Innovative Health Equity Index Reward Program Overview

Part C and D Star Ratings Health Equity Index Reward Amber Didier, PhD Liz Goldstein, PhD Sarah Gaillot, PhD November 2024

Disclaimer Nothing in this presentation is intended to supersede the regulations at 42 C.F.R. Part 422, 42 C.F.R. Part 423, the Prescription Drug Benefit Manual, the Medicare Managed Care Manual, or any other CMS guidance or instructions related to the operation of the MA program or Part D program. Failure to reference a regulatory requirement or CMS instruction in this presentation does not affect the applicability of such requirement. November 2024 Part C and D Star Ratings Health Equity Index Reward 2

Overview Health Equity Index (HEI) Reward Background & Calculations Summary HEI Reward Methodology Calculations Using Data from 2023 and 2024 Star Ratings Frequently Asked Questions Q&A November 2024 Part C and D Star Ratings Health Equity Index Reward 3

HEI Reward Background & Calculations Summary

HEI Reward Incentivizes High Performance Among Enrollees with Specified Social Risk Factors Creates a new reward for Medicare Advantage (MA) and Part D contracts for performing well among enrollees with specified social risk factors (SRFs). Summarizes performance among enrollees with specified SRFs, currently Low Income Subsidy/Dual Eligible (LIS/DE) and disability status (based on original reason for entitlement), across multiple Star Ratings measures into a single score. (Additional SRFs may be added over time through rulemaking.) Score on HEI is translated into an upside-only reward added to the overall and summary Star Ratings for contracts that qualify based on meeting enrollment and performance thresholds for serving enrollees with the specified SRFs. November 2024 Part C and D Star Ratings Health Equity Index Reward 5

HEI Reward Focused where Improvement is Most Needed Beginning with the 2027 Star Ratings, CMS will use the HEI reward to focus on contracts serving larger percentages of enrollees with the specified SRFs where more improvement is needed. Contracts that do not meet enrollment thresholds will not qualify for the targeted HEI reward factor since it is not designed for all contracts. November 2024 Part C and D Star Ratings Health Equity Index Reward 6

HEI Reward Focused where Improvement is Most Needed Additionally, for 2027 Star Ratings, the reward factor (currently used and tied to consistently high performance on the ratings) will be removed. Contracts qualified for the historical reward factor based on performance and there were not enrollment thresholds. CMS removed the historical reward factor to incentivize improvement across all contracts for all enrollees. Contracts can still receive 5 stars on the summary and overall Star Ratings if they do not qualify for an HEI reward (and with the historical reward factor removed). November 2024 Part C and D Star Ratings Health Equity Index Reward 7

HEI Reward Will Be Implemented Beginning with the 2027 Star Ratings The HEI reward will be implemented beginning with the 2027 Star Ratings (measurement years 2024 and 2025) that will be released in October 2026. The HEI reward will first impact 2028 Quality Bonus Payments. In December 2023, CMS provided contracts with calculations of the HEI reward using data from the 2023 and 2024 Star Ratings to assist them in implementation. These reports are available in HPMS. We will provide calculations of the HEI reward to contracts until the HEI is implemented in the 2027 Star Ratings. Around December 2024, CMS will provide calculations of the HEI reward using data from the 2024 and 2025 Star Ratings. Around December 2025, CMS will provide calculations of the HEI reward using data from the 2025 and 2026 Star Ratings. November 2024 Part C and D Star Ratings Health Equity Index Reward 8

HEI Simulation Summary CMS simulated the HEI reward as if it had been implemented in the 2024 Star Ratings and will provide more detail later in the deck. This simulation was part of CMS s efforts to provide additional detail to contracts about their own performance following the publication of the 2024 Part C and D final rule. November 2024 Part C and D Star Ratings Health Equity Index Reward 9

HEI Simulation Summary Key findings include: Most contracts had no change in their highest Star Rating (up or down); 83% of MA-PD and 80% of PDP contracts had no change. Roughly the same number of contracts qualified for a hypothetical HEI reward as qualified for the historical reward factor in the 2024 Star Ratings. 32% of MA-PD contracts qualified for a hypothetical HEI reward compared to 36% that qualified for the historical reward factor. The average HEI reward was similar for large and small parent organizations. Large parent organizations are those with at least 1.5 million enrollees across their contracts. November 2024 Part C and D Star Ratings Health Equity Index Reward 10

