on improving local population health. This new program would be designed to be budget-neutral.

How can reforming the QBP impact Medicare spending?

Reforming the QBP could reduce Medicare spending by cutting overpayments to MA organizations and incentivizing improved performance and cost efficiency. This could help extend the life of the Medicare Hospital Insurance trust fund.

What is the overall consensus on pay-for-performance programs like the QBP?

The Urban Institute suggests that pay-for-performance programs, including the QBP, still need to achieve their intended goals. It calls for major changes to these programs to align them with their original intentions and optimize their outcomes.

The Quality Bonus Program, as it stands, has its shortcomings. However, it is clear that with focused, meaningful reform, there is potential for the QBP to have a significant positive impact on both the performance of Medicare Advantage organizations and the experiences of the beneficiaries they serve. Ultimately, it will be up to policymakers and stakeholders to address these issues and guide the QBP toward its original goals.

Read the Full Urban Institute Report here.

Author: Staff Writer

Leave a comment

We'll never share your email with anyone else.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

ObamaCareFacts is a free informational site. It's privately owned, and is not owned, operated, or endorsed by the US federal government or state governments. Our contributors have over a decade of experience writing about health insurance. However, we do not offer professional official legal, tax, or medical advice. See: Legal Information and Cookie Policy. For more on our company, learn About or Contact us.