Nursing Homes: CMS Needs Milestones and Timelines to Ensure Goals for the Five-Star Quality Rating System Are Met
Released: 2012-03-23T00:00:00

Letter

Background

CMS has publicly reported information on nursing home quality on its Nursing Home Compare website since 1998 and has increased the amount of information it reports on the website over time.2008, CMS announced its plans to make use of the information available on the Nursing Home Compare website and begin assigning each nursing home “star” ratings to help beneficiaries, their families, and caregivers compare nursing homes more easily. Beginning in December 2008, CMS made the Five-Star System publicly available on its Nursing Home Compare website. The Five-Star System assigns star ratings for each nursing home participating in the Medicare and/or Medicaid programs.

These star ratings include a separate rating for each of the three components—health inspections, staffing, and quality measures—in addition to an overall rating.

Health inspection rating. CMS contracts with state survey agencies to conduct unannounced, on-site nursing home health inspections— known as surveys—to determine whether nursing homes meet federal quality standards. Every nursing home receiving Medicare or Medicaid payment must undergo a standard survey not less than once every 15 months, and the statewide average interval for these surveys must not exceed 12 months. State surveyors also conduct complaint investigations in response to allegations of quality problems. State surveyors may spend several days in the nursing home to assess whether the nursing home is in compliance with federal quality standards. If nursing homes are found to be out of compliance with any requirements, state surveyors issue deficiency citations that reflect the scope (number of residents affected) and severity (level of harm to residents) of the deficiency. The health inspection rating is a result of nursing home performance on surveys and complaint investigations.

Specifically, this star rating is based on the scope and severity of deficiencies from the last 3 years of routine surveys and complaint investigations. To calculate this rating, the most recent survey findings are weighted more heavily than those from the prior 2 years. A nursing home’s health inspection rating is relative to other nursing homes’ health inspection ratings in their state. This rating is updated for each nursing home when new survey data become available for that facility.

Staffing rating. Nursing homes self-report staffing hours for a 2-week period at the time of the routine survey. CMS converts the reported point-in-time staffing hours for nursing staff—registered nurses, licensed practical nurses, and certified nursing assistants—into measures that indicate the number of registered nurse and total nursing hours per resident per day.

This star rating is based on the reported registered nurse and total nursing staffing levels, adjusted for differences in the level of complexity of nursing services required to care for residents across nursing homes—referred to as resident acuity. The adjustment for resident acuity is done using data from a resident assessment tool called the Minimum Data Set (MDS), which nursing homes complete and periodically report to CMS. MDS collects information on residents’ health, physical functioning, mental status, and general well-being. Each nursing home’s staffing rating is assigned based on how its total nursing and registered nurse staffing levels compare to the distribution of staffing levels for freestanding facilities in the nation and staffing level thresholds identified by CMS. In addition, this rating is updated when new staffing data are collected at the time of the routine survey, generally every 12 months.

CMS measures resident acuity using the Resource Utilization Group (RUG)-III case mix system that uses resident assessment data routinely collected in MDS. This system classifies residents into 1 of 53 categories according to predicted resource needs, particularly the expected amount of staff time required to care for residents. In October 2010, CMS implemented a new version of MDS—MDS 3.0—and this will change the data used for the case mix system.

Quality measure rating. CMS uses data from MDS to calculate various quality measures for each nursing home. These measures include, for example, the prevalence of pressure sores and changes in residents’ mobility.

This star rating is based on 10 different quality measures. This rating is typically updated quarterly. Quality measure ratings are assigned to generally achieve the following distribution: the top 10 percent of nursing homes receive five stars, the bottom 20 percent receive one star, and the middle 70 percent of nursing homes receive two, three, or four stars, with equal proportions (23.33 percent) in each category. ratings since January 2011 to allow CMS to collect resident information from nursing homes using a new version of MDS and refine and test quality measures using this revised assessment tool.

However, CMS has not updated the quality measure The overall star rating is calculated using a process that combines the star ratings from the health inspection, staffing, and quality measure components. The overall rating is assigned based on the following steps: 1. Start with the number of stars for the health inspection rating. 2. Add one star if the staffing rating is four or five stars and also greater than the health inspection rating. Subtract one star if the staffing rating is one star. The rating cannot go above five stars or lower than one star.

