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Tuesday, 13 December, 2016

Healthy Debate: Medicare's Star Ratings System Fail

The Medicare hospital 5-star rating system suffers from multiple problems but most alarming is how it unfairly impacts larger hospitals and safety net hospitals, i.e., hospitals with a high disproportionate share percentage.  Larger and safety net hospitals see a higher proportion of patients who are at greater risk of quality problems.  The star ratings don’t take this into account.  As a result, smaller hospitals generally have higher star ratings. This exacerbates problems caused for large and safety net hospitals by the quality related penalties imposed on them while smaller hospitals tend to receive higher rewards/lower penalties. In addition, the star rating system uses an obtuse statistical technique (a latent variable model) to construct the seven category scores from sixty plus individual quality measures. This application of the latent variable model is conceptually unsound and results in some of the selected quality measures contributing virtually nothing to the final rating (e.g., clostridium difficile has a loading coefficient of 0.001) while others are given an unduly high weight (e.g., Complication/Patient Safety for Selected Indicators has a loading coefficient of 0.93 and abdominal CT use of contrast material with a loading coefficient of 0.69).  Criticism of this model is not new and has in fact been the topic of multiple articles in various academic journals.

In addition, the 5-star rating system sometimes sends a different message from that sent by the financial rewards and penalties for quality. Some 1-star hospitals (the lowest rating) receive quality rewards, while some 5-star hospitals receive financial penalties for their quality – a counter intuitive result.

For a full explanation of these issues and more detailed information on the analysis performed, read the analysis paper authored by J. Graham Atkinson, JKTG Foundation executive vice president for research and policy.

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