In a brief memorandum dated March 8, 2016 (available here), CMS announced the suspension of its policy providing for automatic reduction of star ratings for Medicare Advantage plans operating under a CMS-imposed intermediate sanction.  Based on various different clinical quality measures, Medicare Advantage plans are rated on a scale from one to five, known as Star Ratings, which can affect the payment amount a plan actually receives from CMS and in certain instances whether the plan can continue to enroll or market its Medicare Advantage products.

Under the prior policy, if a Medicare Advantage plan faced “intermediate sanctions,” its quality rating would immediately drop to 2.5 stars.  CMS defined intermediate sanctions as instances of egregious noncompliance that would bar such a health plan from enrolling or marketing their Medicare Advantage products until the issues are resolved. 

CMS rescinded the prior policy in its recent memorandum, explaining that the changes are in response to multiple comments suggesting that CMS should revise its policy.  CMS announced the change through a Health Plan Management System memo prior to the Announcement of Calendar Year 2017 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter so that CMS’s changes can be implemented prior to the deadline for making adjustments to a contract’s Star Ratings based on a plan’s sanction status as of March 31, 2016.  CMS will propose a revised approach in the draft CY 2018 Call Letter and notes that it retains the right to impose Civil Money Penalties as appropriate.

Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.