Performance on the two activities of daily living-related measures is weighted 1.6667 times as high as the other measures. In addition, thresholds for the two activities of daily living quality measures are reset with each quarterly update of the quality measures data based on the state-specific distribution of these measures. Thresholds for the other quality measure ratings are fixed based on the national distribution of these measures on January 5, 2009.

3. Add one star if the quality measure rating is five stars. Subtract one star if the quality measure rating is one star. The rating cannot go above five stars or lower than one star.

See figure 1 for an example of how a nursing home’s overall rating is calculated. This rating is updated when any of the three component ratings change. For example, changes to the quality measure rating could change a nursing home’s overall rating.

See appendix II for additional information on the methodology for calculating nursing home ratings under the Five-Star System.

CMS Used Input from External Entities on the Development and Implementation of the Five-Star System, Which Included Three Key Methodological Decisions

CMS developed and implemented the Five-Star System largely during an 8-month period with input from long-term care stakeholders, its Five-Star System contractor, and members of a technical expert panel. CMS made numerous methodological decisions during the development of the Five- Star System, including three key methodological decisions that elicited the most discussion during development.

CMS Solicited Input from Long-term Care Stakeholders, a Contractor, and a Panel of Experts

CMS largely developed and implemented the Five-Star System during an 8-month period from April to December 2008, soliciting input from long- term care stakeholders, the Five-Star System contractor, and members of a technical expert panel. For example, after the Acting Administrator of CMS directed CMS officials to develop a rating system for nursing homes in late April 2008, CMS obtained comments about the planned rating system from long-term care stakeholders through an Open Door Forum in June 2008. CMS also reviewed and summarized comments it received via an email account set up specifically for comments regarding the planned rating system through late July. Concurrently, CMS developed the methodology to calculate nursing home ratings in collaboration with the Five-Star System contractor and members of a technical expert panel. CMS’s contractor established this panel, composed of nine members that the contractor and CMS identified as experts in long-term care and that included researchers and an industry representative, to help guide the development and implementation of the Five-Star System. CMS and its contractor convened five meetings with the technical expert panel between July and December 2008 to review and discuss analyses conducted by the Five-Star System contractor regarding various options for calculating the ratings. In November and December 2008, CMS hosted meetings with reporters and other government entities, including the HHS Administration on Aging, and hosted another Open Door Forum to discuss the impending implementation of the Five-Star System with stakeholders. In December 2008, CMS gave nursing home providers a preview of their ratings and, on December 18, 2008, CMS made the Five- Star System publicly available on the Nursing Home Compare website. (See fig. 2 for a timeline of CMS’s development and implementation of the Five-Star System.)

CMS made numerous methodological decisions during the development of the Five-Star System, including three key methodological decisions. We define key methodological decisions as those that at least six members of CMS’s technical expert panel recalled as eliciting the most intense review and discussion during the development of the Five-Star System. According to the panel experts, one key methodological decision was how to combine the component ratings to create an overall rating. The other two key methodological decisions pertain to how to create ratings that account for variation in the type of care provided across nursing homes. Specifically, the second key methodological decision the experts recalled was whether to exclude hospital-based nursing homes or set up separate ratings for hospital-based and freestanding nursing homes.experts recalled was whether the staffing rating should be based on nursing staffing levels that are adjusted to reflect resident acuity.

The third key methodological decision the

How to combine the component ratings to create an overall rating. One key methodological decision that CMS made was deciding how to best combine the health inspection, quality measure, and staffing component ratings to create an overall rating. Technical expert panel members told us that they discussed how much weight should be assigned to each component when combining the component ratings to calculate the overall rating. One technical expert panel member told us that, in the end, the members generally agreed to assign more weight to the health inspection and staffing components and less weight to the quality measure component, which reflects differences in the perceived validity and reliability of the data used to calculate these components. Consistent with the technical expert panel’s proposal, CMS decided to assign overall ratings to each nursing home by starting with the health inspection rating, then adding or subtracting stars if the nursing home’s staffing or quality measure rating was particularly high or low, with a minimum and maximum rating of one and five stars, respectively.

