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New Study Shows Nursing Homes May Be Inflating Their Rating

One of the most difficult decisions families have to face is deciding to put a loved one in a nursing home. They want to make sure they are placing their family member in a safe environment where they will receive the proper care they need.

Many of those families rely on a government rating system to determine which facilities are the best.  The Five-Star Quality Rating System employed by Centers for Medicare & Medicaid Services (CMS) is a source of information to help consumers make an informed decision when choosing a nursing home.  The Medicare Nursing Home Compare website features a quality rating system that gives each nursing home a rating of between 1 (much below average) and 5 stars (much above average). The nursing home is given a star rating in three areas, self-reported staffing, self-reported quality measures, and health inspections.  The facility is also given an overall star rating.

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A new study of California nursing homes (the nation’s largest system of nursing homes) discovered that some nursing homes have inflated their self-reporting to improve their score in the rating system.  The study was done by faculty at Florida Atlantic University and the University of Connecticut and published in the Production and Operations Management journal under the title “Winning at All Costs: Analysis of Inflation in Nursing Homes’ Rating System”The rating system was implemented in 2008 and this study used data from 2009 to 2013.

“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. In reality, many of them are not really providing five-star services.”

This is not the first study that has been released hoping to shine light on nursing homes gaming the rating system.  In 2014, the New York Times reported that numerous facilities were inflating their rating through their self-assessments.  “Many top-ranked nursing homes have been given a seal of approval that is based on incomplete information and that can seriously mislead consumers, investors and others about conditions at the homes.”

The biggest issue with this rating system is that the majority of it is based on self-assessments provided by the nursing homes without government verification.  The only independent review is the annual health inspections.  Nursing homes have a large financial incentive to inflate their rating.  Higher ratings lead to more residents which lead to more profits for the facility.