Published 1/1/2018
Andrew Krause, MD; Zain Sayeed, MD, MHA; Jasmine Saleh, MD, MPH; Muhammad T. Padela, MD, MSc; Khaled J. Saleh, MD, MSc, FRCS(C), MHCM, CPE

The CMS Overall Hospital Quality Star Rating System

Part 1: History and Background
The U.S. Centers for Medicare & Medicaid Services (CMS) is working to improve the healthcare system in the United States by enhancing the quality of care provided to patients. This reform focuses less on recognizing the number of services delivered and more on rewarding performance of healthcare providers.

In the last 15 years, CMS worked towards these goals by updating several programs and legislation that laid the foundation for the new CMS Overall Hospital Quality Star Rating System (Star System).

CMS has great legitimacy along with credibility and creating a composite measure of quality is a commendable achievement, but the Star System is not without its flaws and may have a potential risk of doing more harm than good. However, the Star System is a move in the right direction as public reporting initiatives are important and hospital ratings can drive quality improvement efforts. Table 1 provides a summary timeline of events that have contributed to the creation of the Star System, which is the focus of this article. Furthermore, we will provide a general overview of how CMS calculates a hospital’s star rating.

History and background
Medicare created the Hospital Compare website (medicare.gov/hospitalcompare) in December 2002 to increase reporting on hospital quality of care. Hospital Compare provides information to consumers about how well hospitals provide care to their patients through various ‘compare’ programs.

CMS created the hospital rating system and calculates star ratings using a subset of measures already available on the Hospital Compare website. CMS collects data on hospitals across the country through the Hospital Inpatient Quality Reporting (Inpatient Reporting) Program and Hospital Outpatient Quality Reporting (Outpatient Reporting) Program.

In March 2008, CMS started publically reporting the Hospital Consumer Assessment of Healthcare Providers and Systems survey results on Hospital Compare. CMS includes the results of the 11 questions from the survey as one category in the star rating calculation.

CMS created the Hospital Readmissions Reduction Program in 2012 and the Hospital-Acquired Condition Reduction Program in 2015. The measures calculated in both programs are included in the Safety of Care category of the Star System. Readmission rates are highly emphasized in the star calculation and comprise one of the major categories. Specifically, the rate of readmission for hip and knee surgery is a core measure among 57 included in the calculation.

What do the stars mean?
CMS created the Star System to help patients, family members, and caregivers compare hospitals on different areas of quality measurements. Star ratings have been reported on Hospital Compare for various healthcare settings for more than a decade. CMS “compare” websites that use a star rating system include Physician Compare, Nursing Home Compare, Medicare Plan Finder, Dialysis Compare, and Home Health Compare. The number of stars is tied to the quality of care provided by the entity; five stars is excellent, four stars is above average, three stars is average, two stars is below average, and one star is poor.

What do the stars incorporate?
The Star System uses the CMS five-star scale to rate each hospital by summarizing a subset of quality measures on Hospital Compare. It was designed to be inclusive of as many measures as possible, without limiting certain types of hospitals based on size or characteristics (Table 2).

The July 2016 and October 2016 ratings were based on 64 of the more than 100 existing quality measures publicly reported on Hospital Compare through the Inpatient Reporting and Outpatient Reporting Programs. The latest update of the calculation includes 57 of the measures from the same seven categories: mortality, safety, readmission, patient experience, effectiveness of care, and timeliness of care. All 57 measures are summarized in (Table 3). Each category carries a weighted average of the overall rating.

If a certain category is not calculated at one hospital, the percentage of the weighted average for that category is redistributed to the other categories. Hospitals must report data on at least three of the seven categories, including one outcome group (mortality, safety, or readmission), with at least nine of the 57 measures to be eligible to receive an overall rating.

How are the stars assigned?
CMS then uses a k-means clustering analysis to create five categories based on performance summary scores in each category. A distribution of scores is created that approximates a bell-shaped curve with a three-star rating assigned to 48 percent of the hospitals, while 3 percent of the hospitals receive one- and five-star ratings. All other hospitals receive either two- or four-star ratings.

In addition, data from each reportable category from every hospital are compared to the national average of each category. A score “Above the national average,” “Same as the national average,” or “Below the national average” is awarded to each hospital. Limited information is available regarding the statistical validity of the CMS Star System.