Whether to exclude hospital-based nursing homes or set up separate ratings for hospital-based and freestanding nursing homes. Another key methodological decision that CMS made was whether to exclude nursing homes that are hospital-based from the Five-Star System or to set up separate ratings for hospital-based and freestanding nursing homes. CMS’s Five-Star System contractor stated that hospital-based facilities may typically provide a different type of care than freestanding facilities. That is, hospital-based facilities may provide care to more acute residents who require more extensive services than freestanding facilities. However, one senior CMS official told us that some hospital-based and freestanding facilities may provide care to similar types of residents. While CMS considered creating separate ratings for hospital-based and freestanding nursing homes, CMS ultimately decided not to exclude hospital-based nursing homes or create a separate rating scale for hospital-based and freestanding nursing homes.

Whether staffing ratings should be based on nursing staffing levels that are adjusted to reflect resident acuity. A third key methodological decision that CMS made was whether the staffing rating that nursing homes receive should be based on reported staffing levels that are adjusted to account for resident acuity. For example, in a published article, two of the technical expert panel members and others argued that the appropriate level of nurse staffing may differ substantially in two nursing homes with identical numbers of staff, because of the differences in the amount of time needed to care for residents due to variation in resident acuity. However, panel members told us that they debated whether and the extent to which nursing staffing levels should be adjusted to reflect resident acuity due to concerns about the validity of existing adjustment approaches. Because CMS agreed that nursing home staffing levels should reflect the care needs of the facility’s residents, CMS decided to adjust staffing levels for differences in the expected amount of time required to care for residents and worked with the technical expert panel to select an adjustment method.

CMS Typically Considers Modifying the Five-Star System in Response to Stakeholders, after Routine Monitoring, and When New Data Sources Become Available

CMS generally considers modifying the Five-Star System in response to (1) methodological issues raised by stakeholders, (2) its routine monitoring of the system, and (3) the availability of new data sources. CMS officials explained that when a methodological issue is raised by long-term care stakeholders, they review the Five-Star System to determine whether modifications should be made. Officials further said that each issue raised does not always result in modifications to the Five- Star System, although some minor modifications have been made. For example, in September 2009, in response to input it received from long- term care stakeholders, CMS updated the methodology for calculating a nursing home’s health inspection rating. With the methodological change, the health inspection rating for a nursing home is no longer updated unless new survey data for that nursing home becomes available. Initially, because each nursing home’s health inspection rating is relative to the ratings of all nursing homes in the same state, the results of new surveys and rating changes for some nursing homes could have affected the ratings for other nursing homes in the state. Stakeholders had noted to CMS that the rating of an individual nursing home therefore could be changed even if that nursing home had not had a new survey. CMS made the methodological change to address this concern, while noting that this had happened to only a small percentage of nursing homes.

Some issues raised by stakeholders have not resulted in a modification of the Five-Star System. For example, one stakeholder raised a concern that surveys should have fixed thresholds instead of thresholds that are relative to—or based on—other nursing homes’ survey scores in the same state. CMS reviewed this concern with its Five-Star System contractor and found that fixed thresholds would likely present disadvantages to nursing homes because changes in survey policy could lead to changes in survey scores and result in significant changes for nursing homes’ health inspection ratings. CMS officials stated that using a relative distribution allows nursing homes’ ratings to remain more stable and, additionally, allows consumers to compare nursing homes within a state.

CMS also considers making modifications to the Five-Star System based on its periodic analysis of the system’s rating trends; however, to date, no modifications have been made based on these analyses. CMS’s Five- Star System contractor conducts this analysis and provides monthly reports to CMS as well as an annual report that describes changes over time in nursing homes’ ratings and trend information on the individual components of the system. intended to help CMS evaluate the Five-Star System and determine if modifications are needed. For example, CMS examined whether it should modify the health inspection component because some state survey agencies have begun using the Quality Indicator Survey to collect survey information. In 2010, as part of its analysis for one of its monthly reports, CMS examined whether the health inspection rating of facilities that were inspected using the Quality Indicator Survey differed from those that were inspected with the traditional, paper-based survey. No significant difference was found between the two approaches to conducting the survey and, as a result, CMS did not modify the Five-Star System.

