Medicare Case-mix Adjustments Can Penalize Plans with Healthy Members

If you improve the mental and physical health of your Medicare members then your Medicare CAHPS® (M-CAHPS®) scores can actually decrease.  The case-mix adjustment factors applied to certain M-CAHPS® satisfaction ratings for quality measurement and plan comparisons negatively impact the raw scores of Medicare plans with healthier members.

Background

Case-mix adjustment factors are computed each year for CMS for nine satisfaction measures (six health plan and three Part D prescription or PDP items) included in the MAPD version of the M-CAHPS® survey.  Adjustments are made for age, education level, health status, mental health status, survey proxies, low-income subsidy recipients and dual eligibles.  Different adjustment factors are calculated for each response category (e.g. age 64 and under, age 65 to 69, some college, college graduate, etc).  The goal of these adjustments is to try and account for disparities across health plans on items that have been shown in numerous studies to be highly correlated with perceived satisfaction levels.  A total of 26 adjustment factors are calculated with some items increasing scores and others reducing raw satisfaction scores.  Plans with more advantageous (i.e. higher rating) member populations will see their scores reduced while plans with less advantageous (i.e. lower rating) populations will see their scores increased to balance out these population differences.  The adjusted scores are computed by CMS for use in all quality reporting and to calculate Medicare star ratings that will ultimately impact CMS contribution levels to each plan.

Impact of case-mix adjusters

The case-mix adjustment factors published in November 2010 were used to calculate 2011 Medicare star ratings.  The two largest case-mix adjustment factors across all six health plan measures and one of the three PDP measures are for:

  • Those who rate their physical health as excellent
  • Those who rate their mental health as excellent

For five of the nine adjusted satisfaction scores, the third and fourth largest adjustment factors are for:

  • Those who rate their physical health as very good
  • Those who rate their mental health as very good

Changes in the proportion of members falling into these response categories will have a more negative impact on satisfaction scores and Medicare star ratings than any other changes in case-mix variables.  Therefore, plans that successfully move more of their Medicare members into the top two categories (i.e. excellent and very good) of the physical and mental health rating scales will see the greatest reduction in their satisfaction scores due to case-mix adjustment.

These four response categories (i.e. excellent + very good for physical health and excellent + very good for mental health) account for 88% or more of the potential negative adjustments that can be made to the raw scores for: Rating of Health Care, Getting Care Quickly Composite, Getting Needed Care Composite and Doctors Who Communicate Well Composite.

Will case-mix adjustments offset real improvements in satisfaction?

Theoretically, health plans that move more of their members into the healthier physical and mental health categories should see improvements in their unadjusted satisfaction scores.  However, there is no guarantee that these anticipated improvements in satisfaction scores will equal or surpass the inevitable reductions imposed by case-mix adjustments.  In the best case scenario, the health plan’s scores increase by more than the reductions imposed by the case-mix adjustments, giving the plan a healthier population and slightly higher satisfaction rates.  In the worst case scenario, a plan’s members will get healthier and satisfaction scores will also improve somewhat, but the improvements in satisfaction may not be enough to offset the negative case-mix adjustments.  The net effect under this scenario would be a healthier population, but lower satisfaction scores and potentially lower reimbursements.

An example

The example below shows two member populations with different proportions of healthy members.  The table on the left shows population proportions and the table on the right shows how much satisfaction scores for the nine case-mix adjusted ratings are reduced for the healthier population.  Modest changes in the distribution of a health plan’s members from “less healthy” to “more healthy” can lead to reductions of one half of a rating point up to almost a full rating point (e.g. Rating of Health Care).

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