IPI Factor: A Defining Moment in Medicare


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How will Medicare’s Improvement Performance Increase (IPI) Factor impact Medicare plan sponsors and star ratings strategies?

Last fall, CMS gave low performing Medicare plans a stay of termination, reversing a rule issued earlier in the year that plans with fewer than 3 stars for 3 years would be terminated for the 2015 plan year. However, that reprieve is temporary and the ability to become, or remain, a 4- or 5-star rated plan may become exponentially more challenging.

Survival of Medicare plans playing in this space, or close to it, is still at risk. Plans that stay at or below 3-stars did not receive Quality Bonus Payments from CMS, making it difficult to invest in quality improvement programs. These plans also risk losing lives as more Medicare members transition to high-rated plans. New data from Centers for Medicare and Medicaid Services (CMS) shows 61% of Medicare members enrolled in 4- and 5- star plans in 2015, compared to 51% in 2014.

IPI Factor: Another New Hurdle for Medicare Plans

The November preview CMS gave for 2016 included many anticipated changes and a few new items, most notably, the proposal of the Annual “Improvement Performance Increase Factor,” or what we at Express Scripts call the “IPI” factor.

CMS is hoping that the use of the IPI factor will achieve two things:

1. Satisfy the industry’s request to stabilize star ratings thresholds; and

2. Ensure plans are consistently incentivized to continuously improve.

While these goals are important, the IPI factor creates very difficult quality performance targets that plans will be required to meet.

New Math

Simply stated, the IPI factor takes average industry performance data from the last two years of ratings to calculate a factor of improvement observed during that time period.

CMS then applies this factor – essentially a multiplier – to incrementally increase the performance targets Medicare plans must achieve to earn a 4-star rating. The incremental lift in the 4-star thresholds would continue each and every year for 3 consecutive years, whether or not plans across the industry show improvement in their ratings.

For example, for the Medicare Part C metric “Osteoporosis Management in Women,” CMS is looking for plans to help ensure their female patients with osteoporosis comply with established treatment and screening guidelines following a fracture. The national average for compliance with these guidelines across all Medicare plans improved from 23% in 2014 to 27% in 2015. This increase of 4% is equal to an IPI factor of 1.17.

Currently, 4-star plans have more than 60% of their members complying with treatment guidelines for this metric. When you apply the IPI factor of 1.17 to that 60% threshold, it exponentially increases the threshold. Therefore, by 2018, a plan will need to have 97% of its female members with osteoporosis in compliance with these treatment guidelines to earn the quality points necessary to achieve a 4-star rating for this metric.

Osteoporosis may be the most extreme application of this proposed methodology change, but there is a significant impact in other star ratings metrics.

So, What Do We Do Next?

The first step is to use the comment period CMS provides to point out the concerns with these proposed methodologies and changes. When examining the 2018 4-star targets, is 97% treatment guideline compliance for osteoporosis a reasonable performance expectation for plan sponsors? What do plans need to achieve a 5-star rating?

Second, plan sponsors should begin planning for the implementation of the IPI factor as it currently stands by:

1. Projecting their individual plan’s 4- and 5- star targets using the IPI factor;

2. Prioritizing areas for investment and focus, based current plan performance AND the star ratings measurements that have the greatest impact to overall ratings; and

3. Identifying the short-term actions that the plan can begin improving today, and then the high-impact actions that will, over time, drive the total plan performance needs.

It’s All About the Data

Data is a plan’s best tool for defining the most effective and efficient stars improvement strategies and building a game plan for overall success. Plans should dig deep and use all data available – plan data, government and member surveys and industry research data from both traditional and non-traditional sources – to help guide strategy.

Healthcare informatics teams, and solutions, such as Express Scripts’ Constellation Ratings Advisor®, can help plan sponsors synthesize the information and pinpoint the most effective ways to improve and sustain high plan performance.

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