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Disturbing New Evidence Suggests Fraud Underlies Five-Star Ratings for Some Nursing Homes

Posted  March 19, 2021

Twelve years after the implementation of the nursing-home star-ratings system, a disturbing New York Times exposé and a lawsuit by California against Brookdale Senior Living reveals how the ratings are manipulated to the detriment of families in their time of crisis.  The NYT’s investigation and California’s allegations in combination paint the troubling picture of profits tied to higher star ratings, and nursing homes fudging critical data that affects the ratings, such as the time each resident receives hands-on care, over-medication, serious falls, or injuries requiring medication, and inspection scores.  This reprehensible conduct not only undermines the reliability of the star-rating system, it also jeopardizes the care and safety of vulnerable patients. The manipulation of data related to star ratings may reflect that some facilities are not providing important services for which the government and taxpayers pay.

What are nursing home star ratings?

Star-ratings are the result of a well-intended simplified one-to-five star rating system to assist families in assessing the quality of nursing homes.  Run by CMS, the system compiles data that is self-reported by the facilities and from on-site inspections, five stars being the best, and one the worst.  The ratings are used primarily (1) for the public to educate themselves about their long-term-care choices, and (2) as a marketing tool for nursing homes to attract new customers.

Some of the specific and important data underlying the ratings include: scores from “surprise” inspections, the time that nursing-staff spend in hands-on care with patients, and the quality of care received.  All three of these areas are subject to fraud, and evidence is emerging that much of the data submitted to CMS is wrong and skewed towards making the facilities look better than they truly are.

The more stars, the more profitable the nursing homes, according to the NYT team (led by Jessica Silver-Greenberg and Robert Gebeloff).  They found that five-star nursing homes earned twice as much profit per bed than those with three or four stars.

What went wrong with star ratings?

The NYT reporting and California’s lawsuit reveal the disturbing story of facilities fudging or falsifying the facts that are supposed to inform the star ratings:

False staffing data

Facilities fudge the staffing data by counting the time employees are on vacation or administrative time when nurses aren’t hands-on with residents.  The California lawsuit alleges that Brookdale Senior Living gave false staffing information on CMS Form 671, used to calculate star ratings

Misleading quality-of-care reporting

The quality-of-care metric, based on each resident’s medical “report card,” suffers from the following critical problems:

  • Medications, including dangerous antipsychotic drugs, are understated or not reported (the star-ratings system dings facilities for overmedication);
  • Serious falls and other accidents go unreported;
  • Health issues such as infections and bedsores are covered up

Unreliable inspection data

The “unannounced” inspections are often not surprises, giving the facility time to staff-up and clean-up on or just before the day of examination.  The NYT article gives specific examples where inspections that do yield alarming failures do not (or rarely) translate to lower star ratings.

Follow the incentives

Sadly, an incentive system may now exist whereby nursing homes put valuable resources into improving star-ratings, taking away for quality-care of residents.  Overmedication, understaffing, injuries and neglect result in lower ratings, so facilities are incentivized to lie in these critical support areas if they cannot truthfully report good data about them.

For-profit companies, including those with the added stakeholders in private equity firms, run 70 percent of U.S. nursing homes.  With five-star facilities making twice as much profit as three and four-star nursing homes, it is not surprising that some owners and operators make decisions that prioritize profits over patient care.  With little profit margin in long-term facility care in the best of circumstances, it is not surprising that highly questionable choices are made to deliver profits to the various shareholders.  All of this is made even more tragic during the pandemic.

How to prove the ratings are fraudulent?

The California lawsuit against Brookdale and the NYT article reveal a number of ways to verify whether a facility’s star ratings are fraudulent:

  • Payroll records: The NYT analyzed millions of payroll records to determine how much time residents received hands-on care.  Since 2018, CMS now requires payroll records instead of self-reports for staffing time.  But the records are not required to delineate between purely administrative roles and hands-on staff; at least 50% of the time reported is for non-hands-on administrators.  And California’s allegations reveal that the payroll records themselves are subject to manipulation.
  • Hospital admissions data can be key to show:
    • Severe underreporting of deadly bed-sores
    • Incidences of potential abuse and neglect requiring hospitalization
    • Falls and injuries requiring hospitalization
  • Reviewing state-inspector reports
  • Comparing CMS cost reports or other government-reported financial statements or forms to a facility’s internal data, such as ledgers and time clock reports (as alleged in the California lawsuit)
  • Reviewing ratings data that CMS makes available to academics under research agreements

What can I do?

Unfortunately, many of these checks on nursing-home fraud are costly and time-consuming efforts.  Sometimes, the only way bad practices will be exposed and remedied is through an insider or whistleblower with knowledge who can come forward.  Nursing home resources and care is a complex problem, with many well-intentioned stakeholders.  Unfortunately, the 5-star rating system has led to incentives that create bad behavior by unscrupulous actors who hold the well-being of our most vulnerable in their hands.  While well-intentioned and good faith efforts should be supported, those who prioritize money and ratings should be held accountable.

If you have evidence about nursing home fraud and think you might have a whistleblower case, please contact us.

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Tagged in: FCA Federal, Financial and Investment Fraud, Healthcare Fraud, Home Health and Hospice, Importance of Whistleblowers, Provider Fraud, SNF,