Quality ratings are useful when they capture important and durable aspects of overall performance. They are less useful (and can be misleading) when they are excessively volatile, particularly if volatility is not the result of facility-specific performance. We study the volatility of the nursing home star ratings, published monthly by the Centers for Medicare & Medicaid Services (CMS), over 2009-2024.
We offer suggestions on reducing general volatility; clarifying the extent to which a particular rating means the same thing in different states and at different points in time, and more disclosure of how individual nursing home ratings are determined.