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In Brief: An Overview of Nursing Home Quality Indicators, Their Uses and Limitations

Introduction and Purpose

This In Brief summarizes the findings of the AARP Public Policy Institute issue paper, An Overview of Nursing Home Quality Indicators, Their Uses and Limitations by Barbara Manard, Ph.D.1Today, Quality Indicators (QI) are being developed and used for a broad range of purposes in nursing homes.

The federal government and many states plan to rely on QI as part of newer systems for monitoring and regulating nursing home quality of care. Designing, using, and evaluating quality indicators involve balancing tradeoffs or constraints. The optimal balance depends on the intended purpose and audience. For example, the information best suited for internal quality management is not necessarily the same as that most useful for purchasers such as Medicaid or individuals choosing a nursing home. Matching the stated purpose against the strengths and limitations of QI is a complex process.

This paper is intended to help policymakers and others assess proposed uses of quality indicators; understand the current state-of-the-art, including issues such as reliability, validity, and risk adjustment; and understand the potentially promising uses and substantial limitations of quality indicators.

Findings and Conclusions

The first generation of federally sponsored nursing home quality indicators (QI) was developed in the early 1990s by researchers at the University of Wisconsin Center for Health Services Research and Analysis (CHSRA). That set of quality indicators is based on the federally mandated resident assessment tool (the Minimum Data Set or MDS). These QI were intended to be used as part of the nursing home survey process and designed to be a tool for capturing potential problems in performance that would highlight certain facilities for additional review.

In November 2002, the Centers for Medicare and Medicaid Services (CMS) began publicly reporting a set of "Quality Measures" (QM) for nursing homes on its web site "Nursing Home Compare." CMS uses the term "quality measures" instead of "quality indicators" because the agency believes the new measures to have been sufficiently validated to qualify as true measures of nursing home quality, as distinguished from the survey process QI, which are to be used as pointers to potential quality problems.

Three methodological issues are important when drawing inferences about quality from QI: (1) risk adjustment; (2) facility discharge practices and short-stay patients; (3) smaller facilities and rarer outcomes. All three all can affect the results when QI are used to compare nursing home performance.

CMS contracted with Abt Associates (a Boston-based consulting firm) to develop these measures. This large-scale, multi-million dollar research project is known as "the Mega QI project." One prominent feature of the Abt research team work was the application of three types of risk adjustment to the QM:

  • To reduce the chance that a nursing home that serves more frail residents is disadvantaged by the quality measures, information about some residents may be left out of the quality measures.
  • All but one of the QM are statistically adjusted for resident clinical characteristics that predispose a patient to have a particular clinical problem (e.g., pressure sores).
  • Three of the measures are presented with a special risk adjustment, the "facility admission profile" (FAP). This adjustment factor was applied to calculating a quality indicator at the facility level to address two issues that researchers believed would distort a facility's quality rating: differential measurement practices (how well nursing home staff are able to complete MDS assessments) and differential selection (the types of patients the home admits). The second of these two risk adjustment factors has proved to be quite contentious, although CMS has decided to use it in its new national reporting system.

The Mega QI research team conducted a validation study on the new QM and concluded that many of the quality indicators capture meaningful aspects of the nursing facility performance and are reliably measured. This study has substantially advanced understanding about these new measures and QI in general. However, methodological issues affecting the use of QI in assessing nursing home performance only serve to underscore the conclusion that users must exercise caution when interpreting these complex measurements.

The recent explosion of quality research has contributed to the understanding of QI and their appropriate applications. However, it is clear that the development and use of quality indicators is still an evolving science. The challenge for policymakers and users is to apply the results of these studies wisely with an appropriate matching of the stated purpose against the strengths and limitations of QI.


  1. AARP Public Policy Institute Issue Paper #2002-16 (December 2002)

Prepared by Faith Mullen, AARP Public Policy Institute
December 2002
©2002 AARP
May be copied only for noncommercial purposes and with attribution; permission required for all other purposes.
Public Policy Institute, AARP, 601 E Street, NW, Washington, DC 20049

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