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What Changes in Medicare’s Nursing Home Ratings Mean for Consumers

Jeff Anderson
By Jeff AndersonApril 27, 2015

In early 2015, Medicare rolled out changes to a rating system that changed the criteria for nursing home ratings. These changes were aimed to address potential weak spots in the ratings that had been pointed out by elder advocates. The changes, which raise standards on providers and improved methods of assessing them, should encourage consumers to have faith in Medicare’s rating system for nursing homes. But in the short-term, the sudden readjustment of ratings also has the potential to confuse consumers.

While these changes have generally been welcomed, both by elder advocates and within the senior living industry, the need for them serves as a reminder that there’s much more to selecting a nursing home than looking at Medicare’s ratings. Medicare’s nursing home ratings should be a part of a holistic evaluation of options that also includes families’ own perceptions of providers, reviews from other consumers, and input from knowing professionals.

Origin of Medicare’s Nursing Home Ratings

In 2008, a U.S. Senator from Oregon, Ron Wyden, opined that consumers have better access to information about household appliances than to nursing homes that provide rehabilitation and long-term care. The efforts of Senator Wyden and other policymakers led to legislation that created a ratings system for nursing homes.

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To make the ratings as easy for consumers to interpret as possible, a rating system scaled from one to five stars was used, much like the ratings you might find for hotels in a travel guide. This rating system gave birth to the “five star nursing home.”

Since 2008, nursing home ratings accessible through Medicare’s Nursing Home Compare website have been a staple resource for consumers who are researching skilled nursing care.

How Medicare Calculates Nursing Home Ratings

Medicare calculates ratings based on three categories of information:

1. Health Inspection Ratings

A key component of the ratings criteria is based on comprehensive inspections that evaluate nursing homes on about 180 different indicators. This component is based both on evaluations from both federal inspectors, and state inspectors.

2. Quality Measures

Providers are also scored on what are called “quality measures”, which are based on data about the health and care of residents. Quality measures track items such as the percent of residents with urinary tract infections, who have pressure ulcers or who are prescribed antipsychotic medication. There are 18 quality measures for skilled nursing facilities that provide long-term care, and five measures for rehab facilities.

3. Staffing Ratio

Medicare’s nursing home ratings are also based on staffing ratios — the number of residents for each staff member. Medicare looks at both the overall number of residents per staff member as well as the number of residents per trained nurses when assessing nursing home’s staffing ratios.

Changes to the Rating System

While consumers found this information helpful, the ratings system was not without its critics. The primary area of concern was the fact that much of the ratings were based on data it self-reported by the individual nursing homes, raising the possibility of rating manipulating by providers.

Another area of concern was that the standards were such that it was simply too easy to attain a high rating; in other words, that there were an inflated number of “five star nursing homes.”

Screenshot from Medicare.gov

In 2014 lawmakers addressed these concerns and overhauled the nursing home rating system with the passage of the “Improving Medicare Post Acute Care Transformation Act of 2014.” The bill was made law with President Obama’s signature in October 2014. The changes rolled out early this year, and include:

  • Higher standards for many quality measures
  • Changes to the algorithm for calculating staffing ratios, resulting in higher standards
  • Confirmation of staffing ratio data through nursing homes’ payroll software (to be fully implemented by 2016)
  • New quality measures (for example, prior to the 2015 update, the above mentioned monitoring of the dispensing of antipsychotic medications did not occur)
  • Expanded federal oversight of state inspectors
  • Increased quantity of federal inspections

The result, according to the New York Times, was that “ratings for nearly a third of the nation’s nursing homes dropped under the new rules.”

How the Changes Impact Consumers

In the long run, these changes should give consumers more faith in the value of Medicare’s nursing home ratings, but in the short-term there is the possibility to create confusion.

By raising the standards for quality measures, the star ratings for many nursing homes decreased. Consumers could inaccurately perceive this rating change as a decrease in quality rather than an increase in the strictness of the rating system.

Another fact worth noting is that while the quality measure standards are tougher, the ratings are still based on self-reported data. For this reason, consumers are wise to pay closest attention to the aspect of the ratings based on manual inspections.

Selecting a Nursing Home

It should go without saying that families should visit providers they are considering for their loved one before making a decision. We normally recommend that families view at least three options (although we recognize this is not always possible when scrambling to find care after a hospitalization). When families visit options, they should also know how to make the most of their visit, including what to look for and what questions to ask.

They should also factor in reviews of providers written by real families, such as are available at SeniorAdvisor.com.

Finally, families can also seek input on their decision from discharge specialists at hospitals, a primary care physician or geriatrician, a Senior Living Advisor, or other professional with special insight into the senior care options in the area.

Have these Medicare changes affected a nursing home near you? Share your stories with us in the comments below.

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