Some California Nursing Homes Inflated Star Ratings

The Centers for Medicare & Medicaid Services (CMS) has made improvements to its Five-Star Quality Rating System after questions about self-inflation, and a new study provides more evidence for why the changes were necessary.

The study, by University of Connecticut professors Niam Yaraghi and Ram Gopal and Xu Han of Florida Atlantic University, examined 1,200 California nursing homes between 2009 and 2013. They found that at least 6% of those facilities inflated their self-reported measures for quality and staffing.

The true extent of the inflation, however, could be even broader.


“There is nothing particular in California that would lead nursing homes to do this behavior only in California,” Yaraghi told Skilled Nursing News.

Because the study covered such a large number of nursing homes and was not confined to a particular part of the state, he believes the findings of inflation are a good representation of what is happening in the rest of the U.S.

The study was published online on Nov. 20 in the journal Production and Operations Management, and was funded by The National Institute for Health Care Management Foundation. The findings were also covered in a December 2016 report released by the Brookings Institution, a nonpartisan Washington, D.C. think tank.


The data included information on facility finances, resident complaints, the facilities’ star ratings, and other information from Medicare files. The researchers used the financial data and ratings to calculate the average daily profit per resident for each star rating level. They also used same-year correlations between inspection and self-reported ratings to pinpoint the degree of internal consistency.

Other key conclusions of the study included:

—Little direct connection exists between on-site inspection scores and self-reported measures.

—The inflation of self-reported measures usually occurred with larger, for-profit facilities that could gain the most financially by boosting their scores.

Fixes falling short?

In response to reports of widespread inaccuracies in the Five-Star Quality Care Ratings System, the Obama administration instituted several plans to beef up the program in 2014. The former president also signed the IMPACT Act, which set into motion a multi-year scheme to create standardized data collection processes among long-term care facilities. CMS just this week announced the second phase of beta testing under the IMPACT Act, with a tentative implementation date of fiscal year 2020.

But these measures are inadequate, Yaraghi said.

“They are a Band-Aid on a bullet wound,” he told SNN.

The problem is that due to a lack of auditing or penalties for gaming the star system, a nursing home manager with bad intentions has every motivation to exaggerate the self-reported measures of staffing and quality, Yaraghi said.

He outlined two strategies that could address some of the problems.

“The very first thing is to have an audit system,” Yaraghi explained. “The nursing home rating system is like a tax system without an IRS audit.”

Some steps toward instituting an auditing system for the accuracy of quality measures were put in place with the Obama administration’s improvements in 2014. But the issue of the CMS depending on self-reported measures remains.

The use of payroll data rather than self-reported staffing numbers—one of the 2014 reforms—eliminates one of the issues, Yaraghi said.

Meanwhile, the rise of the Internet of Things could be harnessed for quality measures, he added.

“We could potentially use a host of different sensors to… automatically report many of or almost all of the measures in the quality measure domain,” he explained. “And if we have those sensors, we do not need the nursing homes to manually record and then report them.”

Using that technology would lead to debate over whether CMS or the nursing home should pay for it, but since both a nursing home and CMS could see benefits from such tools, Yaraghi thinks it shouldn’t be out of the question for both to chip in.

After all, he noted, there’s more at stake than accounting.

“The problem is that behind all of these numbers and all of these figures there are actual real human beings—that are our loved ones,” he said. “We ourselves in future are very likely to be in their position, and these people unfortunately most of the time don’t have a voice.”

Written by Maggie Flynn

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