Through this analysis, CMS has found that nursing homes’ star ratings have improved in the first 2 years since the Five-Star System has been implemented, but it is unclear if the results are due to more accurate reporting of the data or an actual improvement in quality. ratings of the Five-Star System based on new data available from MDS 3.0, an updated version of the resident assessment tool. CMS is examining how using data from MDS 3.0 to adjust staffing data to account for resident acuity will affect the staffing ratings of nursing homes. In addition, CMS is considering whether the availability of these new data should result in a modification to the manner in which the thresholds for the staffing component ratings are determined. CMS intends to complete any modifications to the staffing component rating based on the new data by April 2012. CMS is also currently refining and testing the nursing home quality measures using MDS 3.0 data and is considering options for modifying how the quality measure component rating for the Five-Star System will be calculated using these new data. CMS anticipates that the quality measure component of the Five-Star System will be modified at the end of calendar year 2012. Because of these changes, CMS has not updated the Five-Star System quality measure ratings for individual nursing homes since January 2011—the last time period for which data using the previous assessment tool were available.

Similarly, CMS is considering modifying the data it uses to calculate the nursing home staffing rating based on another new data source— electronic payroll data. Although CMS currently calculates this rating based on staffing data from a 2-week period of time, CMS plans to use payroll records of nursing homes to collect staffing data from nursing homes, once these data are available in the next 3 to 5 years. A CMS official told us that the agency has determined what type of data it wants to collect through nursing home payroll systems, such as data that will allow the calculation of nursing staff turnover in a nursing home, and is working with a private firm to develop the system to collect this information. Electronic payroll data have several strengths, including that they will allow CMS to collect data on several aspects of staffing that are not currently available, including the percentage of staff that are full time and the number of staff that provide direct patient care. In addition, because payroll data originate from employees and are used to pay their salaries, CMS officials stated that they have greater confidence in the accuracy of the data. According to one senior official, CMS does not expect to determine potential modifications to the nursing home staffing rating of the Five-Star System until it has experience collecting payroll data.

Although CMS Intends to Make Improvements, the Agency Has Not Ensured That Its Efforts Will Help Achieve the Goals of the Five-Star System

CMS has several planned efforts intended to improve the Five-Star System. However, CMS has not taken steps to ensure that these efforts will help CMS achieve its goals for the Five-Star System—to inform consumers and improve provider quality. Specifically, CMS has not established intermediate goals and measures—such as interim milestones and related timelines—to guide the implementation of these efforts. In addition, CMS has not established how any changes resulting from these efforts, if implemented, will support the goals of the Five-Star System.

CMS Has Identified Efforts Intended to Improve the Five-Star System, but Lacks Milestones and Timelines to Guide Implementation

CMS has awarded contracts for or begun discussions about several planned efforts it has identified to improve the Five-Star System. These plans include evaluating its usability, adding information on nursing home capability, revising the staffing component, and developing additional quality measures. Specifically, CMS’s planned efforts are:

To evaluate the usability of the Nursing Home Compare website, which includes the Five-Star System. CMS plans to conduct a multiphase evaluation of the usability of the Nursing Home Compare website, which includes the Five-Star System, including testing the website with consumers and surveying stakeholders. In an effort to integrate the website with CMS’s other “compare” websites, such as Hospital Compare and Home Health Compare, CMS is currently redesigning the website. As part of this redesign, CMS is changing the appearance of Nursing Home Compare to be similar to that of other compare websites. To inform this redesign, in December 2011, CMS tested proposed web page layouts for the revised website with a group of nine participants. However, according to a senior CMS official, this testing and evaluation have been limited in scope and depth due to time constraintsgathering information on the usability of the Nursing Home Compare website and Five-Star System. The official stated that CMS plans to conduct a more in-depth evaluation of the Nursing Home Compare website and the Five-Star System than any done to date—one that includes more detailed consumer testing, a survey of long-term care stakeholders, and a web-based pop-up survey. CMS’s Five-Star System contractor will assist with the more in-depth evaluation of the usability of the Nursing Home Compare website and the Five-Star System in fiscal year 2012. and are only the first step toward

To evaluate options to better distinguish among nursing homes’ various care capabilities. A senior CMS official stated that CMS is evaluating options for refining the Nursing Home Compare website and the Five-Star System to incorporate additional information about particular nursing home capabilities, such as whether a nursing home specializes in rehabilitative short-stay versus long-stay care. One option is to post information on particular capabilities, such as whether a nursing home has a rehabilitation or dementia support unit. Another option under review is the creation of a rating system that assigns ratings separately for nursing homes that primarily provide short-stay care and for those that primarily provide long-stay care. In fiscal year 2012, CMS’s Five-Star System contractor will develop options for additional information that might be collected regarding specific capabilities of nursing homes that would be useful to CMS or Nursing Home Compare and Five-Star System users.

