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Nursing Homes Game the Medicare Rating System

Published on Sep 4, 2014 at 8:00 am in Nursing Home Abuse.

When Medicare first introduced a five-star rating system for nursing homes in 2009, 37 percent of homes earned a four or five star rating. By 2013, nearly 50 percent were making those marks. Does this reflect an overall improvement in quality? Medicare officials will say the ratings process is designed to encourage homes to do better, but there’s evidence that some are doing better at rigging the ratings system.

An investigation by the New York Times revealed that two out of the three ratings criteria are self-reported by the nursing homes, so the homes have enormous ability to manipulate the data – and enormous incentive. Those ratings affect where doctors discharge patients from hospitals, and influence insurers deciding which homes to include in their networks. Consultants have even popped up to help homes improve their scores – a sure sign that nursing homes have figured out ways to game the system.

Manipulating the Data

More evidence that families should not rely solely on the ratings is the fact Medicare’s own ratings system conflicts with its list of poor quality homes. Up to two-thirds of nursing homes on a federal watch list for quality problems received a four or five star rating in the two categories that are self reported: staffing levels and quality indicators. Yet nearly all of those homes earned no better than one or two stars on the health inspection category – the only one scored by the state.

Adding on extra staff right before annual inspection time appears to be the simplest way that homes manipulate their scores. They get an extra star on their overall score if their staffing score comes in at a four or five. At one home the Times investigated, records showed that within days after the 2011 annual inspection, six full-time positions were eliminated and staff hours were reduced.

Quality reporting has also seen inflation in scores. In 2009, 11 percent of homes received a five star quality rating based on self-reported data. By 2013, that number had risen to 29 percent. Homes get an extra star on their overall rating if they earn a five in this category. It’s hard to believe that Medicare trusts homes to accurately report their own quality measures, such as the number of bed sores, etc.

An executive for the American Health Care Association, a national trade group, claimed that the increased ratings were proof the industry was improving and flatly denied that any manipulation was going on.

But the evidence is suspicious. The Times reported that one California chain, North American Healthcare, had repeatedly reported higher levels of staff – one time 23 percent higher — to Medicare than it did to the state MediCal program, which audits the data. The chain argues the disparity can be explained by differences in criteria, but even then the chain – which pays $50,000 bonuses to CEOs who get five star Medicare ratings – is ahead of the curve. The average California nursing home only reports staffing at 15 percent higher to the state than to Medicare.

Some patient advocate groups suggest that as the Medicare rating system currently operates, it is of little use but to weed out the truly bad homes. Medicare is working to improve the process and begin the audits that are required by the Affordable Care Act.