By Jennifer Popik, J.D.

Late last year, older Americans finished up a period of open enrollment in which they could choose among competing private health insurance plans in the “Medicare Advantage” alternative to the traditional completely government-run Medicare program. While senior citizens were being asked to choose among plans, the Center for Medicare and Medicaid Services (CMS) was engaged in a full-out advertising blitz, attempting to encourage them to base their decisions on the CMS’s so-called “star ratings” of competing health insurance plans.

While most older Americans likely assume these accurately reflect how well the plans deliver lifesaving and health-preserving treatment, in fact plans with higher survival and recovery rates are likely to be outranked by those that deliver cheaper care and emphasize preventive over curative measures, while providing quick and friendly “customer service.”

The CMS star ratings have been assigned to Medicare Advantage plans for the last several years. The ratings reflect a “quality score” that is compiled based on certain performance measures. CMS rates plans on a scale of 1 to 5 stars, with 5 stars representing the highest quality in an effort to guide senior consumer choice. Using this star rating system, CMS has long attempted to steer seniors into what it calls “high quality” plans.

This year, there are changes to the Medicare program, and they are among some of the most dramatic changes present in the Obama Health Care law. Now, the star rating will take on a new and critical role. Starting in 2012, plans with four or more stars will receive bonuses along with higher rebates. After next year, there will be a three-year period of attempting to push plans, using these bonus payments, into higher star ratings.

These bonus payments will no doubt influence plans to conform their behavior to that rewarded by the rating system. A professor who specializes in Medicare economics at George Washington University, Dr. Brian Biles, estimated that the top-rated plans would have received $1.3 billion in bonus payments last year if the bonus plan had been in effect.

There is little doubt that these payments will be important and can shape the way Medicare Advantage plans are constructed and administered. So what do the stars really measure? On the surface, they purport to measure quality. According to the Kaiser Family Foundation, “The quality scores for Medicare Advantage plans in 2011 are based on 53 performance measures that are derived from plan and beneficiary information collected in three surveys—HEDIS®, CAHPS®, and HOS—and administrative data. For example, the performance measures include whether the plans’ enrollees received the appropriate screening tests, the number of complaints CMS received about the plan, and how enrollees rated the communication skills of the plans’ physicians.”

CMS groups 53 individual quality measures, collected by the four sources above, into subsets. Thirteen of the 53 measures evaluate screenings, tests, and vaccines. Seven of the 53 measures evaluate drug plan customer service. Four measures evaluate prices of drugs. Three measures evaluate phone service and another three evaluate plan experience.

Of the 53 measures, each of which is given equal weight, only 10 measures look at a plan’s effectiveness in treating illness and injury—the outcome in terms of lives saved and health problems ameliorated. Senior citizens—and all Americans—should be troubled to learn that it is possible, under this star rating system, to have a plan that has poor outcomes with cancer treatment outrank another plan under which a patient is more likely to survive because the plan under which you are more likely to die is deemed to have better phone service and lower drug prices.

In fact, there has been much scholarly criticism of the validity of the rating measures used. To give just one example, high scores from HEDIS, one of the rating agencies, have been shown not to be associated with better health outcomes. According to one study, “It [an asthma control measure] is controversial because compliance with the HEDIS measure has never been prospectively linked to a better health outcome for the patients.”

Most patients are well aware that among the different types of health insurance plans, health maintenance organizations (HMOs) are those that provide the most tightly managed care. They often limit treatment and diagnostic options, giving less choice of physicians (sometimes assigning beneficiaries to specific doctors directly employed by the HMO), and requiring grudgingly given referrals from a primary care physician in order to see a specialist. HMOs frequently put plenty of emphasis on preventive care (free gym memberships, nutritional and exercise advice) but if you get seriously (and expensively) sick, you are often less likely to get the most advanced and effective treatments.

For 2011, just three Medicare Advantage insurance plans (out of a total of 523 nationwide) received an overall rating of 5 stars—ALL of them HMOs. Moreover, HMOs have higher average ratings (3.59 stars) than the average overall rating for local Preferred Provider Organizations or PPOs (3.46 stars), Private Fee-for-Service or PFFS plans (3.07 stars), and regional PPOs (2.76 stars)—all weighted by 2010 enrollment.

(PPOs and PFFS plans allow patients to go to any doctor they like, although PPO beneficiaries may pay a higher co-payment for “out-of-network” health care providers. PFFS plans may allow senior citizens who choose to do so to add their own money on top of the government payment in order to get plans less likely to curtail treatment, although a provision in Obamacare effectively allows CMS to limit or eliminate this option.)

There is grave reason for concern that treatment that a doctor and patient deem needed or advisable to save that patient’s life or preserve or improve the patient’s health may not always translate into the coveted high star rating. The Medicare Advantage plans will now be under enormous pressure to get their health providers to stay within the quality measure not only to get attractive high star ratings, but also to get greatly desired millions of dollars in bonus payments. Over time, older Americans may come to find that the only alternatives available in Medicare are those better at providing quick, friendly telephone access and cheap drugs than at saving lives.

There is a broader and related danger. The transition to this kind of delivery of health care is not going to be limited only to seniors in the Medicare program; it will extend to all Americans. The Obama health law also calls for an Independent Payment Advisory Board (IPAB). The IPAB is charged with making recommendations to limit growth in private, nongovernmental spending on health to below the rate of medical inflation. In turn, the Department of Health and Human Services has the authority to implement those recommendations by imposing “quality and efficiency” measures on health care providers.

And these will be standards specifically designed to limit what ordinary Americans may choose to spend on health care so that it is BELOW the rate of medical inflation. Treatment that a doctor and patient deem needed or advisable to save that patient’s life or preserve or improve the patient’s health but which runs afoul of the imposed standards will be denied, even if the patient is willing and able to pay for it.