Recent Study Found That Some Nursing Homes Are Gaming The System

An FAU study found that some nursing homes are gaming the system to improve their Medicare star ratings.

Jan. 17, 2018 – For families faced with the difficult decision of placing a loved one in a nursing home, a government rating system is often the only source of information to determine which facilities are the best. However, a new study of nursing homes in California, the nation’s largest system, by faculty at Florida Atlantic University and the University of Connecticut, found that some nursing homes inflate their self-assessment reporting to improve their score in the Five-Star Quality Rating System employed by Medicare to help consumers.

“We were able to empirically demonstrate that inflation does exist in the current system,” said Xu Han, assistant professor in the Department of Information Technology & Operations Management within FAU’s College of Business, who co-authored the study with Niam Yaraghi and Ram Gopal from UConn’s School of Business. “So many nursing homes have a five-star rating; they look like they’re luxury hotels, but it’s difficult to see through that and determine what kind of service they’re actually providing.”

The five-star rating system that Medicare uses to compare nursing homes is made up of three components: employing a base score from an objective, on-site inspection, along with two scores from information on staffing and quality reported by the facility. Patients, physicians and payers rely heavily on these overall ratings, which have climbed higher as self-reported scores have trended upward.

The study, recently published in the journal, Production and Operations Management, investigates whether these rating improvements reflect actual quality gains or unjustified ratings inflation. Among the study’s findings:

  • Nursing homes that have more to gain financially from higher ratings are more likely to improve their overall rating through self-reporting.
  • Little direct correlation exists between self-reported measures and on-site inspection results, either contemporaneously or over time.
  • The number of resident complaints is similar for nursing homes with the same inspection rating but varies noticeably between facilities with the same overall rating, which suggests inflation in self-reported measures.
  • At least 6 percent of the nursing homes inflate their self-reported measures, which include quality measures on patient health, as well as staffing numbers.

The study, which examined data from more than 1,200 nursing homes in California, provides systematic evidence that some nursing homes are inflating the self-reported measures in Medicare’s star rating system.

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