BACKGROUND. While CMS has not released the precise rating methodology, the following information has been made available on each rating component:

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1 As we have previously reported, the Centers for Medicare & Medicaid Services (CMS) will launch its 5 Star Quality Rating System, which will be posted to Nursing Home Compare as of December 18, This memo provides details of the new ratings system, along with suggested actions and talking points that members may find useful in responding to media and consumer inquiries. About The 5 Star Rating Scoring System: BACKGROUND Facilities will actually receive four ratings. One for each of the following categories: survey results, Quality Measures (QMs), and staffing levels. CMS will then use these three ratings to assign an overall rating. All four ratings will be included on the enhanced Nursing Home Compare site. While CMS has not released the precise rating methodology, the following information has been made available on each rating component: Survey Rating: The survey rating will be based up a rolling three years of overall survey performance. Annual and complaint that resulted in a substantiation and deficiency will be used in the rating; most recent standard survey will have the greatest weight afforded. The rating will consider the number and scope/severity of deficiencies, with greater weight allocated for serious, widespread deficiencies. Life safety code cites are not included in the rating. Also, instances of a facility requiring a second revisit will impact the score negatively. CMS takes each facility s overall point score (between 0 and 136) and ranks it by state not nationally a step that the agency hopes will help to balance out known discrepancies among survey regions. Therefore, the survey rating for your facility will be based on where your performance falls when compared to Wisconsin providers. The top 10% of each state s facilities receive a 5 Star rating for Survey and the bottom 20% receive 1 Star ratings, while the remaining facilities within a state are assigned 2, 3 or 4 Stars for the survey component of 5 Star based on an even distribution of this middle 70% of facilities within a state. QM Rating: CMS calculates the QM component of 5 Star by assigning points based on 10 of the 19 QMs that are currently posted to Nursing Home Compare including 7 long-stay and 3 short-stay measures (details for each of the 19 QMs remains posted to Nursing Home Compare). CMS averages the three most recent quarters worth of QM data. Performance related to the QMs for both ADL Decline and Mobility Decline accounts for 40% of a facility s QM rating on the long-stay measures (i.e., these 2 QMs are weighted times as high as other QMs). CMS compares these point totals according to a national average. The top 10% of facilities receive a 5 Star rating for QMs and the bottom 20% receive 1 Star ratings, while the remaining facilities are assigned 2, 3 or 4 Stars for the QM component of 5-Star based on an even distribution of this middle 70% of facilities nationwide.

2 Staffing Rating: CMS calculates the Staffing component of 5 Star by calculating the average number of hours and minutes of nursing care per resident per day (including registered nurses (RN), licensed practical nurses (LPN), and certified nurse aides (CNAs) and those under contract to a facility). The source of the data is the staffing information provided by the facility as part of their annual survey. This average will be case-mix adjusted to account for variations in residents Resource Utilization Group (RUG) categories within a facility. Then, CMS will assign Staff ratings for both total staffing and RN staffing. Facilities cannot receive a 5 Star rating for the Staffing component unless it meets the threshold of 4.08 hours per resident day total staffing to include a minimum of.55 RN hours. Overall Rating: A facility s overall 5 Star rating incorporates ratings in three categories: survey results, Quality Measures (QMs), and staffing levels. The survey rating forms the base star rating with stars being added or subtracted depending upon a facility s star rating for QMs and staffing respectively. CMS will calculate a facility s Overall 5 Star rating at follows: 1. The overall rating is begins with the survey rating, with stars possibly being added or subtracted based on QM and Staffing rating scores. 2. A QM rating of 5 Stars can bump up a facility s overall score by 1 Star, whereas a 1 Star rating in the QM category will downgrade the overall rating by subtracting 1 Star. 3. Staffing rates of 4 or 5 stars can bump up a facility s overall score by 1 Star, whereas a 1 Star rating in the Staffing category will downgrade the overall rating by subtracting 1 Star. To illustrate: A facility receives a three-star for their survey performance over the past three years, yet their QM rating is a 5. This would add a star to the overall rating. They could further receive an additional star if their staffing rating was a 4 or a 5. Conversely, the three-star survey rating could be reduced by the facility having a one-star in QM or Staffing ratings. While we do not have the raw data yet, it would appear that the Survey rating score will in most cases be the same as the Overall rating. Presumably, there will be a minority of homes receive Staffing ratings of 5, 4 or 1, most will be in the 2 or 3 category, thus yielding no increase or decrease. Similarly, 70% of facilities will receive a QM score of 2, 3, or 4, which will not trigger either an increase or decrease. This highlights a fundamental issue with this rating system, that survey performance (which was never intended to be a measure of quality) is weighted so heavily in the overall rating score. Anticipated Media Coverage: CMS intends to hold a media call this week to announce and explain the enhancements to the Nursing Home Compare site, including the 5 Star Rating System. In addition, indications are that on December 18, USA Today will feature an exclusive day of story unveiling the new rating system. We anticipate that this high profile coverage and the

