CMS recently released its updated hospital quality star ratings on Medicare's Hospital Compare, marking the first release of the ratings since CMS updated its methodology last year.

How CMS calculated this year's star ratings

CMS updated its star ratings methodology in its 2021 Outpatient Prospective Payment System final rule. Previously, CMS calculated its star ratings using a method called a latent variable model, which uses a variety of variables to calculate the weight of each measure used in the ratings. 

In the new methodology, CMS gives equal weight to the quality and safety measures it uses. It also reduced the overall number of those measures from 65 to 48, and grouped the measures into five—rather than the former seven—categories:

• Mortality (weighted at 22%);
• Safety of care (weighted at 22%);
• Readmission (weighted at 22%);
• Patient experience (weighted at 22%); and
• Timely and effective care (weighted at 12%).

In the new methodology, CMS also groups hospitals by the number of measures they report to the agency. Hospitals that have at least three measures in three groups, with at least one of those groups being either mortality or safety of care, are eligible for the star ratings.

For the latest rankings, CMS relied on data from October 2020.

How hospitals performed

The 4,586 hospitals evaluated broke down as follows:

• 455 hospitals received a five-star rating, compared to 396 last year;
• 988 hospitals received a four-star rating, compared to 1,132 last year;
• 1,018 hospitals received a three-star rating, compared to 1,108 last year;
• 690 hospitals received a two-star rating, compared to 710 last year;
• 204 hospitals received a one-star rating, compared to 226 last year; and
• 1,181 had no information available, compared to 1,761 last year. 

In total, 50% of the hospitals received the same rating as they did last year, while 45% either increased or decreased by one star, and 5% increased or decreased by at least two stars, Becker's Hospital Review reports. According to Modern Healthcare, more hospitals overall received four out of five stars on the scale, and an additional 59 hospitals received a five-star rating, compared to the prior year.

Reaction to the ratings

Ashley Thompson, SVP of public policy analysis and development for the American Hospital Association (AHA), applauded CMS' new star ratings methodology, saying the update "is an improvement that will likely make the ratings more useful for both patients and hospitals," and adding that AHA "appreciate[s] that CMS reorganized some of the measures so individual topics wouldn't carry an undue amount of weight in the determination of star ratings."

However, Thompson added that "there remain flaws in the methodology that CMS must address." These include a "failure to account for social risk factors in calculating performance on measures like readmissions [which] biases the ratings against those hospitals caring for more vulnerable patients."

And while AHA agrees "with the intent of CMS's new peer grouping approach," Thompson said AHA believes "it needs improvement to ensure it fosters equitable comparisons."

Similarly, Jeff Softcheck, principal of performance analytics and advisory services at SullivanCotter, said, "You can still see imbalance in the CMS Star Ratings as hospitals increase in size and complexity."

However, Softcheck said one advantage to the new methodology "is that hospital leaders can more easily identify performance outliers, allowing them to target and calibrate reasonable improvement efforts" (Morse, Healthcare Finance, 4/28; Carbajal, Becker's Hospital Review, 4/29; Gillespie, Modern Healthcare, 4/28).