Navigating health reform
How the Five-Star Quality Rating System Measures Quality in Senior Services
In 2008 the Centers for Medicare and Medicaid Services (CMS) implemented a tool to assist consumers in evaluating nursing homes. The Nursing Home Compare website was developed and updated by CMS to provide an overall rating to all Medicare and Medicaid certified nursing homes in the United States.
For further information, users should review the Five-Star Technical Users’ Guide or the MDS 3.0 Quality Measures User’s Manual. A new version of the second document with the new QM data and methodology was published in April 2016.
The Five-Star Quality Rating System was developed as an easy-to-understand rating system for consumers. In the years since its development, however, the data has been used by hospitals to determine referral sources, by nursing homes for peer comparison, and by managed care organizations to determine contract feasibility. State regulatory agencies have also found value in the information provided by the system.
The system is easy to understand once the ratings are assigned, but arriving at that rating is a complex process.
The composition of the rating system
Three separate domains contribute to the overall rating:
- Health inspection — Based on outcomes from state health inspections
- Staffing — Based on nursing home staffing levels
- Quality measures (QMs) — Based on minimum data set (MDS) and claims-based QMs
The star ratings are described below.
- Five-star — Quality much above average
- Four-star — Quality above average
- Three-star — Quality average
- Two-star — Quality below average
- One-star — Quality much below average
Star rating draws heavily on health inspection score
The foundation of a facility’s overall star rating is its health inspection score. All nursing homes that are Medicare/Medicaid certified must undergo an annual health inspection survey. This survey can begin as soon as nine months or as late as 15 months after the previous year’s survey was completed.
The survey is based on federal nursing home regulations as outlined in Appendix PP of the State Operations Manual. In addition to the federal guidelines, there are also state-specific regulations. A survey team will show up unannounced to perform an on-site review. If deficiencies are found during the survey process, they are graded on a scope and severity grid, as seen in Table 1 in CMS’s Technical Users’ Guide. The scope and severity grid has assigned point values which determine the star rating for the health inspection domain.
Following the annual health inspection survey, facilities receive the CMS 2567 Statement of Deficiencies and Plan of Correction. CMS uses the deficiency notes on the 2567 to assign point values according to the scope and severity grid, which provides a facility with its health inspection score. The score is calculated based on the three most recent surveys with 50 percent of the weighted score placed on most recent survey, 33.3 percent on the second most recent survey, and 16.7 percent on the third most recent survey. The score can be impacted in a few ways:
- Substantiated findings from a complaint investigation adversely impact the rating.
- If the survey team has to return to the facility after they have issued a deficiency statement to check on the correction of the deficiency, the star rating would be lowered.
- The resolution of an informal dispute resolution (IDR) or independent informal dispute resolution (IIDR) that resulted in a change to the scope and severity could improve the rating.
- The aging, or expiration, of complaint deficiencies (typically 36 months) would improve the rating.
To account for the varying differences among states, adjustments to the star rating are percentage based.
- The top 10 percent of facilities in each state receive five stars.
- The middle 70 percent of facilities receive a rating of two, three, or four stars with an equal number in each category.
- The bottom 20 percent of facilities receive a one-star rating.
Staffing domain linked to five-star rating
The CMS Staffing Study has clearly tied resident outcomes to staffing ratios in nursing homes. Because of this clear correlation, staffing ratios are a large component of the Five-Star Quality Rating. This domain has two separate measures.
- Total nursing hours per resident day — This is a combination of registered nurse (RN), licensed nurse, and nurse aid hours.
- RN hours per resident day — This can include the director of nursing, direct care RNs, and RNs with administrative duties.
The source document(s) for this information are:
- CMS 671 (Long-Term Care Facility Application for Medicare and Medicaid) — This form is used to collect nursing hours.
- CMS 672 (Resident Census and Condition of Residents) — This form is used to give a census count of residents in the facility and bed holds on the day the survey began.
