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Re-examining CMS' 5-star rating system

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In 1998, the Centers for Medicare and Medicaid Services (CMS) began posting information regarding the quality of care provided by nursing homes on it Nursing Home Compare (NHC) website. The purpose of the NHC website was to assist people in choosing a nursing home. A decade later, in 2008, CMS implemented its Five-Star Quality Rating System to provide additional information that enabled consumers to evaluate a specific nursing home and compare its ratings to other nursing facilities.

CMS rates each of the 15,600 nursing homes that participate in the Medicare program with an overall “star rating” as well as ratings in three discrete categories—health inspections (both annual and complaint surveys), quality measures, and staffing. The star ratings are based on a five-star scale with CMS defining a 1-star rating as “much below average,” a 3-star rating as “average” and a 5-star rating as “much above average.”

Although CMS has made a number of changes to the Five-Star System, the long-term care industry—as well as the Government Accountability Office (GAO)—have long expressed concerns regarding the usefulness of the Five-Star System. For example, in a March 2012 report, the GAO recommended that CMS “use strategic planning to establish how its planned efforts will help meet the goals of the Five-Star System, and develop milestones and timelines for each of its planned efforts.”

CMS added quality measures regarding antipsychotic medications and staffing levels to its Five-Star System in February 2015. However, those changes “caused an estimated 4,777 of 15,500 centers nationwide to lose one or more stars in their individual quality rankings even though nothing about the quality of care those centers offered changed,” Greg Crist, Senior Vice President for Public Affairs for the American Health Care Association (AHCA), told Bloomberg BNA in August 2015. If AHCA is correct and the quality remained the same, why indeed, would a facility lose a star-rating?

Calls for improvement

Even with the additional measures that CMS recently added to the Five-Star System, those changes do not “impact the accuracy and reliability of the measures reported,” according to Senator Bob Casey (D-Pa). In a jointly signed letter to the GAO, Senators Casey and Ron Wyden (D-Ore.), both members of the Senate Finance Committee, noted that there are “questions about the [Five-Star] system’s integrity.”[i] Consequently, they requested that the GAO again examine the Five-Star Rating System to address its reliability and accuracy.

GAO recommendations

The GAO report, published in November 2016, found fault with the fact that the NHC website does not include consumer satisfaction survey information, “leaving consumers to make nursing home decisions without this important information.”

The GAO also demonstrated the problems created by the lack of a resident satisfaction tool. It provided the hypothetical example of two nursing homes with the same star rating but vastly different resident recommendation rates. Presumably, the resident satisfaction data would be an important consideration for a family trying to choose a nursing home for a loved one.


Alan C. Horowitz

Partner at Arnall Golden Gregory

Alan C. Horowitz

Alan C. Horowitz, Esq., is a partner at...