Regulatory watchdog calls for more transparency on CMS star-rating methodology

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The Centers for Medicare & Medicaid Services is facing accusations that it failed to comply with notice-and-comment laws and wasn't transparent in its methodology when it made changes to its five-star ratings system.  

CMS launched the five-star scale earlier this year through its Hospital Compare website in an effort to simplify hospital quality scores for consumers, using data from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. 

However, the methodology has not been peer-reviewed, which federal law requires for "influential scientific information" and "highly influential scientific assessments," according to a letter from the Center for Regulatory Effectiveness (CRE), an independent watchdog group.

The CMS star-rating system is a clear example of the latter, as it "requires synthesis of multiple factual inputs [and] derives from the medical sciences," CRE founder Jim Tozzi wrote in the letter. It also has large financial impacts on bonuses and rebates, and has heavy influence on consumer choice of individual providers. 

CMS' process for establishing the five-star system also violated Federal Register notice-and-comment protocols, Tozzi wrote, because individual comments and the agency's response to each one didn't appear on the regulations.gov website--rather, the agency summarized comments and responses. This puts CMS in violation of Medicare rulemaking provisions that require Federal Register notice-and-comment rulemaking for any rule or policy statement that alters legal standards for payments, the letter claims.

This is not the first criticism of CMS' ratings scale. Earlier in the month, the American Hospital Association criticized the ratings' omission of data voluntarily submitted by critical access hospitals, while a 2014 study found Hospital Compare scores would likely have no effect on patient outcomes.

To learn more:
- read the letter (.pdf)

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