The staffing domain measure is calculated by adding the two measures above and then adjusting the total for case mix based on the Resource Utilization Group (RUG) III categories and the data reported on form 672 from the day of the survey. This measure is then compared to the staffing cut points published monthly that determine what the facility’s staffing star rating will be.
Payroll Based Journal reporting (PBJ) is expected to be used to calculate the score for this domain starting in 2017, though this may be delayed. There has been much discussion and concern from the provider community about the past preparation practices for form 671 and the submission requirements for PBJ. The concerns have focused on the fact that the calculation of the two measures differs slightly: one reflects time spent throughout each quarter, while the other is a snapshot taken at one point in time.
The PBJ reporting regulation requires that agency and contract nursing staff data related to hours worked and paid are submitted daily using a unique ID for each employee or contractor. Under PBJ, hours spent in certain training cannot be counted as direct care hours, whereas the current process allows these hours to be recorded. Additionally, hours worked by exempt staff in excess of those they are paid for cannot be counted under the new PBJ regulations. As such, a significant number of hours that providers previously used in calculating their nurse staffing ratio may be excluded, causing it to drop below a previous staffing threshold.
Beyond these issues, CMS also has the right to audit the data submitted and can reduce the hours reported if the documentation does not clearly meet the PBJ requirements. Providers with variable staffing patterns or inaccurately reported hours for contract staff may also have weaker scores.
Providers will need to effectively monitor and manage their disparate data systems to adequately maintain their staffing domain rating.
Quality measures domain offers opportunities
QMs can be the most difficult domain to understand for non-clinicians. Historically, all QM data came directly from MDS coding, which was populated daily from licensed nurse and nurse aid documentation. Since the inception of the Five-Star Quality Rating System, this domain has undergone many changes. The most recent changes went into effect in July 2016, and introduced five new QMs used in the calculation of this domain, three of which come directly from Medicare claims. In addition to the new QMs, there have been adjustments to the rating methodology. Phase in of the new QM data began in July and will continue through January 2017, with the new measures weighted at 50 percent.
There are more QMs on Nursing Home Compare than are used on the overall calculation of this domain. The calculation is based on a subset of 13 MDS based QMs and three MDS/Medicare claims data measures. CMS chose these measures based on the following clinical data factors:
- Extent to which the facility practice may affect the measure
- Statistical performance
Calculating your score
To determine your overall score, begin with the Five-Star Rating score from your health inspection and follow the two steps below.
- Add one star if the staffing score is four or five stars AND greater than the health inspection rating. Subtract one star if your staffing ratio score is one star.
- Add one star if the QM rating is five-stars; subtract one star if your QM rating is one star
If the health inspection rating is one star, then the overall quality rating cannot be upgraded by more than one star based on the staffing and QM ratings. If the nursing home is a Special Focus Facility (SFF) that has not graduated out of the initiative, the maximum overall quality rating is three stars. A facility’s overall rating cannot be more than five-stars or less than one star.
Five-star rating tips
- Only nursing homes that participate in Medicare/Medicaid programs are rated in this system.
- Not every QM found on Nursing Home Compare is used in the QM domain calculation.
- PBJ is anticipated to be used in place of the current staffing methodology by late 2017 or early 2018.
- The quickest way to improve your overall five-star rating is through the QM domain.
- It can take up to three years after a bad survey to improve the health inspection domain.
- The staffing domain is currently updated annually with your health inspection survey.
- There are three QMs that come directly from Medicare Part A claims.
How we can help
It is now more important than ever to monitor accuracy and quality of documentation. Your organization should have a plan in place to monitor QMs, manage survey readiness, and adapt to PBJ. CLA can provide guidance in all areas of five-star quality, including:
- QM analysis, including guidance on a proactive approach to monitoring
- MDS data analysis and evaluation
- Staffing ratio accuracy and correct completion of CMS forms 671 and 672
- PBJ guidance and assistance
- Using a mock health inspection survey and developing a survey readiness plan
- Evaluating and implementing systems and processes
- Training and education for staff