HEI Reward Methodology

Calculating the HEI Score - Overview Assign points for each measure based on where measure score falls along distribution of all contract scores. Calculate measure-level scores for subset of enrollees with specified SRFs. Divide Calculate HEI score as the weighted average of measure points. distribution of performance into thirds for each measure. November 2024 Part C and D Star Ratings Health Equity Index Reward 12

Calculating the HEI Score Measure-level scores for each measure included in the HEI are calculated for each contract: Using the two most recent measurement years of data, and For the subset of enrollees with the specified SRFs If an enrollee has one of the specified SRFs for only one of the two included measurement years, their performance data for just that year are used. November 2024 Part C and D Star Ratings Health Equity Index Reward 13

Calculating the HEI Score Measure scores are adjusted for year. This accounts for situations where for example: Mean scores are, on average, different in the two years Contracts have different measure sample sizes across years All standard case-mix adjustors from the Star Ratings are used for relevant measures (e.g., CAHPS measures), excluding any adjustors that are: The same as the specified SRFs, Strongly correlated with the specified SRFs, or Conceptually similar to the specified SRFs November 2024 Part C and D Star Ratings Health Equity Index Reward 14

Calculating the HEI Score For each measure, the distribution of contract performance among enrollees with the specified SRFs is divided into thirds. Points are assigned for each measure based on where the measure score among the enrollees with the specified SRFs falls in the distribution: 1 point for scores in the top third 0 points for scores in the middle third -1 point for scores in the bottom third November 2024 Part C and D Star Ratings Health Equity Index Reward 15

Calculating the HEI Score HEI score is calculated as the weighted average of the measure points using the Star Ratings measure weights. Measures weights are from the current Star Ratings year. Weighted average includes only those measures for which the contract met all inclusion criteria. Measure-level scores are used for contracts that have data for only the most recent year of the 2 years, but measure-level scores are not used for contracts that have data for only the first of the 2 years. HEI scores range from -1 to 1. Score of -1 when all measures are in bottom third of distribution. Score of 1 when all measures are in top third of distribution. November 2024 Part C and D Star Ratings Health Equity Index Reward 16

Calculating the HEI Score A measure will be excluded from the calculation of the HEI if the measure meets any of the following criteria: The focus of the measurement is not the enrollee but rather the plan or provider. The measure is retired, moved to display, or has a substantive specification change in either year of data used to construct the HEI. The measure is applicable only to SNPs. At least 25 percent of contracts are unable to meet the criteria specified at 422.166(f)(3)(iv) and 423.186(f)(3)(iv). For Part D measures, these criteria are assessed separately for MA-PDs and cost contracts, and for PDPs. 422.166(f)(3)(iv) 423.186(f)(3)(iv) November 2024 Part C and D Star Ratings Health Equity Index Reward 17

Calculating the HEI Score To receive an HEI score, a contract must have had at least 500 enrollees at the contract level as of December of the most recent measurement year, and meet the inclusion criteria for at least half of the measures included in the HEI. Contracts that do not meet these criteria are not eligible for an HEI reward. November 2024 Part C and D Star Ratings Health Equity Index Reward 18

Calculating the HEI Score For a measure to be included in the HEI score for a specific contract, the following inclusion criteria need to be met: Reliability of at least 0.7 when the measure is calculated for the combined subset of enrollees with the specified SRFs across 2 years of data, and Measure-specific denominator criterion is met for the subset of enrollees with the specified SRFs across 2 years of data November 2024 Part C and D Star Ratings Health Equity Index Reward 19

Example HEI Score Calculation Points for Performance by SRF (-1, 0, 1) Measure Weight A 1 B 0 C 0 D 1 E 1 F 1 G 1 H 1 I -1 J 1 TOTAL Points for Performance by SRF X Measure Weight 3 0 0 2 1 1 3 3 -1 1 13 Measure 3 2 1 2 1 1 3 3 1 1 18 HEI score is 13/18 or 0.722222 November 2024 Part C and D Star Ratings Health Equity Index Reward 20

