This past summer we released a report for the Commonwealth Fund that evaluated the efforts of the state-based marketplaces to implement the Affordable Care Act’s (ACA) quality improvement provisions. We found that several states were moving forward with quality-related initiatives, in spite of delayed action by the federally facilitated marketplace (FFM).

Recent federal rulemaking suggests the FFM is – slowly but surely – implementing the quality improvement requirements prescribed by the ACA. In their latest rules and guidance, the FFM puts insurance companies on notice that quality improvement standards, reporting requirements and rankings are coming their way.

Quality Improvement Strategy

The ACA requires plans participating on the marketplaces to maintain a “quality improvement strategy” designed to prevent hospital readmissions, improve health outcomes, reduce health disparities and meet other quality improvement goals. In their recent proposed Notice of Benefit and Payment Parameters, the Centers for Medicare and Medicaid Services (CMS) implement this requirement with a focus on quality improvement strategies that are grounded in “market-based” incentives that use value-based purchasing concepts. The proposed rule also emphasizes the importance of aligning insurers’ provider payment and quality improvement strategies with those efforts already underway in the Medicare program and other public and private sector payment reform initiatives. In explanation, CMS says: “We believe that aligning…standards for quality improvement strategies in Exchanges with existing initiatives will reinforce national health care quality priorities while reducing the burden on health plans and stakeholders….”

CMS is proposing that insurers that have been participating in the marketplaces for at least two years be required to implement the quality improvement strategy. Beginning in the fall of 2016, insurers that participated in one or more marketplaces in 2014 and 2015 will have to submit a quality improvement plan to CMS, followed by annual progress updates.

While CMS is not specifying precise elements for insurers’ quality improvement strategies, they indicate that they’ll be looking for strategies that link provider payments to the quality and value of their performance.

Data Collection and Quality Rankings

The ACA and federal rules require insurers to collect and report data that will support the development of quality rating scores for each of their plans offered through the marketplace. In addition, they must contract with an approved vendor to conduct enrollee satisfaction surveys. The FFM will use this data to rate each participating plan through a 1- to 5-star rating scale (similar to the 5-star rating scale used for Medicare Advantage plans).

While the FFM will collect quality and consumer satisfaction data in 2015, consumers will not see the health plans rated until the open enrollment period for the 2017 plan year (i.e., the fall of 2016). In its recent draft Letter to Issuers for 2016, CMS notes that it will use the information it receives in 2015 for a “beta test” that will inform the rating system that consumers will ultimately use to select a plan. (Note, however, that eight of the state-based marketplaces moved forward with their own, state-specific star rating systems in 2014. They are required to shift to the federally developed star rating system in 2016).

What does this mean for consumers?

For years now, the action on quality improvement and payment reform has largely come from initiatives in public coverage programs, such as Medicare, complemented by a limited set of activities through a patchwork of large employer purchasing coalitions. Drafters of the ACA envisioned that the health insurance marketplaces, by aggregating the purchasing power of individuals and small groups, could help extend these quality and payment reforms to the private health insurance market – and thereby help drive broader delivery system reforms. To date, however, the attention of marketplace officials has rightly focused on critical operational functions, such as working eligibility and enrollment systems. With just a few exceptions, quality improvement has taken a back seat. Now that the second open enrollment season will draw to a successful conclusion in just a few short weeks, the time is right for the marketplaces – and their participating insurers – to step up their efforts to deliver consumers better health care at a better price. The latest proposals from CMS are a step in that direction.