The Centers for Medicare & Medicaid Services’ (CMS’) new formula for calculating star ratings disproportionately rates specialty hospitals higher than major teaching hospitals, according to an analysis by Modern Healthcare and Sullivan, Cotter, and Associates.

In December 2017, 3,692 hospitals received a star rating, including 75 specialty hospitals. Of the specialty hospitals, 61 percent received a five-star rating, while just 9 percent of the 172 major teaching hospitals rated received five stars.

Under the new formula, CMS sought to improve accuracy and fairness by removing winsorization, a process by which outliers are removed to minimize their effect on overall ratings. Instead, the agency uses K-means clustering to complete convergence, a method in which hospitals are grouped repeatedly into five groups until the hospitals in each group are similar to each other and different from the other four groups.

This new formula does not change the weights of the seven quality measure categories. Mortality, safety of care, readmissions, and patient experience all are weighted at 22 percent; while effectiveness of care, timeliness of care, and efficient use of medical imaging are weighted at 4 percent. There are 57 total measures within the seven categories.

However, hospitals only are required to report in three quality measure categories. When hospitals do not report on measures in all seven categories, CMS weights the submitted data more heavily. Data suggest that specialty hospitals benefited by reporting fewer quality measures. The Modern Healthcare analysis shows that specialty hospitals reported an average of 27.2 of the 57 measures, while teaching hospitals reported an average of 51.37 — almost all of the measures.

America’s Essential Hospitals previously expressed concern with the data behind the star ratings and their value to consumers. CMS said the agency continues to gather stakeholder feedback and improve the ratings methodology. The agency plans to release updated star ratings in July.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.