You asked for information on the Centers for Medicare and Medicaid Services' (CMS) new five-star rating system for nursing homes.

In 1998, CMS implemented “Nursing Home Compare,” a national, online nursing home report card providing information on every Medicare and Medicaid certified nursing home in each state. In an attempt to make the website more user friendly, CMS added a new “five star” quality rating system on December 18, 2008. Each nursing home is rated on a scale of one to five stars based on three components: health inspection results, quality measures, and staffing levels. Each home also receives an overall quality rating. According to CMS, when the rating system was first implemented last December, 23% of nursing homes received an overall rating of one star while 12% received a five-star rating.

In 1998, CMS implemented “Nursing Home Compare,” a national, online nursing home report card. It provides information on every Medicare and Medicaid certified nursing home in each state, including inspection results, hours of direct care, and 19 quality measures for short- and long-term residents. The website allows individuals to search nursing homes by name, city, county, state, or zip code.

In an attempt to simplify the information found on Nursing Home Compare and make it more user-friendly, CMS implemented a new “five star” quality rating system on December 18, 2008. Its goal is to provide nursing home residents and their families with a mechanism to assess nursing home quality, enabling them to make distinctions between low and high performing nursing homes. Each nursing home is rated on a scale of one to five stars based on three components: health inspection results, quality measures, and staffing levels. Each home also receives an overall quality rating. Table 1 describes the five-star rating scale.

Nursing homes that receive a five star rating are considered to have above average quality compared to other nursing homes in that state. Conversely, homes with one star have a quality rating much below the state average. But, CMS notes that nursing homes receiving one star ratings are still certified and meet all minimum federal safety and health requirements.

In addition to receiving an overall quality rating, each nursing home is rated based on three components: health inspection results, quality measures, and staffing levels. Ratings are based on existing information already posted on the Nursing Home Compare online report card.

The health inspection rating considers the nursing home's inspection results over the last three years, including annual site visits and any complaint investigation findings. CMS chose to include this component in its rating system because it felt that the data provides a comprehensive quality assessment because it covers the home's administration, environment, food services, resident rights, and quality of life. The rating is weighted based on the number, scope, and severity of health inspection deficiencies. Nursing homes with more frequent, serious violations receive a lower rating than homes with less serious, isolated deficiencies.

The quality measure rating assesses resident outcomes to determine the quality of care residents receive in the nursing home. It is based on a subset of ten Minimum Data Set (MDS) clinical and physical measures currently posted on the Nursing Home Compare website. (CMS requires all Medicare- and Medicaid-certified nursing homes to complete MDS assessment forms on each resident.) The rating is based on the three most recent quarters of data reported to CMS by the nursing home. Table 2 lists the ten measures used in this rating.

This rating is based on the average number of direct care hours provided per resident per day. This includes care provided by registered nurses, licensed practical/licensed vocational nurses, and certified nurse assistants. The rating is case-mix adjusted using the Resource Utilization Groups, Version III classification system (RUGS-III) so that it accounts for differences in resident acuity. This means that a nursing home that has residents with more intensive care needs would be expected to have more direct care staff than a home with “lower need” residents. (CMS uses RUGS-III to classify nursing homes residents into Medicare payment groups based on their care needs.)

In order to calculate a nursing home's overall quality rating, CMS begins with the nursing home's health inspection rating and adds one star if the home received a staffing rating of four or five stars; one star is subtracted if the home received a staffing rating of one star. If the nursing home received a quality measure rating of five stars, another star is added to its overall rating; one star is subtracted if the home received a quality measure rating of one star. Table 3 provides examples of overall quality rating calculations.

A nursing home's overall quality rating is updated monthly. The three sub-ratings are reported and updated on different schedules. When the five-star rating system began on December 18, 2008, 23% of nursing homes received an overall rating of one star while 12% received a five-star rating.

CMS acknowledges certain limitations with its rating system and recommends that it not be used exclusively by consumers when choosing between nursing homes. One noted weakness with the health inspection rating is that is does not account for state variations in inspection processes, state licensing requirements, and state Medicaid programs that pay for the majority of nursing home care.

In addition, CMS notes the data used to calculate the staffing and quality measures ratings are self-reported by nursing homes rather than an independent agency and may be inaccurate. Staffing data is reported just once per year and only represents a two-week time period. Also, the quality measure rating is based on only 10 measures; they may not represent the quality measures of nursing home care that are important to a particular individual. The rating system also does not measure resident or family satisfaction with the nursing home care they receive in a particular home.

Centers for Medicare and Medicaid Services, “Five-Star Quality Rating System,” http://www.cms.hhs.gov/CertificationandComplianc/ 13_FSQRS.asp#TopOfPage, last visited on January 26, 2009.

Centers for Medicare and Medicaid Services, “Nursing Home Compare,” http://www.medicare.gov/NHCompare/Include/DataSection/ Questions/SearchCriteriaNEW.asp?version=default&browser=IE%7C7%7CWindows+Vista&language=English&defaultstatus=0&pagelist=Home&CookiesEnabledStatus=True, last visited on January 26, 2009.

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