Navigating health reform
New CMS Nursing Home Star Ratings Have Surprising Impact
CMS’s updates to the Five-Star Quality Rating System methodology took effect on April 1, 2019. These changes are reflected in our article Nursing Homes Star Ratings Significantly Impacted by New CMS Updates.
When the Centers for Medicare and Medicaid Services (CMS) announced it would update the Five-Star Quality Rating System methodology beginning April 1, it may have gone largely under the radar. However, the changes could have a bigger impact than originally thought.
The update reflects the agency’s continued push towards value across the health care continuum, with a key change made to the staffing domain regarding the number of days without a registered nurse (RN) on site. The current requirement, which began in 2018, uses Payroll Journal Reporting (PBJ) for a more accurate look at facility staffing. Currently, a facility with no RN on site for seven days or more receives an automatic downgrade to one star in the staffing domain rating. Beginning April 1, this requirement is reduced from seven to four days.
To account for this change, facilities will need to re-examine RN staffing models. Not doing so may drop star ratings and introduce other long-term market obstacles such as inability to access sufficient capital, decreasing volumes, and declining margins.
Nearly 800 more nursing homes will receive one-star staffing rating
To measure the potential impact of the revised staffing methodology and its overall impact, CLA performed an analysis using the most recently released PBJ staffing data, nursing home compare data, and the CLA Clarity model. The analysis shows a swing of almost 800 nursing homes that would automatically receive a one-star staffing rating due to missing RN days.
Of these facilities, 113 are already one star overall. Another 165 will have their staffing ratings offset by other domains, so their overall rating will not drop. This leaves roughly 500 facilities whose overall star rating will drop at least one star. Of those 500, 130 would drop by two stars and 219 will drop below a three-star rating.
Low star ratings could result in reduced operating metrics
The analysis shows strong correlations between CMS Five-Star Rating and key performance indicators, such as occupancy and Medicare volumes.
Having a one-star rating publicly posted on Nursing Home Compare for staffing levels may result in consumers or referral sources bypassing a facility in favor of one with higher star ratings in this domain.
Lower star ratings also have the potential to limit full participation in value-based models. New staffing domain changes could lead to a facility’s overall star rating falling below three stars at a time when a three-star rating continues to grow in importance under Medicare.
For example, only nursing homes with a three-star rating or above are eligible for a waiver of Medicare’s three-day inpatient hospital stay requirement under Medicare’s Accountable Care Organizations (ACOs). According to CMS data for 2018, 10 million Medicare beneficiaries are in ACOs. There are similar waiver requirements under other CMS bundled payment models.
Obviously, low star ratings are suboptimal for a variety of reasons, but one item worthy of note is that low ratings may preclude these entities from fully participating in value-based models. All providers, including nursing homes, unable to demonstrate what CMS believes are minimum levels of quality or cost efficiency will be increasingly marginalized in health care’s transition to value.
Rob Schile, Principal, CLA
Additional star rating changes for April 1
In addition to the staffing measure changes, CMS also makes the following star ratings changes:
- Ending the freeze on health inspection star ratings and resuming the traditional method of calculating these scores by using three cycles of inspections. Inspections occurring on or after November 28, 2017, will be included in each facility’s star rating. Additionally, in a separate memorandum, CMS provided new guidance to state surveyors on “immediate jeopardy” findings. While the guidance goes beyond nursing homes to cover all Medicare and Medicaid entities, it is still a component of the star quality ratings.
- Under the quality measure (QM) domain, CMS will use a separate measure rating for short or long stays to reflect the level of quality provided for these two subpopulations in nursing homes. Thresholds for ratings will be updated every six months, as well as weighting and scoring individual QMs differently. CMS is also adding a long-stay hospitalization measure and a long-stay emergency department (ED) transfer measure to the rating system, among several other measures changes.
“The time is now for nursing homes to dig deep into changes occurring in the market and in Medicare, including new star ratings methodology and the forthcoming transition to the Patient-Driven Payment Model,” said Cory Rutledge, senior living leader with CLA.
How we can help
CLA is on top of the financial and regulatory changes impacting health care providers, as well as analyzing new innovations and disruptions like the new four-day RN rule. Our senior living professionals can help you model the financial impacts of changing star ratings, as well as manage, monitor, and submit your quarterly PBJ filings.