Medicare quality ratings for private plans questioned by critics The latest attack came in a report last week from the American Action Forum, a conservative think tank, which argued that some standards are difficult to measure and that it's hard to score well when plans don't always know the criteria in advance. Supporters defend the program as part of a broad initiative to boost the quality of patient care and point to demonstrable improvements - for instance, a San Diego physicians group that discovered 700 Medicare patients with diabetes who were not getting annual eye exams, even though failure to get early treatment can result in blindness. "Change a compensation system, and priorities shift," said Dan Mendelson, chief executive of Avalere Health, a consulting firm. You can see the numbers going up. The federal government created the star rating system in 2007 as a guide to help seniors compare the quality of private health plans in the Medicare Advantage program. One quarter of older and disabled people now opt out of the traditional, government-run Medicare program in favor of private plans that often have lower premiums and extra benefits, such as coverage of hearing aids. Until recently, health plans and their enrollees all but ignored the ratings. But insurance executives made them a priority after the 2010 health-care law attached large financial rewards to them. The first round of ratings in the fall showed that most plans have a way to go. Only 12 earned a perfect score of five, on a scale of one to five, and about 9 percent were below average. The majority received scores of three or three and a half stars - enough to get them bonus money this year. After 2014, plans will need four or five stars to get bonuses. And if they have fewer than three stars, they won't be allowed to enroll beneficiaries through Medicare's Web site and risk being booted from Medicare altogether, according to HHS spokesman Tony Salters. Already, five-star plans don't have to wait until open season to enroll new customers. Poor performers are branded with an icon on Medicare's Web site. "You basically can't operate a profitable Medicare Advantage plan without strong star ratings," Mendelson said. For some health plans, the bonus money accounts for as much as 7 percent of revenues, which can translate into a couple of billion dollars for a large health plan. The money is particularly attractive to Medicare Advantage plans as the health-care law cuts their payments this year by $6 billion. This year's bonus money is estimated to offset about half of that reduction. The bonus program runs over 10 years, but most of its awards will be made in the first three years.