How Centene plans to boost its Medicare Advantage star ratings

With average Medicare Advantage star ratings seeing a decline nationwide, payers like Centene are facing lower revenues in 2024 after missing out on federal bonuses tied to the quality ratings. 

"While the final results were slightly worse than our internal expectations, the vast majority of the revenue headwind was known to us months in advance as we shared transparently with the investment community," Centene CEO Sarah London said Oct. 25.

Centene executives notified investors in July that 2023 Medicare Advantage star ratings were going to be "disappointing and unacceptable." The percentage of Centene members with 4-star or higher plans dropped from 48 percent to 3 percent in 2022, a Stephens analyst told Business Insider Oct. 7.

CMS awards financial bonuses to plans that earn four stars or above. In 2022, Centene received $233 million in bonuses, according to a KFF analysis.

Ms. London said the reason for the lowered star ratings in 2023 stemmed from Centene's acquisition of WellCare Health Plans in 2020 for $17 billion, which tripled Medicare business.

The two companies were "operating in fundamentally different models," and WellCare was centralized while Centene was not. 

"It's very hard to run an enterprise quality program at our level of size and scale in a decentralized model. And then we send everybody home for COVID," Ms. London said.

During a third quarter call with investors, Ms. London shared more details about the plan the company is prioritizing to improve quality performance.

Centene has hired a chief quality officer and assigned executives to manage key operational and administrative programs. The quality program has also been moved under the direct oversight of the chief transformation officer.

"In addition, we launched a focused effort to standardize and streamline our quality processes, and we implemented real-time operational dashboards to track key performance metrics," Ms. London said.

Centene has invested in technology that enhances clinical care access around care gaps, integrated quality programs into a single workflow and redesigned its Medicare onboarding process. As well, quality improvement is now a compensation metric for every Centene employee.

"When I say quality is a priority, I mean it," Ms. London said. "Over the next three cycles, our goal is to achieve at least 60 percent of members in four-star plans. And I promise you, this senior management team is aggressively tracking stars improvement toward that goal on a real-time basis."

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