Calculating the HEI Reward - Overview Determine if contract meets one of the percentage of enrollees with specified SRFs thresholds. If both thresholds are met, calculate HEI reward. If either threshold is not met, contract does not qualify for HEI reward. Determine if contract meets the minimum performance threshold. November 2024 Part C and D Star Ratings Health Equity Index Reward 21

Contracts Must Meet Minimum Performance and Enrollment Thresholds to Qualify for Reward Minimum performance threshold Contracts must have an HEI score of greater than zero. AND Percentage of enrollees with the specified SRFs thresholds Reward ranges from 0 to 0.2 for contracts with at least one- half the contract-level median up to but not including the median percentage LIS/DE/disabled enrollees. Reward ranges from 0 to 0.4 for contracts with at least the contract-level median percentage LIS/DE/disabled enrollees. November 2024 Part C and D Star Ratings Health Equity Index Reward 22

Calculating the HEI Reward If HEI score <=0 HEI reward = 0 If the percentage of enrollees with specified SRFs < one-half the contract- level median HEI reward = 0 November 2024 Part C and D Star Ratings Health Equity Index Reward 23

Calculating the HEI Reward If the percentage of enrollees with specified SRFs >= one- half the contract-level median and < contract-level median HEI reward varies between 0 and 0.2 on a linear scale, for contracts with HEI score > 0. HEI Reward = 0.2*(contract s HEI score - performance threshold)/ (maximum HEI score - performance threshold) Contracts with service areas wholly located in Puerto Rico are excluded from the calculation of the contract-level median and one-half the contract-level median. November 2024 Part C and D Star Ratings Health Equity Index Reward 24

Calculating the HEI Reward If the percentage of enrollees with specified SRFs >= contract-level median HEI reward varies between 0 and 0.4 on a linear scale, for contracts with HEI score > 0. HEI Reward = 0.4*(contract s HEI score - performance threshold)/ (maximum HEI score - performance threshold) November 2024 Part C and D Star Ratings Health Equity Index Reward 25

Example HEI Reward Calculation Example Contract HEI Score: 0.722222 If percentage of enrollees with specified SRFs >= one-half the contract-level median and < contract-level median: HEI Reward = 0.2*(0.722222-0)/(1-0) = 0.144444 November 2024 Part C and D Star Ratings Health Equity Index Reward 26

Example HEI Reward Calculation If percentage of enrollees with specified SRFs >= contract-level median: HEI Reward = 0.4*(0.722222-0)/(1-0) = 0.288889 November 2024 Part C and D Star Ratings Health Equity Index Reward 27

Calculating the Final Star Rating with the HEI Reward The HEI reward will be added to the unrounded overall and Part C and D summary ratings after the addition of the CAI described in 422.166(f)(2) and 423.186(f)(2) and the application of the improvement measures described in 422.166(g)(1) and 423.186(g)(1) November 2024 Part C and D Star Ratings Health Equity Index Reward 28

Calculating the Final Star Rating with the HEI Reward Example If the HEI reward was 0.288930 and the unrounded overall rating was 4.234210 after the addition of the CAI and the application of the improvement measure hold harmless rule, the unrounded overall rating would be 4.234210 + 0.288930 = 4.523140 Resulting in a final, rounded overall rating of 4.5 stars. November 2024 Part C and D Star Ratings Health Equity Index Reward 29

Calculations Using Data from 2023 and 2024 Star Ratings

Calculations Using Data from 2023 and 2024 Star Ratings We calculated the HEI reward as if it had been implemented in the 2024 Star Ratings and aggregated the results. Contract level results were shared in HPMS in December 2023. Data are from the 2023 and 2024 Star Ratings, which primarily reflect measurement years 2021 and 2022. Results reflect a baseline of performance and do not reflect any actions that may be taken by contracts to improve performance as a result of the implementation of the HEI reward and removal of the historical reward factor. November 2024 Part C and D Star Ratings Health Equity Index Reward 31

