CRE Backs Reform Process of CMS Hospital Star Ratings System

By Jacqueline DiChiara on August 07, 2015

As the Hospital Quality Star Ratings system released by the Center for Medicare & Medicaid Services (CMS) merely too problematic to be effective? According to the Center for Regulatory Effectiveness (CRE), the program’s overall design has many flaws that require ironing out – specifically transparency gaps, lack of adherence to notice-and-comment rule-making procedures, and vaguely presented burden costs. Although CMS confirms the ratings offer a series of benefits, such as for home health agencies, mixed reviews across the healthcare industry are buzzing.

As reported, CRE has been in communication with both Andy Slavitt, CMS’s Acting Administrator, and Patrick H. Conway, MD, MSc, CMS’s Acting Principal Deputy Administrator for Innovation and Quality, about recommendations the organization should adapt to ensure the star ratings’ excellence is actively maintained. As of this writing, CMS has yet to respond to CRE’s recommendations.

To acquire a deeper perspective regarding the CRE’s perspective about the best next steps for CMS to consider and implement, spoke with Bruce Levinson, CRE’s Senior Vice President of Regulatory Intervention.

“I'm very much supportive of the Star ratings. It is an ideal type of regulation in the sense that it's a market-based alternative to command and control regulation,” says Levinson.

Nonetheless, huge pitfalls will manifest themselves if the healthcare industry is not careful, Levinson maintains. For example, doctors’ ratings may be incentivizing cardiologists to avoid difficult cases and to not practice the best medicine, he says. A doctor who takes on more challenging cases can get lower ratings if a mortality rating shoots up because case difficulty wasn’t taken into account, Levinson explains.

Regarding Medicare ratings that involve patient surveys, Levinson says physicians and nurses may be communicating differently with patients to maintain high patient satisfaction survey results. Doctors – mostly employees of large corporations – may be less likely to speak with patients about lifestyle factors, such as weight management, alcohol consumption, sodium intake, etc. because they do not want a low patient rating, adds Levinson.

“If a doctor's saying, ‘I get rated internally and if a patient gives me a bad rating, that makes me look bad – I'm going to soft-pedal it,' why take the grief of having a patient potentially yell for trying to save their life?" he explains. “A rating system that encourages doctors to soft-pedal health information to patients is comparable to an education evaluation system that discourages teachers from challenging students. Both avoid consumer friction but at a long-term cost to professional integrity and social responsibility.”

Indeed, the biggest red flag in terms of process is the lack of notice and comment rule-making through the Federal Register which is a mandatory administrative process, says Levinson.

“Now that CMS is using the star ratings for things like bonuses and eligibility, the Medicare Act requires that CMS go through a notice and comment rule-making because the ratings affect payments. Not doing that is CMS’s single biggest problem,” he says. “They are going to have to comply with the laws which provide for meaningful public participation in the process of developing the ratings.”

Says Levinson, “There are two administrative process laws that should be governing the ratings programs, the Paperwork Reduction Act which sets utility and other quality requirement on CMS’s collection and use of data and the Data Quality Act which sets quality requirements on the CMS’s dissemination of data, such as the ratings.”

Levinson says CMS’s adherence to federal information quality processes – including peer review requirements – is incredibly important. "In one of their Technical Notes on star ratings, CMS says they go through a clustering algorithm to analyze certain data. They say they’re using SAS, a standard statistical package, and setting these parameters,” Levinson maintains. “What we don't know is what other ways could those parameters be set? What other ways are there to approach the data that might produce very different results? This is why we need independent peer review, as spelled out in the Office of Management and Budget’s Peer Review Bulletin.”

There is a tangible difference between a three-star and four-star rating, he says. Also tangible is Levinson’s dual concern that medical facilities will optimize according to erroneous factors and patients will then incorrectly use such information to make poor healthcare decisions.

“The single outcome I'm worried about is worse health outcomes,” he states. “The star ratings can lead to better outcomes as consumers and healthcare providers chase each other up the quality scale. But if we have poor incentives, inadvertently there will be negative outcomes through the best of intentions.”

Levinson confirms a topical approach to CMS’s star ratings may prove problematic. Perhaps a new focus upon a larger healthcare picture is the best approach, stresses Levinson, confirming his advocacy for strict regulations to prevent infections. Instead of questioning patients, perhaps hospitals and healthcare providers can connect ratings to more important issues, such as a reduction in infections or a clean hospital room.

“If the rating system process isn’t reformed, what's next potentially is a formal data-quality complaint from CRE. We're not at that point yet, but that is certainly a possibility,” he maintains. “The next steps are to be decided.”

Levinson concludes with strong support for the “wonderful” spotlight places upon this topic to advance and improve the healthcare industry via the promotion of a sharing of communicative voices across the industry.

Tagged Physician Revenue Cycle, Medicare and Medicaid Services, CMS Star Rating