To evaluate options to include other types of nursing home staff in the staffing component rating. A senior CMS official stated that CMS would like to include some non-nurse staff, such as therapy staff, in the staffing component of the Five-Star System.CMS must first evaluate the feasibility and options for including additional staff. Subject to this evaluation, CMS officials said they would like to include some non-nursing staff in the staffing component by January 2013. CMS already collects data from nursing homes on some non-nursing staff levels, including therapy staff, but does not currently use this information to calculate the staffing rating.

To develop more quality measures for the quality measure component rating. CMS is in the initial stages of identifying additional nursing home quality measures for use in the Five-Star System. CMS’s Five-Star System contractor has been tasked with identifying potential measures for use in the Five-Star System in fiscal years 2011 and 2012. A senior CMS official stated that identifying quality measures for the Five-Star System is an ongoing task under the contract and includes working with experts in the field of nursing home quality measure development, reviewing literature, and analyzing the results of potential quality measure data, such as data generated from MDS 3.0. In meetings with the technical expert panel, CMS and its contractor have solicited feedback from panel members on quality measures that would improve the Five-Star System.

Although CMS has several planned efforts intended to improve the Five- Star System, the agency has not established intermediate goals and measures—such as interim milestones and related timelines—that could be used to show progress or contribution towards implementing these efforts. Specifically, while CMS officials have given us broad estimates for when they anticipate some of these efforts to be undertaken, CMS does not have planning documents or strategies that outline specific milestones and timelines associated with implementing the agency’s planned efforts to improve the Five-Star System. We have found, in our prior work, that developing and using specific milestones and timelines to guide and gauge progress toward achieving an agency’s desired results is a leading practice for effective strategic planning and management. Particularly because much of the implementation is to be conducted by the Five-Star System contractor, the use of milestones and timelines to guide and gauge implementation is especially useful for helping to ensure that CMS has clear expectations for its contractor and a means for determining whether appropriate progress has been made in implementing these efforts.

CMS Has Not Established How Its Planned Efforts Will Help Achieve Goals

CMS has not established, through planning activities or resulting planning documents, how its planned efforts to improve the Five-Star System will help CMS achieve the goals of the system—to inform consumers and improve provider quality. As a result, CMS may not be identifying and prioritizing its efforts in a manner that best ensures that the goals are being achieved. We have found, in our prior work, that aligning activities, resources, and goals is a leading strategic planning practice that can help agencies to more efficiently and effectively achieve their goals.

CMS officials stated that the agency has no planning activities or resulting planning documents that link the Five-Star System’s goals with CMS’s efforts to improve the system and that establish priorities among the efforts, based on these goals. This lack of planning and priority setting may explain why CMS has taken limited steps to determine whether or to what extent the Five-Star System is achieving the primary goal of providing consumers with understandable and useful information on nursing home care. For example, consumer testing of the Five-Star System could provide information on the extent to which this goal is being achieved. According to AHRQ, consumer testing is a key practice for ensuring that health care quality information is publicly reported in a manner that is useful and understandable to consumers. However, CMS has gathered very limited information from consumers regarding the usefulness of the Five-Star Systemprioritized its efforts based on the goal of informing consumers. and it appears that CMS has not In addition, CMS has not set specific priorities among its planned efforts based on how to best achieve the secondary goal of the Five-Star System—to improve provider quality. For example, while public reporting itself can be an incentive for providers to improve quality, there may be other efforts that could help CMS to further accomplish this goal. Nursing home quality measures serve a number of purposes, including providing data to nursing homes to help with their own quality improvement efforts. In addition, making quality measure information available to consumers allows them to distinguish among nursing homes’ quality and provides an incentive for providers to improve their quality. Therefore, adding more individual quality measures to that rating component in the Five-Star System could potentially create even greater incentives as well as provide nursing homes with more data on how to improve the quality of their care. However, CMS has not explicitly prioritized this planned effort or others based on achievement of this secondary goal. This planning and prioritization is especially important for quality measures because quality measures can be costly and time intensive to develop, especially if new data need to be collected in order to create the measures.

