Health equity index (HEI) reward and its relationship with CAI and RF

Article by: Ronak Bavishi

??Let's understand the terms HEI, CAI and RF first!?

What is Health Equity Index (HEI Reward)?

Beginning with the ??2027 Star Ratings (MY 25), the current rewards structure in the Star Ratings will undergo a transformation, transitioning to a new system that considers the measures related to Social Risk Factors (SRF) populations to calculate Health Equity Index (HEI) reward.

??Check out the BHA tutorial that explains the HEI: Health Equity Index

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What is Reward factor (RF)?

The current Reward Factor (RF) emphasizes contracts with high weighted average Star Ratings and low variability among individual measures, whereas the HEI reward will prioritize contracts that serve LIS/DE and disabled populations and achieves better measure outcomes for these groups ??

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What is Categorical Adjustment Index (CAI)?

Categorical Adjustment Index (CAI) is the factor that is added to or subtracted from an overall or summary Star Rating to adjust for the average within-contract disparity in performance associated with the percentages of beneficiaries who are DE/LIS, or disabled

CAI is essentially CMS’ mechanism to adjust Star Ratings ?? for socio-demographic factors that may influence healthcare outcomes. The purpose of CAI is to ensure that plans are not unfairly penalized or rewarded due to the characteristics of the populations they serve.

Are CAI and HEI reward related?

Both the CAI and HEI are closely related, as both act to advance CMS’ efforts to promote health equity

??Complementary Measures: While CAI adjusts for socio-demographic factors in Star Ratings, HEI focuses on measuring improvements in health equity. Together, they provide CMS with a mean for addressing disparities in healthcare outcomes.

??Incentivize SRF Improvement: Plans that serve disadvantaged populations (LIS/DE and Disabled) and demonstrate improvements in those populations will benefit from both CAI adjustments to their Star Ratings and additional rewards through the HEI

??How can payers plan and prepare for HEI reward?

CMS plans to release contract level HEI scores and calculations every year to help plans prepare for implementation of the HEI reward beginning with the 2027 Star Ratings.

However, the scores would be available at a contract level and ?? competitive data necessary for proper analysis is currently unavailable.

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To address this gap, the plans can use the CAI data as a directional proxy. Since both CAI and HEI reward are somewhat influenced by the proportion of the SRF population, CAI data can provide an approximation of how the plan might be impacted by the introduction of the HEI reward. Particularly you can compare current CAI scores with current RF scores and analyze if a health plan stands to ??gain or ??lose from introduction of HEI reward.

?While it might not provide an exact representation, it can serve as a useful tool for strategic planning and decision-making until competitive data becomes available

??Disclaimer: Please note that while the proportion of the SRF population, can help determine the factor (0, 0.2, or 0.4) of the HEI reward, it does not directly impact the HEI score itself. However, a higher SRF population may result in a higher reward multiplier (>0.5 Median is 0.2x, >Median is 0.4x) for health plans. Assuming health plans achieve competitive SRF measure scores, this multiplier could serve as a tiebreaker in determining the final HEI reward. Therefore, while analyzing CAI data as a proxy for HEI reward impact, it's important to recognize the limited influence of SRF population proportion solely on the reward multiplier and not on the HEI score calculation itself.

BHA Analysis

We compared how plans scored on the RF vs CAI score in recent 2024 Star ratings:

??Key Takeaways:

• As current Reward Factor is not dependent on proportion of SRF population, we see little to no co-relation with RF & CAI scores, in fact plans with higher CAI scores often received low RF
• When HEI reward will replace RF, plans with high RF and low CAI will be at risk as even if they are high performers and have high measures scores, they would not be eligible for an HEI reward simply due to low SRF population.
• On the other hand, many low performing high SRF population plans, who currently received no or less RF, would be eligible for an HEI score

We also categorized top 30 insurers according to their RF vs CAI scores:

??Key Takeaways:

• Nationals like UHC, CVS seem to be doing good with both their RF and CAI scores
• Managed care players such as Centene & Molina will definitely be at an advantage when HEI kicks in, since they currently have low RF scores, but their bigger SRF population will provide them with an added advantage
• Many payers who are currently doing just fine with higher RF scores and low average CAI scores (due to lower SRF population) will need to make key strategic decisions and planning in order to gain from the HEI reward

??We can help you prepare for the new HEI reward

BHA offers following services to clients specifically addressing HEI

• BHA Stars Suite is analytical package that lets you drill deep into all aspects of Star Ratings and how they relate to Medicare Advantage enrollment and financials.
• Train your team to understand the methodology and calculation for HEI reward; Analyze & prepare HEI assessment reports with current released data to find opportunities for improvement and potential impact on future ratings
• Create a strategic roadmap to minimize the impact and achieve success in HEI including SRF measure prioritization, competitive intelligence, and other assessments and tactics.
• BHA’s stars suite is scheduled to receive the HEI feature. You can subscribe to our solutions to take full advantage of it and include the HEI component in your stars simulations & planning.

??Check out our quality improvement solutions: BHA

??Reach out to us on [email protected]