The Growing Importance of Nursing Home 5-Star Ratings and How They are Impacted by Survey Findings ( continued )
• Accountable Care Organizations ( ACOs ): Beginning in 2017 , CMS will allow waivers of the required 3-day hospital stay before Medicare will pay for skilled nursing facility ( SNF ) care for enrollees in certain Medicare ACOs . The waiver requires that patients go to nursing homes with at least 3-star ratings . An ACO is a network of providers that seeks to reduce the total cost of care and meet quality targets for an assigned population of patients .
• Medicare Episodic Payments : CMS also offers waivers of the required 3-day hospital stay for Medicare SNF coverage in certain “ bundled ” and episodic payment arrangements . To qualify for the waiver , the majority of the SNF partners in the arrangement must have a quality rating of at least 3 stars . These payment arrangements – some of which are mandatory – encourage hospitals , doctors , SNFs and other providers to coordinate and reduce the cost of care received by patients across an episode of care , such as heart bypass surgery or a hip replacement .
• Lenders and investors : The U . S . Department of Housing and Urban Development ( HUD ), an important nursing home lender , is now using star ratings as a component of its risk assessment . Several other lenders and institutional investors include 5-star ratings on their underwriting checklists .
In summary , nursing homes may not even be able to obtain sufficient referrals or receive Medicare and Medicaid funding in the future if they do not have at least a 3-star rating .
Survey Findings and 5-Star Ratings
Nursing homes certified by Medicare and / or Medicaid are required to meet over 180 regulatory standards intended to protect residents . The Health Inspections component of the 5-star rating is based on state inspection reports which provide information on nursing home deficiencies identified during annual surveys , including the number (“ scope ”) and severity of problems , revisits needed to document correction of deficiencies and actions taken by nursing homes to investigate complaints .
CMS gives greater weight to deficiencies that cause “ immediate jeopardy to resident health or safety ” when determining each nursing home ’ s score , particularly when the infractions are widespread and not isolated incidents . CMS totals the points for facility revisits and scope and severity for each of the previous three years . After applying weighting factors – with the current year counting the most and less weight applied to the prior two years ’ results – the Health inspections score is determined .
The Health Inspections score is the foundation for the 5-star rating , counting for over half of the overall rating .
To reflect variation among states in survey findings , the Health Inspections score reflects the ranked performance of facilities in each state . Accordingly , 5-star ratings are given to nursing homes scoring in the top 10 percent , and 1-star ratings are assigned to the 20 percent that scored the lowest . The remaining 70 percent of facilities are evenly assigned 2 , 3 , and 4 stars . The Health Inspections score is the foundation for the 5-star rating , counting for over half of the overall rating . To arrive at the overall 5-star rating , the Health Inspections rating is adjusted upward for a 4 or 5-star Staffing rating or a 5-star QM rating , or downward for a 1-star rating in either Staffing or QMs .
To summarize , survey inspection results can have a major effect on a nursing home ’ s 5-star rating . Whether a facility receives a high-level deficiency for an isolated incident or accumulates several low-level deficiencies in a survey , the resulting effect on the 5-star rating can have a profound effect on the facility ’ s referrals , business relationships and finances for up to three years .
For more information about the impact 5-Star Ratings can have on nursing homes , contact LeadingAge New York at 518.867.8383 .
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