CMS officials said that the agency has no planning activities or resulting planning documents related to the Five-Star System because there are too many intervening circumstances that make planning difficult. These include uncertainty about resources available for the Five-Star System due to competing resource needs within the agency, mandatory activities required by the Patient Protection and Affordable Care Act that take up staff time and effort, and other agency initiatives. However, CMS officials acknowledged that, as CMS’s budget is more constrained, the development of planning documents that prioritize its efforts intended to improve the Five-Star System will become increasingly important.

Conclusions

In an attempt to make information on nursing home quality easier for consumers to understand and use, and to help improve provider quality, CMS developed and implemented the Five-Star System in 8 months using information that was readily available. This was a significant step toward increasing the transparency of information important to consumers, but for CMS to sustain the Five-Star System over time, the agency will need to continue making a concerted effort. CMS has made some efforts to update the Five-Star System as it reviews the system’s underlying components to identify potential ways to improve the system over time. However, there can be significant challenges to ensuring that the Five-Star System remains useful and valid over time, especially when the components of that system continue to evolve. While CMS has identified efforts it intends to make to improve the Five-Star System, the agency has not strategically planned how to carry out these efforts, such as outlining the milestones and timelines that will help ensure that progress is being made. In addition, CMS has not clearly identified how each of its planned efforts will help achieve the goals of the Five-Star System. As a result, CMS may not know how it will prioritize and best leverage its available resources to implement these efforts and achieve the goals of the Five-Star System. Additionally, during this period of fiscal constraint, these strategic planning practices can help CMS to better anticipate and make resource allocation decisions that minimize the effect of funding constraints on accomplishing the goals of the Five-Star System.

Recommendations for Executive Action

In order to strengthen CMS’s efforts to improve the Five-Star System, we recommend that the Administrator of CMS use strategic planning practices to: establish—through planning documents—how its planned efforts will help CMS achieve the goals of the Five-Star System, and develop milestones and timelines for each of its planned efforts.

Agency Comments

We received written comments on a draft of this report from HHS on behalf of CMS, which are reprinted in appendix III. CMS agreed with our recommendations and submitted general comments on the draft.

Specifically, CMS agreed with our recommendation to establish—through planning documents—how its planned efforts will help CMS achieve the goals of the Five-Star System. CMS stated that it will work to develop a strategic plan for the Five-Star System that will address the short- and long-term goals for the system and the manner in which those goals will be achieved. CMS said that it would include a mechanism for receiving regular input from consumers and other stakeholders as part of a strategic plan. CMS also agreed with our recommendation to develop milestones and timelines for each of its planned efforts. CMS acknowledged the importance of both a strategic plan and the use of specific timelines and milestones for measuring progress toward meeting the goals of the Five-Star System and budgeting for the resources needed to meet those goals.

We are sending copies of this report to the Secretary of HHS and the Administrator of CMS and other interested parties. In addition, the report also will be available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff members have any questions about this report, please contact me at (202) 512-7114 or kohnl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.

Appendix I: Methodology for Identifying Key Methodological Decisions Made during Five- Star Quality Rating System Development

To identify the key methodological decisions made during the development of the Five-Star Quality Rating System (Five-Star System), defined as those that caused the most intense discussion and review according to at least six members of the Centers for Medicare & Medicaid Services’ (CMS) technical expert panel, we solicited the views of panel members through a series of interviews and questionnaires.

Specifically, we completed the following steps: 1. We interviewed each member of the technical expert panel using a structured interview set containing open-ended questions. During these interviews, we asked each member to provide their views on the top three methodological decisions that caused the most discussion and review during the development of the Five-Star System and to describe the differing views expressed by members of the panel on the methodological approach that CMS was considering. 2. We summarized the open-ended interview responses related to the views on the methodological decisions that caused the most discussion and review during the development of the Five-Star System. 3. We distributed a questionnaire to the members of the technical expert panel that outlined the methodological decisions identified during our interviews and asked each member to identify the six methodological decisions they recalled as eliciting the most intense review and discussion during the development of the Five-Star System. 4. We analyzed the responses to our questionnaire to identify the key methodological decisions—those that at least six members of CMS’s technical expert panel recalled as eliciting the most intense review and discussion during the development of the Five-Star System. Seven of nine technical expert panel members responded to our questionnaire. We made multiple unsuccessful attempts to obtain completed questionnaires from the remaining two members over a 4 week period. (See table 1.)

