Care Delivery

May 20, 2016

CMS Delays Rating System Release Due to Controversy

CMS postponed the release of the new overall quality star rating for U.S. hospitals one day before the scheduled April 21 release, bowing to pressure from lawmakers and industry stakeholders. The delay results from controversy about the ratings methodology used and the potential to mislead consumers.

In a notice to Congress following the decision, CMS said it would delay the release of the star ratings on its Hospital Compare website until July or possibly later if the methodology is still undergoing analysis or revision, National Public Radio (NPR) reported.

“CMS is committed to working with hospitals and associations to provide further guidance about star ratings,” the notice said. “After the star ratings go live in their first iteration, we will refine and improve the site as we work together and gain experience.”

Of the 3,600 U.S. hospitals reviewed earlier this year, only 87 received a five-star rating, according to American Hospital Association. Just over half fell within the three-star range and 142 got one star.

CMS Star Rating System Explained

The federal government has promoted ratings for hospitals, nursing homes, and other facilities to help healthcare consumers evaluate and pick providers.

“The new overall rating system takes into consideration 62 measurements related to inpatient and outpatient quality, many of which are technical and confusing to the average consumer,” said Laurie Leonard, director of consulting services at Schumacher Clinical Partners (SCP), remarking on the issue. “It boils down the complex series of quality metrics into star ratings, making it easier for healthcare consumers to understand.”

Star Rating System Problematic on Three Fronts

Three issues related to the rating system are cause for concern: the methodology used, lack of weighting or adjustment for specific patient populations, and future applications of the rating system.

Methodology Used to Determine Ratings

“The core underlying metrics are not what’s in question,” said Lisa Fry, chief business development officer, SCP. “It’s the formula being used to create the star rating clustering methodology.”

According to Fry, CMS uses a bell curve in its algorithm to determine ratings.

“That means that 70 percent of hospitals will be three-star, 14 percent will receive two stars, and another 14 percent will get four stars,” Fry said. “A small percentage will receive one- or five-star ratings.”

Fry added that hospitals are up in arms because those that have done well on a particular metric in the past might now receive a three-star rating.

“Even the Cleveland Clinic is getting three stars instead of five,” she said.

Lack of Weighting or Adjustment

This particular version of the rating system fails to take into account weighting or adjustment for sociodemographic differences in the patient population or their case mix (how ill a particular hospital’s patient population is).

“CMS typically applies some sort of weighting to reimbursement and other methodologies it uses to account for such factors,” Leonard said. “This one doesn’t, which is cause for concern because of how critical this star rating can be in the age of consumerism in health care.”

Other Ways CMS May Use the Methodology

“Many people are worried that this represents a slippery slope,” Fry said. “They’re concerned that CMS may use it to impact reimbursements, referrals, exemptions, and other critical areas.”

Key Constituents Express Concerns

In January, several hospital industry trade associations, including American Hospital Association, American Association of Medical Colleges, and others, sent a letter challenging CMS (PDF), arguing that many of the measures will not be relevant to patients seeking a particular service. The letter also stated that the program “oversimplifies the complexity of delivering high-quality care.”

The letter contained four recommendations:

Delay the release to allow time to understand the full impact;
Share the full star ratings with hospitals before the release;
Remove the PSI-90 composite measure and other quality measures from the methodology;
Adjust the star ratings for socio-demographic factors.

After hearing the hospital industry’s concerns, 60 senators and 225 members of the House of Representatives signed letters pushing CMS to delay release of the star ratings, according to NPR.

“We have heard from hospitals in our districts that they do not have the necessary data to replicate or evaluate CMS’s work to ensure that the methodology is accurate or fair,” the letter from the House members said. “We believe that additional time is necessary for hospitals and stakeholders to thoroughly review the data and understand the impact of the current methodology to ensure the validity and accuracy of the information before it is publicly released.”

Implications for Hospital Executives

Both Fry and Leonard agree that hospitals should stay informed about what’s taking place with the rating system and what factors affect it, and then work to improve their ratings.

“While you can do everything possible to make CMS delay the star rating, expect it to be published,” Fry said. “Your focus should be on what you’re going to do to improve your score. These metrics are updated quarterly, and you can impact them.”

“SCP helps hospitals deliver high-quality service. The alignment between our Emergency Medicine and Hospital Medicine Services can improve many of the factors contributing to the ratings, such as timeliness of care, patient experience, and others,” notes Leonard, “and our Consulting Services are proven to help providers improve clinically, financially and operationally.”

“Regardless of the ratings a hospital achieves, it’s vitally important to track performance,” Fry added. “We have the analytical and data-warehousing capabilities to report out to our clients and give them the data they need.”