Blue Cross in Louisiana Loses Bid to Change Medicare Advantage Ratings

This week, a federal judge turned down Louisiana Blue Cross and Blue Shield’s attempt to change its Medicare Advantage Star rating, which plays a crucial role in determining the bonus payments from the government to insurance providers. Only plans that secure a rating of 4 stars or above can qualify for these bonuses.

Blue Cross initiated legal action against the Centers for Medicare and Medicaid Services, or CMS, claiming that the agency acted inconsistently by including certain data in the Star rating calculations—data that Blue Cross believed should have been left out. On Thursday, U.S. District Judge Christopher Cooper, based in Washington, D.C., dismissed the lawsuit after determining that the claims made by the insurance companies did not hold up legally.

The judge pointed out a contradiction in the insurers’ argument; they initially requested the government to factor in specific data for their ratings but then contended that the same data shouldn’t be considered when it led to lower scores than anticipated.

Reason for the Lawsuit

The lawsuit was prompted by an insurance company that experienced a decrease in its rating this year. Blue Cross representatives neither commented on the situation nor indicated whether they would pursue an appeal.

“The concept isn’t bad. If you improve quality in some way, you should receive better payment,” noted Walter Lane, a health economist from the University of New Orleans. “But clearly, there was some dissatisfaction with how Blue Cross presented its data, resulting in a lower rating than they expected.”

As for the reason behind Blue Cross’s lawsuit, they had merged two Medicare Advantage plans for 2024 under an existing contract, which had included a previously decommissioned plan that catered to individuals with serious health issues.

Initially rated at 3.5 stars, the merged plan led Blue Cross to ask CMS to incorporate quality data from the older Special Needs plan, believing it would enhance the overall score. CMS agreed, but the older program had only received three stars, ultimately bringing down the rating of the new plan. In their complaint, Blue Cross characterized CMS’s approach as “stricken and unreasonable,” claiming that the agency had unduly penalized the plan.

The judges had differing opinions. In his ruling, the judge warned that allowing a company to disregard certain data could lead to potential gaming of the system.

CMS defended its decision, stating that including such data complies with federal regulations meant to stop insurers from inflating ratings following plan consolidations.

Understanding the Star Rating System

A Medicare Advantage Plan is an alternative private insurance option to traditional Medicare. Each plan receives a rating between 1 and 5 stars based on various performance measures. These include aspects like drug therapy accessibility, cancer screening, chronic disease management, and overall patient satisfaction.

Plans that achieve a rating of 4 stars or higher can earn additional payments designed to reward better care. However, not many plans reached that four-star threshold this year, which means they missed out on those payments.

The rating system, established in 2012 under the Affordable Care Act, has faced criticism from various groups. The Medicare Payment Advisory Committee pointed out that the current star ratings encompass too many metrics, leading to a single rating for contracts that may serve very different plans, often neglecting patients with significant health and social needs.

The specific losses experienced by BCBS, which operates the Blue Advantage HMO Medicare Advantage Plan, weren’t detailed in the lawsuit. Still, it’s essential to note that these payments can be substantial. For instance, this year, a Medicare Advantage plan achieving four stars received an average bonus of $372 per enrollee, according to the Kaiser Family Foundation. The Blue Cross Blue Shield plan is among the largest in the nation, serving around 30,000 individuals in Louisiana.

Potential Impact on Patients

For current members of Louisiana’s Blue Cross Medicare Advantage plan, the ruling likely won’t lead to immediate changes. However, it could pose challenges for the company. “Some people might shop around looking for plans with five stars,” Lane pointed out. “So, there’s a possibility they could lose some customers.”