The Centers for Medicare & Medicaid Services (CMS) has quietly scrapped a policy that required private Medicare Advantage insurance companies facing sanctions to face a reduction in the star ratings consumers use when picking their private health insurance plans.  Unbelievably, CMS (caving to political pressure from the insurance lobby) will allow sanctioned companies to keep their violations hidden from consumers by protecting their star ratings.  Modern Healthcare reports:

The move, which was quietly released by the CMS in a memo (PDF) and shocked many in the industry, will immediately protect hundreds of millions of dollars at Cigna Corp., which had its Medicare Advantage plans sanctioned in January.

“It does seem pretty unusual to make this kind of dramatic change in a memo,” said Tom Kornfield, a vice president at consulting firm Avalere Health and former CMS official. “It sort of comes out of nowhere.”

Richard Lieberman, a Medicare Advantage data consultant at Mile High Healthcare Analytics, said the CMS’ decision could be characterized as “a huge gift or even corporate welfare” even though it could help insurers that quickly resolve problems.

“CMS’ actions definitely send a mixed message to plans,” he said.

Clearly, there are huge financial rewards for the insurance industry if companies are allowed to violate CMS’ rules and seniors are left in the dark about a company’s sanctions.  CMS is allowing companies like Cigna which has been found guilty of “egregious instances of noncompliance,” including blocking the appeals process for its customers, to continue to reap the rewards of government subsidized bonuses and over payments.

“Star ratings carry clinical and financial impact. The CMS ties bonus payments to Medicare Advantage plans that have at least four stars. Highly rated plans that get sanctioned and thereby lose their high ratings stand to lose millions of dollars in extra payments. But the goal is motivate more insurers to improve their Medicare Advantage operations.” Modern Healthcare

It’s impossible to imagine how — in this political environment where cutting Medicare benefits has become the “go-to” solution for Members of Congress who claim we can’t afford the program – allowing the nation’s multi-billion dollar insurance industry to keep taxpayer funded bonuses while they are violating federal standards is acceptable policy. 

This decision didn’t happen in a vacuum.  If follows another political cave by CMS last month when it bowed to industry lobbying pressure and decided to raise reimbursement rates for insurance companies rather than trimming back the billions of federal overpayments as required in the Affordable Care Act.  Wall Street and the insurance industry loved the news that taxpayers will continue to overpay Medicare Advantage plans.  They’ll surely love it now that these massive companies will keep their taxpayer-funded overpayments while not being held accountable to serving the seniors who’ve signed up for medical coverage, blissfully unaware that anything is amiss.