Enrollment Thresholds from 2022 Eighty percent of MA and 1876 cost contracts met one of the enrollment thresholds. Ninety-two percent of PDPs met one of the enrollment thresholds. One-Half Median 20.9036 5.7573 Median 41.8072 11.5145 MA and 1876 Cost Contracts PDPs November 2024 Part C and D Star Ratings Health Equity Index Reward 32

Overall Rating HEI Score and Reward for MA-PDs -0.011 Average HEI Score -1.0 1.0 HEI Score Range -0.979 to 0.944 Average HEI Reward (where reward >0) 0.4 0.107 HEI Reward Range 0.004 to 0.375 Part C and D Star Ratings Health Equity Index Reward November 2024 33

Part D Summary HEI Score and Reward for PDPs 0.028 Average HEI Score -1.0 1.0 HEI Score Range -1.000 to 1.000 Average HEI Reward (where reward >0) 0.4 0.151 HEI Reward Range 0.029 to 0.400 Part C and D Star Ratings Health Equity Index Reward November 2024 34

HEI Score and Reward by Parent Organization Size Small POs Large POs 0.030 -0.049 Average HEI Score -1.0 -1.0 1.0 1.0 HEI Score Range -0.979 to 0.938 -0.967 to 0.944 Average HEI Reward (where reward >0) 0.4 0.4 0.100 0.118 HEI Reward Range 0.004 to 0.375 0.005 to 0.347 Part C and D Star Ratings Health Equity Index Reward November 2024 35

HEI Score and Reward by D-SNP Contract Type D-SNP Only Partial D-SNP Non D-SNP 0.003 -0.019 -0.008 Average HEI Score -1.0 -1.0 -1.0 1.0 1.0 1.0 HEI Score Range -0.764 to 0.741 -0.967 to 0.938 -0.979 to 0.944 Average HEI Reward (where reward >0) 0.4 0.070 0.4 0.4 0.131 0.121 HEI Reward Range 0.014 to 0.297 0.004 to 0.375 0.006 to 0.327 Part C and D Star Ratings Health Equity Index Reward November 2024 36

HEI Score and Reward by EGWP* Enrollment 25%+ EGWP <25% EGWP 0.246 -0.028 Average HEI Score -1.0 -1.0 1.0 1.0 HEI Score Range -0.667 to 0.944 -0.979 to 0.938 Average HEI Reward (where reward >0) 0.079 0.4 0.4 0.108 HEI Reward Range 0.006 to 0.231 0.004 to 0.375 *EGWP stands for Employer Group Waiver Plan Part C and D Star Ratings Health Equity Index Reward November 2024 37

Comparison to 2024 Star Ratings Most contracts had no change in the highest rating 83 percent of MA-PD contracts had no change in the overall rating. 80 percent of PDP contracts had no change in the Part D summary rating. November 2024 Part C and D Star Ratings Health Equity Index Reward 38

Comparison to 2024 Star Ratings Very similar percentages of contracts qualified for a hypothetical HEI reward as qualified for the historical reward factor in the 2024 Star Ratings. 32 percent of MA-PD contracts qualified for a hypothetical HEI reward compared to 36 percent that qualified for the historical reward factor. 31 percent of PDP contracts qualified for a hypothetical HEI reward compared to 39 percent that qualified for the historical reward factor. November 2024 Part C and D Star Ratings Health Equity Index Reward 39

Conclusions Results show that contract performance at baseline is consistent with our expectations and our analyses of the HEI reward in the 2024 Part C and D final rule. Most contracts (80% of MA and 92% of PDP) met one of the HEI enrollment thresholds necessary to be eligible for an HEI reward. Although the upside only HEI reward is a relatively small part of the overall rating, added on top of a contract s ability to earn 5 stars, it can improve the rating, especially for contracts that serve larger percentages of harder to treat enrollees with the specified SRFs. November 2024 Part C and D Star Ratings Health Equity Index Reward 40

Frequently Asked Questions on HEI Reward

Specified SRFs Question: Does a member need to be enrolled in the same contract in both years to be counted in the HEI calculations for that contract? The member does not need to be enrolled in the same contract in both years to be included in the HEI calculations for that contract. November 2024 Part C and D Star Ratings Health Equity Index Reward 42

