Sachin H. Jain: A simple policy fix to the epidemic of low-star plans

Sachin H. Jain posted on LinkedIn:

“This annual enrollment period, we will see many seniors enroll in low-star rated plans.
It happens every year.

Why?
Low-star rated plans are often offered by big, recognizable brands.
Low-star rated plans often invest in gaudy benefits that attract members.
Low-star rated plans are often sold by a small fraction of powerful brokers who are swayed to sell them by incentives from plans.

And seniors often don’t know the difference between low-star rated and high-star rated plans *until they get sick* and it is simply too late to make a change.

It’s a bad situation.

The Centers for Medicare and Medicaid Services dictates maximum broker commissions and most plans pay brokers the maximum broker payment.
A simple policy fix to the epidemic of low-star plans:

Vary maximum allowable commissions by STAR ratings.
In California, the maximum broker commission for a new beneficiary is $880. Almost all plans offer this maximum commission to brokers.

What if CMS capped the maximum commission by STAR rating?
$950 = 5 STAR rated
$850 = 4.5 STAR rated plan
$750 = 4 STAR rated plan
$700 = 3.5 STAR rated plan
$650 = 3 STAR rated plan

Plans would have major incentives to improve their plans. And brokers would have clear incentive to place their customers into high quality plans.

All plans are not created equal and all plans should not be sold equally.

The Medicare Payment Advisory Commission should study the impact of changing the broker commission structure to amplify the impact of the Medicare Advantage quality ratings program.”

Sachin H. Jain is the President and CEO of SCAN Group and Health Plan and an Adjunct Professor of Medicine at Stanford University School of Medicine. He also serves as a Board Member at The Paul & Daisy Soros Fellowships for New Americans, an Academic Hospitalist (WOC) at the U.S. Department of Veterans Affairs, and a Board Member at America’s Health Insurance Plans (AHIP). He is also a board member of Omada Health.