On December 18, 2008, the Centers for Medicare & Medicaid Services (CMS) released a new quality rating system for nursing homes nationwide. The new system will affect all 15,800 facilities participating in the Medicare and/or Medicaid program. The rating of each facility and the data used to determine that rating is currently available on the CMS Nursing Home Compare Web site located here.

Each facility’s rating will be measured in stars, with five stars indicating that a facility is “much above average” in its quality of care, and one star indicating a quality rating “much below average.” The ratings are based on three factors: (1) Health Inspections; (2) Staffing; and (3) Quality Measures (QMs). The health inspections are carried out annually and conducted in accordance with current CMS inspection guidelines. Staffing information is based on the number of staff per patient, as reported by the nursing facilities themselves.  Quality Measure data is based on CMS’ assessment of how prevalent certain issues are at the facility, such as bed sores and resident mobility, relative to other facilities.

Recently, consumer groups and Congress have pressured CMS to provide the public simple and accessible data rating nursing facilities. The Five-Star Program is a response to this demand. While CMS has touted its new Five-Star system as an effective means by which consumers can inform themselves of the quality of health facilities into which they place themselves or their loved ones, many within the health care industry believe that the rating system is flawed and potentially misleading.

One criticism of the Five-Star system is its failure to account for different acuity levels between facilities, particularly with respect to the QMs data. This can often result in very good facilities that provide services to a higher acuity patient base being judged poorly, and other facilities with lower acuity patients being rated higher than is deserved.  Although CMS requires facilities with residents having more severe needs to have more staff in order to maintain a high quality rating, CMS does not make allowances for homes with higher acuity levels when making QMs ratings. For example, part of the CMS Quality Measures rating criteria includes prevalence of bed sores or changes to resident mobility.  These factors can be misleading as they are not necessarily indicators of the quality of care the resident is receiving so much as an indicator of the resident’s overall health.  Nursing facilities which care for residents who are sicker may have more instances of bed sores, decreased mobility or other issues factored into the Quality Measures data.  Facilities with higher acuity patients may therefore run the risk of rating lower in the CMS Quality Measures, meaning a lower rating on the Five-Star system when those facilities may actually deliver a very high quality of care.

Another criticism of the Five-Star system is that it does not take into account penalties issued by state health departments.  According to CMS, the federal government chose not to include state-level facility evaluations because the penalty criteria vary widely from state to state. The problem this creates is that if a state inspector were to find a serious violation missed by a CMS evaluator, the Five-Star rating level would not be affected.  Conversely, a strong compliance history with state regulations would not be reflected in the facility’s rating.

Patients’ rights groups have criticized the new rating system for its reliance on self-reported data from nursing facilities. Two of the three sources of information used by CMS – Facility Staffing and Quality Measures – come from the nursing facilities themselves.  Advocacy groups believe that greater transparency will result from actual investigation, rather than a system of self-reporting. Advocacy groups warn that nursing homes that are selective about the data they choose to report could add to the unreliability of the ratings.

Finally, some believe that another rating system is simply unnecessary since facility evaluations in the form of federal and state surveys are already available in the facility public file and should also be posted on site at the facility.

While the Five-Star system is only just the beginning and has already generated significant controversy, a number of competing programs are beginning to crop up nationwide. For example, in California, the Los Angeles County Board of Supervisors has proposed legislation similar to the Five-Star system requiring nursing homes to display their rating on site. This system, which is based on a letter grade, is similar to systems adopted by other states, will be voted on in the California Assembly later this year.

CMS has stated that the Five-Star system should be used as just one method of assessing a nursing facility. It has indicated that simply because a facility is rated highly, it should not be assumed to be of top quality. Similarly, CMS has stated that nursing facilities which rate poorly in the Five-Star system are not necessarily poor-quality providers. Unfortunately, the CMS statement, which adds to the confusion, is of little comfort to facilities who have unfairly received poor grades.

It remains to be seen whether the Five-Star system will be modified to address any of the concerns that have been raised. Until that time, nursing facilities should be aware of the criteria on which they are being judged and check their grade on the Nursing Home Compare Web site. They also should be aware of the methodology used to determine the grade (which is also available on the CMS Web site). If the provider believes its grade on the Web site is not appropriate, it can contact CMS directly through the Nursing Home Compare Hotline to address the issue. While staffing and QMs data are self-reported, and therefore not appealable, providers can appeal the CMS health inspection findings used to calculate the provider’s rating. For those providers that remain dissatisfied, informal appeal procedures are available to contest the rating. Finally, if an informal appeal does not lead to a satisfactory result, the nursing home care providers can appeal the survey finding to an administrative law judge.

If you have questions or would like additional information, please feel free to contact any of the Arent Fox health care law attorneys listed below:

Jonathon E. Cohn
cohn.jonathan@arentfox.com
213.443.7515

Linda A. Baumann
baumann.linda@arentfox.com
202.857.6239

Connie A. Raffa
raffa.connie@arentfox.com
212.484.3926