3 media call CMS has scheduled for Thursday will generate significant media coverage. In anticipation of questions and inquiries that members may receive from the media and consumer groups, we have developed the following suggested steps and talking points. As always, should you require additional assistance in responding to the media, please contact WHCA Director of Communications Erin Celello or ). Preparation Steps: 1. Review you survey performance over the past three years. This will prepare you to discuss your overall rating. For example, if a facility has had a long history of very good survey performance, however, the most recent annual survey yielded one of the many Immediate Jeopardy citations issued in Wisconsin, you will want to be prepared to discuss this (likely) isolated instance that has negatively impacted your survey rating and consequently your overall score. 2. Review your QMs overall and be prepared to explain your performance in the areas covered by the rating system, and as importantly how you have performed in those measure not included in the rating system. 3. Review the staffing data submitted as part of your last survey. You may identify that this period may not be representative of your current staffing patterns. You will want to be prepared to discuss you staffing. SUGGESTED TALKING POINTS Ensuring the greatest level of transparency and delivering the highest quality of care is a top priority for Wisconsin s long term care community and the vast majority of nursing homes throughout the state provide the high-quality, compassionate care that patients, residents, and their families want and deserve. We support a rating system that accurately reflects the quality of care in our nursing facilities; that s why we believe that a ratings system based so heavily on the current survey system which does not include more important measures, is a disservice to consumers. The survey system is broken and as importantly is not a measure of quality. It is unfortunate that CMS s 5-Star ratings rely heavily on that broken system. Wisconsin is a national leader in quality improvement and out-performs the national average of nearly all of the 19 quality measures defined by CMS. However, Wisconsin nursing homes receive almost three times the national average of serious violations. It s impossible to reconcile these two competing realities, and CMS is currently conducting an investigation into this serious and inexplicable incongruity in our state. CMS claims that the survey component of its 5-Star Quality Rating System represents the most important dimension in determining a facility s overall quality

4 rating. We disagree. Even a properly-functioning survey system does not measure quality; it just assesses compliance with federal or state regulations. We believe that customer satisfaction how a resident and family members judge the care being provided in a particular facility is a better indicator of the quality of care and quality of life residents enjoy. MyInnerView, an independent and nationally-recognized leader in measuring resident and satisfaction in long term care providers found in its June 2007 report that: 90% of Wisconsin residents rated their overall satisfaction of the care in they received as Excellent or Good ; 89% would recommend their facility to others; 87% of resident Families rated their overall satisfaction of the care in Wisconsin Nursing Homes as Excellent or Good ; And 86% indicated they would recommend the facility in which their family member resided to others; The facts speak for themselves quality is a top priority in our nursing facilities, and it shows. But this reality is not reflected in the 5-Star program. In addition, CMS has chosen to use staffing as a separate category in its 5-Star rating system because there [is] strong evidence [that] low nurse staffing levels seriously compromise[s] quality of care, but there are few nursing homes in the country that could afford to staff at these levels. To receive a 5 Star rating under the CMS system a facility must provide 4.08 of nursing services per resident per day. Wisconsin nursing facilities currently provide an average of 3.57 hours of skilled nursing services to their residents, even when the maximum level of payment any nursing home can receive under Wisconsin s Medicaid program will support only 2.83 hours of nursing services. That means CMS s desired staffing levels are 44 percent higher than what Wisconsin s Medicaid program payment would support. In alone Wisconsin nursing homes experienced a nearly $156 million gap between the cost of the nursing services they provided residents and what they were reimbursed under Medicaid. Given current reimbursement rates, it is nearly impossible for nursing homes to attain CMS s staffing standard necessary to achieve its top rating. Medicaid is the source of payment for the care received by almost 70% of the state's nursing home residents. In order for staffing levels and quality to improve in Wisconsin, the state s Medicaid nursing home payment

5 system (ranked worst in the nation) must be held publicly accountable and assume responsibility for paying its fair share of resident care costs. And finally, consumers are at a distinct disadvantage under CMS s 5-Star rating system. Because it is provided by the government agency in charge of nursing home oversight many will likely view it as the last word on the quality level of a particular home. They will not be aware of what the rating represents, or the shortcomings of it. And we fear that consumers will stop short of taking the best possible way to evaluate a particular facility: making a personal visit to the home to observe and ask questions of the staff.