Why Getting an Extra CMS Star Can Boost a SNF’s Census

Consumers are using the Five-Star Quality Rating System to make decisions about skilled nursing care — and there could be a major financial incentive for providers to earn that extra star.

Adding a single star to a skilled nursing facility’s rating from the Centers for Medicare & Medicaid Services (CMS) boosts admissions in many cases, according to a new study in the American Journal of Health Economics.

The effect was largest for homes in the middle of the range: Four-star homes saw a 4.7% gain in admissions relative to three-star homes, while five-star homes had a 2.1% admissions increase over four-star homes.

“For a nursing home administrator, yes, you are better off getting a better rating,” corresponding author Marcelo Coca Perraillon told Skilled Nursing News. “That’s the unqualified answer.”

Perraillon, an assistant professor at the Colorado School of Public Health, and his colleagues used a variety of CMS data — including unpublished underlying data that the agency uses to calculate its star ratings — to perform the study. Focusing on the six-month period after CMS rolled out the five-star model in December 2008, the team sought to quantify the effects of a better rating on admissions, which Perraillon said had not yet been extensively studied.

In addition to quantitative data, Perraillon and his team also conducted qualitative interviews with nursing home administrators and staffers. That work helped generate one of the most surprising conclusions, at least to Perraillon: the fact that one-star nursing homes tend to care less about boosting their scores than higher-end facilities.

Those facilities tend to be in lower-income areas, where residents may not have the financial or social flexibility to make a choice.

“We don’t care too much about our ratings, because we don’t think our clients care about the ratings,” Perraillon said, characterizing staffers’ opinions at lower-rated facilities.

The numbers backed up this observation: For nursing homes at the lower end of the scale, there was no statistically significant correlation between adding a star and increasing census. Furthermore, those facilities tended to have a higher proportion of Medicaid recipients than Medicare or private-pay residents.

“Because Medicaid residents are generally less educated than private pay and Medicare residents, they may be less likely to access web-based quality ratings, and thus may be less likely to choose nursing homes of better quality,” the team wrote in the paper.

In addition, low-rated nursing homes are more likely to be part of a chain of homes, while the group of top-rated facilities has a higher concentration of hospital-based SNFs. For-profit homes also were more prevalent among the low-rated facilities, and the facilities with the best ratings had an overall lower proportion of black residents.

The results, Perraillon said, aren’t just useful for nursing home operators looking for a way to boost census; CMS should take heed as well.

“They should pay very careful attention to whether the quality ratings do affect the quality of care, because that means patients and their families are indeed using their ratings, which makes the ratings have more high stakes,” he said.

Written by Alex Spanko

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Alex Spanko
Assistant Editor at Aging Media Network
Alex covers the skilled nursing and reverse mortgage industries for Aging Media. Outside of work, he reads nonfiction, yells at Mets games from his couch, and enjoys pretty much any type of whiskey or scotch — often all at once.

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