Nursing Home Star Rating Reform Must Put Residents First — and Fight Unintended Incentives

The passage of the Social Security Act in 1935 was a landmark moment in the history of aging in America, but it also created a novel problem for the federal government: how to keep track of payroll information for the millions of workers who would now be paying into the new retirement insurance program, and one day drawing on the benefits they’d earned.

The solution was the Social Security number, a nine-digit identifier unique to each American worker. When it was first developed, that was the SSN’s only intended task; in fact, from 1946 to 1972, each Social Security card bore the bold warning “FOR SOCIAL SECURITY PURPOSES — NOT FOR IDENTIFICATION.”

Of course, that warning was never seriously heeded. Over the years, the humble SSN became a de facto government ID for a host of institutions, from banks to mortgage lenders to utility companies to landlords. As a high school senior in the mid-2000s, I was even told to put my name, date of birth, and SSN in the header of every page of my college essays to make sure there were no ID mix-ups.


The public servants who developed the SSN in the mid-1930s didn’t know that they were creating solutions to a wider problem than tracking government benefits. In a decentralized country like the U.S., especially in the days before electronic records, proving that a person really was who they said they were was a huge challenge — until Washington conveniently assigned everyone a nine-digit code that no other living person in the country could have.

Like the proverbial butterfly’s wings causing a hurricane on another continent, the Social Security Act laid the groundwork for a new, more dignified kind of aging in America — along with a future in which the wrong people can torch a person’s financial life just by learning the correct sequence of nine numbers.

The evolution of the SSN shows that even the best-designed system can beget consequences both predictable and completely unforeseen. The federal government’s five-star rating system for nursing homes is another perfect example.


The New York Times this past weekend published a deep dive into the ways the Centers for Medicare & Medicaid Services (CMS) measures nursing home performance, and none of the conclusions should shock people who follow or work in post-acute and long-term care.

Terrible situations, including abuse and neglect, can and do occur in high-ranked facilities. Self-reported staffing data was often inaccurate and inflated. Operators frequently seem to know when inspections might be coming, with temporary staffing boosts deployed at just the right time.

The five-star system, like many other attempts at improving nursing home care and transparency, was launched with good intentions. Picking a long-term care facility for a loved one is an important and difficult decision, and what better way to show comparative quality than stars — the same way we review restaurants or movies?

But the stars are public, meaning that it’s not just residents and their families who can see the ratings. Plenty of stakeholders can figure out alternate uses for a simple surface-level quality metric.

Over the years, hospitals realized that the star ratings could guide their decisions on where to direct their patients for post-acute stays. Managed care plans discovered that they could build preferred provider networks, with a certain number of stars serving as a requirement for entry. Investors found that the star ratings could serve as an integral part of their valuation calculus, with a stable five-star building commanding a larger price tag than a one-star facility that might require significant capital and clinical improvements.

It doesn’t matter, as a CMS spokesperson told the Times, that the five-star system is supposed to be one part of the decision-making process for residents and their families. Imbued with all of these new meanings, the star ratings went from a handy consumer guide to a five-point scale that could make or break a building’s finances. When each extra star brings concrete benefits to investors and operators, it’s naive to assume that some industry actors, if left to their own devices, won’t find ways to secure them however they can.

To be extremely clear: Gaming a federal quality rating system to cover up gaps in care for vulnerable elderly Americans is wrong. But any attempts to fix the problem need to account for the fact that even the simplest solutions can have a range of meanings to people outside of the intended audience.

And what about that intended audience — residents and their families? The five-star system routinely fails them, too.

Back in 2018, the United Hospital Fund identified a host of information that people can’t immediately verify about the nursing home options available to them, such as hospital affiliation, visiting hours, and the professionalism of the staff. The basic questions that anyone would ask about a facility designed to care for their parents — how’s the food? can Mom get a private room? is there a chaplain who performs religious services for Dad? — have no clear answers when a facility’s performance is boiled down to five stars.

“I am committed to quality measurements, absolutely, in terms of a driver of improving patient safety and the delivery of health care services, on the one hand,” Lynn Rogut, director of quality measurement and care transformation at the United Hospital Fund, told SNN at the time. “And on the other hand, I totally believe that that information is not all that useful to consumers when they’re making health care decisions. These are decisions about the care they want to receive, or decisions about the providers they want to receive it from.”

Solutions often are presented as us-versus-them. Resident advocates say the rules on the books aren’t enforced and fines are too low, and that allowing input from operators on improvements is tantamount to collaboration with a foreign enemy; the industry, meanwhile, predictably erupted in anger when CMS rolled out a warning icon for facilities with recent histories of abuse in the fall of 2019.

The discourse is related to the age-old debate around the nursing home survey process. Advocates argue that enforcement is too lax and fines aren’t high enough; industry leaders say surveys don’t measure the metrics that truly matter to care, that the system encourages inspectors to find as many faults as possible, and that inspection reports are too often based on individual surveyors’ preferences and biases.

All the while, potential residents and their family members remain in the dark about what really matters to them.

As I’ve argued about the current incentives baked into the reimbursement system, just about everyone with an opinion on survey and quality ratings is correct. Clearly the current punishments don’t work to improve infection control and staffing; clearly there’s little public information about the quality-of-life metrics that actually matter to people; clearly operators have many non-care-related incentives to boost star ratings.

The Times investigation comes at a crucial moment for nursing home reform in the United States. COVID-19 cases have sharply declined amid the ongoing vaccine rollout, and for the first time in a terrible year, both operators and policymakers are poised to look ahead to change instead of managing day-to-day crises.

In fact, just a few days after the Times report, California attorney general Xavier Becerra — who will soon lead the federal Department of Health and Human Services (HHS) — led a lawsuit against Brookdale Senior Living (NYSE: BKD), alleging that the operator falsified staffing records in order to inflate star ratings at 10 skilled nursing facilities.

There are several relatively simple fixes to the current system: As with the Payroll-Based Journal (PBJ) program, which replaced self-reported staffing data within the star system in 2018, CMS could require nursing homes to submit data that officials can more easily verify, or subject reports to more regular audits.

CMS can include information about nurse turnover and tenure as well as staffing hours, as both researchers and the HHS Office of the Inspector General (OIG) have recommended. CMS could also develop a series of qualitative metrics, based on consumer and family input, to include alongside the more technical data on staffing and quality.

But if there’s a wider lesson to take away from the last year in long-term care, it’s the story of the Social Security number. A simple solution can create much bigger problems years or even decades from now, and any attempt to put a single number on nursing home quality will just invite more creative — and potentially harmful — ways of bending reality to maximize the rankings.

Both industry leaders and regulators have the power to find real solutions that benefit residents. If we start with what matters most to them, the future of nursing home quality ratings will be harder to exploit.