What the five-star rating really tells us about skilled nursing facilities

Low scores don’t necessarily equate to a low-quality provider

By Miles Kingston, Lancaster Pollard

When the Centers for Medicare and Medicaid Services (CMS) announced substantial changes to its five-star rating system for nursing homes, the impact was immediate. Quality measures declined for two-thirds of the nation’s nursing facilities, placing them at a high risk of losing hospital referrals and new patients, and making it increasingly difficult to obtain the capital they will need to remain competitive going forward.

While the new measures were meant to strengthen the validity of the ratings by replacing self-reported data with live audits and patient surveys, the new measures are far from perfect. In fact, there are pitfalls within the rating system that could create a detrimental sway, moving a relatively high-performing facility to a three- or two-star rating with no true reduction in the quality of patient care.

It is well known that hospitals and consumers make choices based on the gold standard — the five-star rating system — when selecting a nursing home through Nursing Home Compare. Today, even capital providers are relying more heavily on the nursing home’s rating when making credit decisions. And while a high rating is an important quality assessment that nursing facilities must vigilantly work toward every day, numbers are not always black and white. A poor score does not necessarily reflect a low-quality nursing facility.

As such, as the old saying goes, “not everything that counts can be counted, and not everything that can be counted counts.” There are many components to the rating system, with drawbacks within each, and many ways to improve or augment a low rating. Having a comprehensive understanding of how a facility’s rating is derived will allow operators to articulate the full picture of their home and what improvements are being implemented for future progress.

Five-star rating defined

The five-star rating is composed of three parts:

  • Onsite health inspections or surveys by the state
  • Quality Measures derived from the minimum data set (MDS) assessment
  • Self-reported staffing levels

The facility star rating is based on a comparison to other facilities in the state. 

  • Five-star – top 10 percent
  • Four-star – next lower 23.33 percent
  • Three-star – next lower 23.33 percent
  • Two-star – next lower 23.33 percent
  • One-star – lowest 20 percent (those facilities with the worst inspections in the state)

Pitfalls within the rating

Heath Inspection Rating: The health inspection rating contains information from the last three years of onsite inspections, and includes both standard and complaint surveys. While the most recent surveys do carry more weight than the prior two years, the rating does not fully take into account special circumstances or new developments toward improvements.

For example, a disgruntled employee could file a single complaint that will become part of the rating for three years without considering that no other complaints have been filed. In addition, if a nursing home receives a poor inspection rating and is currently implementing new practices and is diligently trying to improve, these actions will not be fully reflected for three years.

As the nursing home carries the weight of these measures over three years, it is important to stay fully focused on its plan to continuously improve while at the same time being prepared to tell the story of the steps they are currently taking now to improve. Further, they must be able to quantify the progress made to date.

Staffing: The staffing rating does consider differences in the acuity level of resident’s care. A nursing home with high needs would require more nursing staff. The rating includes two sub measures:

  • Direct care registered nurse (RN) hours per resident day and total direct care staffing hours per resident
  • Case-mix adjusted for different levels of acuity across nursing homes

The key factor, which is not revealed in this measure, is the quality of staff. More staff does not necessarily mean better care. The staffing measure within the five-star rating gives us only one side of the story. When nursing homes discuss their staff levels, it’s important to go beyond the numbers and discuss the staff turnover rate, training, and skill. Highly trained staff are generally more productive and provide better care.

The Quality Measure: This rating covers results from 16 different physical and clinical measures. The measures include the use of antipsychotic medications, pressure ulcers, pain management and re-admissions.

What this measure is looking for is a picture of how well nursing homes are caring for their residents. But what it doesn’t include is the level of sickness of the patients within the nursing home.

Homes with a greater number of high-risk patients could end up performing poorly on the quality measures simply because those patients, by default, have a higher risk for ulcers, bed sores or needing more antipsychotic medications. In a positive example, one nursing home was able to improve its quality measure scores by asking residents about their pain levels after they administered medications, as opposed to the first thing in the morning.

Overall Five-Star Rating: Regardless of how well a nursing home performs, the facility’s rating will always be rated against all facilities within the state. Based on the formula, only 10 percent of nursing homes within the state will receive a five-star rating, 70 percent will be evenly ranked between two and four, while 20 percent will receive one star. A three-star property could actually be a high-performing facility that is ranked lower simply because of the scale of the rating system.

While the rating is re-calculated every 90 days, it’s important for nursing facilities to be ready to explain their ratings in terms of the data they have collected about patient care — data that is not always reflected in the rating system.

As the demand for long term care continues to increase, federal and state regulators will be under increasing pressure to ensure the quality of long-term care facilities remain high. The continued focus on quality of care will put additional reliance on the five-star rating system.

When a facility is focused on providing quality customer care and service, and treats its employees with respect, there will be fewer errors, fewer complaints and fewer liabilities. This all translates into higher operational performance, a better overall rating and an increased ability to obtain capital in order to maintain a high-quality facility.

The components within the current five-star system are designed to highlight the hot spots of potential weaknesses within care facilities and alert consumers, and financial institutions, where such weaknesses exist. A full understanding of how each component is calculated can help facilities make immediate and ongoing improvements to operations. This will not only improve the quality of care being provided, but will also improve the overall five-star rating.


Miles Kingston is a vice president with Lancaster Pollard in Philadelphia. He may be reached at [email protected].