Nonprofit Medicare Advantage Plans Rated Higher in Quality Than For-Profit Plans.

Larger, older, and nonprofit Medicare Advantage plans are more likely to receive higher quality ratings, a new SPH study shows.

The results, published in the Annals of Internal Medicine, found that quality varied strongly between nonprofit and for-profit plans, which may indicate the need for additional oversight by the Centers for Medicare and Medicaid Services (CMS).

CMS rates Medicare Advantage plans on a scale ranging from 1 to 5 stars, with 1 star indicating poor performance and 5 stars reserved for plans deemed excellent. The rating system, in use since 2008, is based on a variety of indicators that include processes of care, health outcomes, access to care, and beneficiary satisfaction.

About 55 percent of nonprofit plans received star ratings of 4 or higher, while just 15 percent of for-profit plans achieved the same quality ratings.

“We feel that CMS isn’t giving enough attention to this issue,” said study co-author Lewis Kazis, professor of health policy and management. “As a consumer you might want to ask the question when looking at a plan—is a plan for-profit or is it nonprofit?”

Led by research analyst Peng Xu, the team collected data from 409 Medicare Advantage plans, which are offered by private companies to provide a spectrum of benefits that include hospital and nursing home care, home heath visits, medically necessary services, and preventative care.

Medicare covers people 65 years of age and older, who can choose to use Medicare’s traditional fee for service programs or, for an additional fee, receive benefits through private managed care plans via Medicare Advantage. The plans examined in the study covered about 10.6 million beneficiaries in the United States in 2010.

The star ratings also incorporate data from the Healthcare Effectiveness Data and Information Set (HEDIS), a tool used by more than 90 percent of US health plans to measure performance on dimensions of care and service, and the Consumer Assessment of Healthcare Providers and Systems (CAHPS), whose surveys ask consumers and patients to report on and evaluate their experiences and satisfaction with health care.

SPH researchers found that the average star rating was about 3.3 among all plans, regardless of age, size, or profit status. Along with Xu and Kazis, the SPH team included James F. Burgess, professor of health policy and management; Howard Cabral, professor of biostatistics; and Rene Soria-Saucedo, research fellow in health policy and management.

Study results showed that larger plans that served more people received higher star ratings than smaller plans, and plans with more years of providing service received higher star ratings than younger plans.

Overall, the for-profit plans received about half a star rating lower than nonprofit plans, a significant difference, said the authors. Results suggest the administrative infrastructure of the for-profit plans may be a hindrance to the care that doctors want to provide, Kazis said.

“There are a lot of very good doctors out there who want to do good work. They genuinely care about their patients. The question is when you get enmeshed in a for-profit system, and in a culture within that system, are you driven in directions that you don’t want to go?” Kazis said. “Part of that might be quotas, and needing to see a certain number of patients over a set period of time. In those instances, quality is bound to suffer.”

CMS may want to consider exercising greater scrutiny of for-profit plans with lower quality ratings, Kazis said. The agency may also consider developing programs to help newer and smaller plans improve care for Medicare beneficiaries.