The CMS' star-rating system for hospitals launched last month attempts to boil down hospitals' performance through a five-star rating—an attempt to provide consumers with an overall flavor for their hospital's performance.
It's easy to understand why the CMS is trying to deliver a simplified value assessment for hospitals. As complex and important as healthcare choices can be, a comprehensive value-benchmarking system would be a powerful tool for consumers. However, the five-star system as launched underdelivers for consumers and imperils hospitals' journey to improve value for patients.
Evidence suggests that the system fails to recognize the influence of patient- and community-level factors on many of the measures included in the methodology. Research from the Missouri Hospital Association, quality measurement organizations and academia show that a patient's socio-demographic status and community context are powerful drivers of health outcome measures such as readmissions. The star-rating system fails to address this problem because the measures included in the aggregated data fail to include additional risk adjustment for socio-demographic factors.
Risk adjustment for health outcome measures is intended to provide meaningful comparisons of measured quality differences between hospitals that are attributable to characteristics of the hospitals, as opposed to differing characteristics of the patients for which they care, or random variation. Implementing a tool based on questionable risk adjustment will produce questionable results. Moreover, there's a risk that healthcare providers will allocate scarce quality improvement resources to address random variation, which is impossible to improve.
In the long term, the CMS will move toward a value-based payment system that rewards hospitals with higher star ratings. The shift for value-driven payment correlated with star ratings already is occurring in the Medicare Advantage program. However, in the Advantage program, the CMS has recognized the influence of patients of low socio-demographic status on outcomes. The CMS has yet to recognize the influence of socio-demographic status in hospital value-based purchasing and quality reporting programs.
To improve outcome measures for patients of low socio-demographic status and their communities, safety net hospitals need additional resources, not additional penalties. The star-rating system, built on measures with inadequate risk adjustment, doubles down on a system that already is unfair.
Hospitals should be rated on their performance, not on factors that are outside of their control. It's not surprising then that many of the nation's safety net hospitals—those that care for low-income patients who often don't have access to health insurance, a regular source of care, nutritious food or transportation for follow-up visits—suffer from a lower star rating.
Medicare is trying to create a rich reduction sauce for consumers. Unfortunately, they aren't following the right recipe. The question now is whether it is better to start over or compensate for the error. There's a chance that Congress will help them decide.