Why the stars can be misleading
About 20 percent of hospitals on Hospital Compare did not meet the minimum requirements from the quality measures necessary to calculate individual overall ratings. Each hospital may not be able to report data on all measures, based on the type and number of patients treated. A hospital’s overall rating is calculated based only on the data available for each measure.

Hospitals are currently averaging enough reportable data for 39 of the 57 measures. Preliminary analyses have shown a bias for hospitals reporting fewer measures to receive higher star ratings. Hospitals that reported all seven categories needed at least three domains with “Above the national average” to receive a five-star rating.

Of the current five-star rated hospitals, 30 (29 percent) reported only three of the seven categories. Among these hospitals, only one hospital scored above the national average in all three categories, 15 hospitals scored above average in two out of three categories, and 14 hospitals performed above average in only one category. This highlights a bias in the star calculation for reporting less data and receiving a higher rating.

This article provided a brief introduction to the CMS Star System. The Star System may serve as one resource patients can use to help decide where to seek quality medical care.

A follow-up article will discuss the results of the Star System and the impact this rating has on hospitals, physicians, patients, and providers, as well as provide recommendations for improving future ratings.

Andrew Krause, MD, is a member of the department of general surgery at the Detroit Medical Center; Zain Sayeed, MD, MHA, and Muhammad T. Padela, MD, MSc, are members of the department of orthopaedics at the Detroit Medical Center; Jasmine Saleh MD, MPH, is the director and co-founder of Global Health Conscious NFP; Khaled J. Saleh MD, MSc, FRCS(C), MHCM, CPE, is the executive-in-chief of orthopaedics at the Detroit Medical Center.

Editor’s note: This article is the first of a three-part series detailing the CMS Overall Hospital Quality Star Rating. Part two will appear in the February issue of AAOS Now.


  1. Hospital Compare.  https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalCompare.html. Accessed 08/04/2017.
  2. Kreke J: Overall Hospital Quality Star Ratings: Answers to your frequently asked questions. 2016; https://www.advisory.com/research/financial-leadership-council/at-the-margins/2016/12/demystifying-overall-hospital-quality-star-ratings. Accessed 07/16/2017.
  3. HCAHPS Star Ratings.  http://www.hcahpsonline.org/StarRatings.aspx. Accessed 06/21/2017.
  4. Daly R: 18 Key Points About the New Overall Hospital Star Rating. 2016; https://www.hfma.org/Content.aspx?id=49503. Accessed 07/13/2017.
  5. Whitman E: Fewer hospitals earn Medicare bonuses under value-based purchasing. 2016. http://www.modernhealthcare.com/article/20161101/NEWS/161109986. Accessed 06/25/2017.
  6. Hospital-Acquired Condition Reduction Program. https://www.medicare.gov/hospitalcompare/HAC-reduction-program.html. Accessed 06/25/2017.
  7. Terry K: CMS Releases Overall Hospital Quality Star Ratings. 2016; http://www.medscape.com/viewarticle/866763?pa=e8NgO1qAxKaBxHoKOFhT%2BKGuCVdbs8qxzfTKS5vYQxwA2ssLQqh3W3I1QH0leQlHVrJxKJt4DRD8mxYr6kYfOw%3D%3D. Accessed 07/18/2017.
  8. Linking quality to payment.  https://www.medicare.gov/hospitalcompare/linking-quality-to-payment.html. Accessed 06/25/2017.
  9. First Release of the Overall Hospital Quality Star Rating on Hospital Compare. 2016; https://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2016-fact-sheets-items/2016-07-27.html. Accessed 06/21/2017.
  10. Hospital Compare overall rating. https://www.medicare.gov/hospitalcompare/About/Hospital-overall-ratings.html. Accessed 06/23/2017.
  11. Methodology Overall Hospital Ratings. 2016; https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228775957165. Accessed 07/17/2016.
  12. Punke H: CMS changed overall star rating formula in December update — here's what's new. 2017. http://www.beckershospitalreview.com/quality/cms-changed-overall-star-rating-formula-in-december-update-here-s-what-s-new.html. Accessed 06/23/2017.