Appendix II: Overview of CMS’s Five-Star Quality Rating System Methodology

In the Five-Star System, nursing homes are assigned ratings for three components—health inspections, staffing, and quality measures—and an overall rating. These ratings range from one star to five stars, with more stars indicating higher quality.

Health Inspection Rating

Each nursing home is assigned a health inspection rating in comparison to other nursing homes in its state using a point system. These points are assigned based on the nursing home’s three most recent health inspections—known as a survey—results, including survey revisits and complaint surveys, over the past 3 years. Points are assigned based on the number, scope, and severity of a nursing home’s health deficiencies found during surveys, with deficiencies with greater scope and severity equating to more points. Therefore, a lower survey point total results in a better rating (see table 2). If multiple revisits are required to ensure that major deficiencies are corrected, additional points are added to the health inspection score (see table 3). Based on the totals received, the top 10 percent of nursing homes in a given state receive five stars, the bottom 20 percent receive one star, and the middle 70 percent of nursing homes receive two, three or four stars, with equal proportions (23.33 percent) in each category.

Each nursing home’s staffing rating is calculated based on the facility’s self-reported registered nurse (RN) and total nursing (sum of RN, licensed practical nurse, and certified nursing assistant) staffing levels for a 2-week period around the time a routine survey is conducted. Staffing levels are converted to hours per resident day and are adjusted to reflect varying levels of resident acuity. Each nursing home’s staffing rating is assigned based on how its total nursing and RN staffing levels compare to the distribution of staffing levels for freestanding facilities in the nation and staffing level thresholds identified by CMS. (See table 4.)

Each nursing home’s quality measure rating is calculated based on the nursing home’s performance over the three most recent quarters on 10 of 19 quality measures, including 7 long-stay and 3 short-stay measures. Two of the long-stay measures capture aspects of activities of daily living, which reflect nursing home residents’ ability to provide self- care. Performance on the two activities of daily living-related measures is weighted 1.6667 times as high as the other measures. This, according to CMS, reflects the greater importance of these measures to many nursing home residents and ensures that the two activities of daily living measures count for 40 percent of the overall weight of the long-stay measures. For the individual quality measures used to calculate this rating, nursing homes that have lower percentages are considered to have higher quality of care and, thus, receive more points. For example, for one of the quality measures used in the Five-Star System—the percentage of patients who were physically restrained—nursing homes with lower percentages of patients who were physically restrained are considered to have higher quality of care. As a result, those nursing homes receive more points towards their quality measure rating than facilities in which a higher percentage of residents are physically restrained. The points received for all quality measures are summed to create a total score for each facility with a higher point total equating to a better quality measure star rating. Quality measure ratings are then assigned to generally achieve the following distribution: the top 10 percent of nursing homes receive five stars, the bottom 20 percent receive one star, and the middle 70 percent of nursing homes receive two, three, or four stars, with equal proportions (23.33 percent) in each category.

Overall Rating

Each nursing home’s overall rating is based on its ratings for the three components—health inspections, staffing, and quality measures. From these three ratings, the overall rating is assigned based on the following steps: 1. Start with the number of stars for the health inspection rating. 2. Add one star if the staffing rating is four or five stars and also greater than the health inspection rating. Subtract one star if the staffing rating is one star. The rating cannot go above five stars or lower than one star. 3. Add one star if the quality measure rating is five stars. Subtract one star if the quality measure rating is one star. The rating cannot go above five stars or lower than one star.

If the health inspection rating is 1 star, then the overall rating cannot be upgraded by more than one star based on the staffing and quality measure ratings. In addition, if a nursing home is a Special Focus Facility that has not graduated, the maximum overall rating allowable is 3 stars.

Appendix III: Comments from the Department of Health and Human Services

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Karen Doran, Assistant Director; Danielle Bernstein; Deirdre Brown; Krister Friday; Giselle Hicks; Melanie Krause; Lisa Motley; and Jessica Smith made key contributions to this report.