For Medicare plans, reaching for stars means more revenue

— -- Nine Medicare Advantage plans scored top marks on the five-star government rating system for 2012, up from only three plans this year, according to new figures posted by Medicare on Wednesday.

That's a small share of the 569 private Medicare plans, but it's a laurel much of the industry is now chasing. For the first time, Medicare plans will get big cash bonuses for higher scores, a new reward created by the 2010 federal health law.

The star ratings are part of a push by the Obama administration to increase the quality of care provided by private plans that contract with Medicare. The ratings are based on 36 measures, ranging from rates of hospital readmissions to the volume of consumer complaints a plan gets.

The administration has argued that Medicare Advantage plans cost more than traditional Medicare without providing better results for patients. The 2010 federal health law tried to remedy that discrepancy by cutting plan payments by $136 billion over ten years. But the star-rating bonus system restores some of those losses to high-performing plans.

Five-star plans will also have the ability to enroll members year-round, rather than only during Medicare's annual open enrollment period, which this year begins Oct. 15 and ends Dec. 7.

Gundersen Lutheran Health System's Medicare Advantage plan attained its first five-star rating this year and intends to take full advantage of that perk. Gundersen's chief financial officer, Gordon Edwards, said the Wisconsin-based plan will begin expanding into Iowa in January. The five stars will allow Gundersen to gain members quickly — while competitors like Humana and UnitedHealth Group have to wait for next year's enrollment period.

Kaiser Permanente, the California based managed-care organization, operates four of the nine five-star plans. (Kaiser Health News is not affiliated with Kaiser Permanente.) The other five-star winners are a mix of smaller, regional plans.

"Everyone is taking this seriously," said Sarah Baker, of Health Dialog, a Boston-based insurance analytics firm that is advising plans on how to improve their ratings. Higher ratings now offer a "huge competitive advantage," she added.

United plans fell well short of five stars this time, but the company is trying to change that. United, the largest insurer by revenue, has set a goal of having all of its members — currently, 2.3 million seniors are on its rolls - in four star or better plans by 2014, said Dr. Rhonda Medows, the chief medical officer overseeing quality for the insurer.

That will be a big leap compared to current scores: In 2011, UnitedHealth Group averaged only 3.18 stars in its 68 Medicare Advantage plans, according to a Barclays Capital research note.

But, United is investing heavily in the ratings, said Medows, launching, for instance, a new Web tool that will let doctors track quality measures that can boost the scores. The results are already showing. The portion of United members in 3.5 star-or-better plans increased by 10 percentage points this year, Medows said.

Overall, health plans boosted their ratings to 3.44 stars on average in 2012 from 3.18 stars this year, a senior Medicare official said in an interview. The official attributed the increase to the health law bonuses.