H.R. 2506 would prohibit the Centers for Medicare and Medicaid Services (CMS) from terminating Medicare Advantage contracts that fail to achieve a minimum quality rating. That prohibition would be in effect until 2019. Under current law, CMS has announced that, beginning with contracts for calendar year 2017, it will exercise its authority to not renew contracts that for three consecutive years do not achieve at least three stars under the five-star rating system. Thus, enacting H.R. 2506 would permit certain plans to continue operating in 2017 and 2018 that otherwise will be terminated under current law. Those plans tend to receive slightly lower payments than other Medicare Advantage plans in the same areas, in part because they do not receive bonus payments under the five-star rating system.
CBO projects that very few beneficiaries will be enrolled in plans that fail to achieve minimum quality ratings, and thus would be subject to the changes under the legislation. Permitting those plans to continue operating would reduce direct spending by $30 million over the 2016-2025 period, CBO estimates. Because the legislation would affect direct spending, pay-as-you-go procedures apply.
H.R. 2506 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local or tribal governments.