Specified SRFs Question: How are contracts scored in instances where a member moves from one contract to another? The HEI uses the existing Star Ratings data; thus, even if an enrollee moves, they would be counted in the score for a particular contract if they had enough months in the contract to be included in a particular measure score. Existing measure specifications for each measure are not changed when calculating scores for the HEI. November 2024 Part C and D Star Ratings Health Equity Index Reward 43

Specified SRFs Question (cont d): How are contracts scored in instances where a member moves from one contract to another? Contract enrollment used in determining the percentage of enrollees with the specified SRFs is determined using enrollment data for the month of December for the measurement period of the Star Ratings year. The count of beneficiaries for a contract is restricted to beneficiaries who are alive for part or all of the month of December of the applicable measurement year. See 422.166(f)(3)(i)(A) and 423.186(f)(3)(i)(A) November 2024 Part C and D Star Ratings Health Equity Index Reward 44

Specified SRFs Question: If an enrollee is only LIS/DE for part of the year and they switch to a different contract or plan sponsor as part of a special enrollment period, are they still counted as having an SRF once they've switched to the new contract/plan if they no longer have that SRF status after they switch? A beneficiary is categorized as LIS/DE if the beneficiary was designated as full or partially dually eligible or receiving an LIS at any time during the applicable measurement period. When calculating the measure-level scores for the subset of enrollees with specified SRFs, if a person meets the LIS/DE criteria for only one of the two measurement years included in the HEI, the data for that person for just that year are used. See 422.166(f)(3)(i)(A) and 423.186(f)(3)(i)(A) November 2024 Part C and D Star Ratings Health Equity Index Reward 45

Specified SRFs Enrollment Thresholds Question: When will the median and one-half median percentage enrollees with the specified SRFs be announced? Once the HEI is implemented beginning with the 2027 Star Ratings, this information will be available to contracts annually for the respective measurement period during the second plan preview that occurs each year in September prior to releasing the final Star Ratings in October of that year. November 2024 Part C and D Star Ratings Health Equity Index Reward 46

Specified SRFs Enrollment Thresholds Question: Which year of data is used to calculate the median and one-half median percentage of enrollees with the specified SRFs? The contract percentages of enrollees with SRFs included in the HEI will be based on enrollment in the most recent of the two years of data used to calculate the HEI. For example, if the HEI includes data from measurement years 2024 and 2025, the enrollment used for calculating the enrollment thresholds would be from 2025. Contracts with service areas wholly located in Puerto Rico are excluded from the calculation of the contract-level median and one-half the contract-level median. See 422.166(f)(3)(vii) and 423.186(f)(3)(vii) November 2024 Part C and D Star Ratings Health Equity Index Reward 47

Measures Included in HEI Question: Which Star Ratings measures are included in the HEI? The measures being evaluated for inclusion in the HEI will be announced annually in the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act (Advance Notice/Rate Announcement). These announcements (of the measures being evaluated for inclusion in the HEI) will not include the final list of measures used in the HEI for the upcoming Star Ratings because the data to determine that final set will not yet be available. See 422.166(f)(3)(iii) and 423.186(f)(3)(iii) November 2024 Part C and D Star Ratings Health Equity Index Reward 48

Measure Included in HEI Question (cont d): Which Star Ratings measures are included in the HEI? In general, measures from HEDIS, HOS, and CAHPS, as well as medication adherence, MTM Program Completion Rate for CMR, and Statin Use in Persons with Diabetes will be included unless they meet one of the four exclusion criteria at 422.166(f)(3)(ii)(A) (D) and 423.186(f)(3)(ii)(A) (D). The final list of measures included in the HEI will be available to contracts annually for the respective measurement period during the second plan preview. November 2024 Part C and D Star Ratings Health Equity Index Reward 49

Measure Weights Question: What weight will the HOS Improving or Maintaining Physical/Mental Health have in the HEI calculations that are used for the 2027 Star Ratings? The measure weight for each measure used in calculating the HEI score is the weight used for the measure in the current Star Ratings year. For the 2027 Star Ratings the HOS outcomes measures will have a weight of 3. See 422.166(f)(3)(v) and 423.186(f)(3)(v) November 2024 Part C and D Star Ratings Health Equity Index Reward 50