Are Nursing Homes Manipulating Federal Ratings to Increase Admissions and Profits?

A study of skilled nursing facility ratings combined with individual nursing home staff interviews found that long-term care facilities who improved their overall quality rating by just one star saw a jump in admissions.  The study, recently published in the American Journal of Health Economics and led by Assistant Professor Marcelo Coca Perraillon of the Colorado School of Public Health, found that the relationship between an admissions increase and the acquisition of a star was stronger for nursing homes that were already rated 3 or 4 stars out of the possible 5 according to the Centers for Medicare and Medicaid Services’ (CMS) rating system. Specifically, nursing homes who went from 3 stars to 4 stars saw a 4.7% admissions gain. Nursing homes who went from 4 stars to 5 stars saw a 2.1% admissions gain. The study team cautions that if nursing homes are aware of the correlation between gaining a star from CMS and an admissions increase, that this knowledge likely encourages middle-to-upper-ranked facilities to beef up the services and quality of care they provide in order to gain a better rating.

Through interviews with nursing homes staff, Professor Perraillon and his researchers found that nursing homes who were rated just one star seemed to care the least about boosting ratings, which Professor Perraillon theorizes is likely because they can get away with little to no improvement and still draw residents. Their analysis of star ratings revealed these one star facilities were more often than not in low income areas and had a higher level of Medicaid residents than private pay and Medicare residents.

Among the other conclusions made by Professor Perraillon and his team through their research:

  1. Medicaid recipients tend to be less educated and less likely to search online for nursing home ratings
  2. Low-rated nursing homes are more often than not a part of a chain and are for-profit facilities
  3. Higher rated skilled nursing facilities group is comprised of more hospital-based facilities than those that are lower rated
  4. Best rated facilities have fewer black residents

Professor Perraillon told Skilled Nursing News that CMS “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.”


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