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Understanding Medicare's 5-star rating hospital program

CMS star ratings for hospitals

​Were you surprised by your hospital's Medicare Star Rating? Learn more about how the ratings are calculated and what you can do to improve your score.

Changes in hospital ratings

​The US Centers for Medicare and Medicaid Services (CMS) released the first ratings list for the Medicare Overall Hospital Star Ratings Program on July 27, 2016. CMS developed the program to help consumers make more informed decisions by giving them a way to compare hospitals based on quality ratings.

After the initial ratings release, many hospitals sought to better understand how the Star Ratings Program works and determine how they could improve their scores. To shed light on these issues, the Deloitte Center for Health Solutions analyzed the 64 quality measures CMS used in July 2016 to compute the star ratings. Our analyses point to four key findings:

  • There are many ways to achieve a 5-star rating
  • Hospitals that earn a 5-star rating generally have better scores in the heavily weighted categories
  • Scores for individual outcome measures vary widely
  • Variation in caseloads and the ability to report some measures appear to be tied to performance

Hospital quality measurement is going to continue, as evidenced by CMS's continued commitment to improving the Star Ratings Program. The Hospital Star Ratings Program was designed to change over time. CMS has already made several updates to the program, dropping seven of the measures between the July and December 2016 reporting periods.

The Star Ratings Program is just one of CMS's initiatives to improve health care quality; hospitals also may be measured as accountable care organizations, through payment incentive programs, and by other payers using different sets of quality measures. Thus, hospitals may be best served by focusing on their own population needs and areas for improvement rather than having the Star Ratings Program drive their agenda.

Our finding that 5-star hospitals report fewer measures than 1-star hospitals, even when we controlled for hospital characteristics, could be a consideration for CMS as it looks to help lower performing hospitals and considers revisions to the Star Ratings Program's risk adjustment methodology.

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Strategies for hospitals and health systems

​As hospitals look to improve quality over time and—in the process—improve their star rating, they might consider the following:

  • Adopt a broad quality improvement strategy. Clear differences exist among hospitals and their ability to report on certain measures, but most of this is due to differences in caseloads—a factor over which hospitals have little control. As such, hospitals may do best to drive their quality strategy by optimizing patient outcomes and experiences, quality areas that CMS consistently weighs more heavily and that show the highest variation among hospitals. The focus could be on broad quality performance improvement rather than one specific quality measure. A multi-pronged approach may be required, as the methodology is based on comparisons to the rest of the pack and a moving target.
  • Invest in technology and analytics tools to support quality improvement goals. Understanding the main drivers behind a hospital’s performance in the areas of mortality, readmission, patient safety, and patient experience will likely be critical to improving quality broadly. Investing in tools that enable individual clinicians to understand their performance in these key areas may help hospitals improve quality overall.
  • Develop and promote a culture of quality improvement among individual clinicians. Individual clinicians drive the overall quality of services performed in a hospital. Thus, it’s important to help them understand that they’re a critical component of quality improvement. Leadership from the C-suite down to the clinicians at the bedside should communicate and promote a culture of quality. Hospital leadership should consider helping clinicians understand which areas need improvement and how they fit into the overall quality strategy.

The health care system is moving toward a model that bases payment upon outcomes and quality. As this happens, quality measurement will become even more important. CMS has championed the move toward value-based payment in developing its major quality performance programs.

The Star Ratings Program is yet another way for CMS to measure quality and make quality performance transparent to consumers. As the Star Ratings Program and other quality performance initiatives mature, hospitals should consider developing flexible and adaptive quality improvement strategies.

To learn more about what it takes to become a 5-star hospital, download our full report.

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