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Nursing Home 5-Star Rating System Exacerbates Disparities In Quality By Payer Source

Author: R. Tamara Konetzka, David C. Grabowski, Marcelo Coca Perraillon, Rachel M. Werner
$15.00

Market-based reforms in health care, such as public reporting of quality, may inadvertently exacerbate disparities. We examined how the Centers for Medicare and Medicare Services’ five-star rating system for nursing homes has affected residents who are dually enrolled in Medicare and Medicaid (“dual eligibles”), a particularly vulnerable and disadvantaged population. Specifically, we assessed the extent to which dual eligibles and non–dual eligibles avoided the lowest-rated nursing homes and chose the highest-rated homes once the five-star rating system began, in late 2008. We found that both populations resided in better-quality homes over time but that by 2010 the increased likelihood of choosing the highest-rated homes was substantially smaller for dual eligibles than for non–dual eligibles. Thus, the gap in quality, as measured by a nursing home’s star rating, grew over time. Furthermore, we found that the benefit of the five-star system to dual eligibles was largely due to providers’ improving their ratings, not to consumers’ choosing different providers. We present evidence suggesting that supply constraints play a role in limiting dual eligibles’ responses to quality ratings, since high-quality providers tend to be located close to relatively affluent areas. Increases in Medicaid payment rates for nursing home services may be the only long-term solution.

Market-based reforms in health care, such as public reporting of quality, may inadvertently exacerbate disparities. We examined how the Centers for Medicare and Medicare Services’ five-star rating system for nursing homes has affected residents who are dually enrolled in Medicare and Medicaid (“dual eligibles”), a particularly vulnerable and disadvantaged population. Specifically, we assessed the extent to which dual eligibles and non–dual eligibles avoided the lowest-rated nursing homes and chose the highest-rated homes once the five-star rating system began, in late 2008. We found that both populations resided in better-quality homes over time but that by 2010 the increased likelihood of choosing the highest-rated homes was substantially smaller for dual eligibles than for non–dual eligibles. Thus, the gap in quality, as measured by a nursing home’s star rating, grew over time. Furthermore, we found that the benefit of the five-star system to dual eligibles was largely due to providers’ improving their ratings, not to consumers’ choosing different providers. We present evidence suggesting that supply constraints play a role in limiting dual eligibles’ responses to quality ratings, since high-quality providers tend to be located close to relatively affluent areas. Increases in Medicaid payment rates for nursing home services may be the only long-term solution.

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