LeadingAge Tells Congress Nursing Home 5 Star System Needs Overhaul

Regulation | August 28, 2017 | by Barbara Gay

The 5-Star system the Centers for Medicare and Medicaid Services (CMS) uses to rate nursing homes needs substantial revision.

The Nursing Home 5-Star Quality Rating System on the Center for Medicare and Medicaid Services (CMS) website calculates a rating based on each nursing home’s performance as compared to others’ in the same state. There are no national criteria against which all nursing homes are measured. A “five-star” nursing home in one state may provide services and quality inferior to a three-star nursing home in another state.

The 5-Star system grades nursing homes on a bell curve, which requires some nursing homes to be graded at the one- and two-star level and relatively few nursing homes to be graded at the four- or five-star level. No matter how well its nursing homes may perform, no state may have a preponderance of four- and five-star nursing homes.

While the 5-Star system was conceived as a tool to help consumers choose a nursing home, few consumers understand the actual meaning of the 5-Star ratings. In addition, the ratings have been applied to contexts for which they were never intended, such as partnership in accountable care organizations, inclusion in managed care plans and distribution of revenues under state Medicaid value-based purchasing initiatives.

On June 27, 2017 CMS announced an 18-month freeze on nursing homes’ 5-Star ratings. Nursing homes that commit time and resources to improving quality will be stuck with their current ratings. During this period, CMS will “highlight areas of quality concern” on nursing homes’ star ratings, and will also note any nursing homes that achieve deficiency-free surveys. However, no information will be posted on improvements nursing homes achieve during the freeze period.

Related Statute/Regulation:

CMS promulgated the 5-Star system on December 18, 2008.  There is no underlying regulation.

Proposed Solution:

Congress should direct CMS to develop national quality criteria on which 5-Star ratings for all nursing homes would be based (Also recommended by the Government Accountability Office).

The 5-Star rating system should not include a bell curve. Every nursing home should have the potential to achieve a 5-Star rating by providing the highest-quality services.

In addition, CMS should be directed to lift the present freeze on 5-Star ratings. At the very least, CMS should note which nursing homes have achieved quality improvements during the period of the freeze.