BACKGROUND: Nurses' independent decisions about assessment, treatment, and nursing interventions for hospitalized patients are important determinants of quality of care. Physician peer implicit review of medical records has been central to Medicare quality management and is considered the gold standard for reviewing physician care, but peer implicit review of nursing processes of care has not received similar attention. OBJECTIVE: The objective of this study was to develop and evaluate nurse structured implicit review (SIR) methods. RESEARCH DESIGN: We developed SIR instruments for rating the quality of inpatient nursing care for congestive heart failure (CHF) and cerebrovascular accident (CVA). Nurse reviewers used the SIR form to rate a nationally representative sample of randomly selected medical records for each disease from 297 acute care hospitals in 5 states (collected by the RAND-HCFA Prospective Payment System study). SUBJECTS: The study subjects were elderly Medicare inpatients with CHF (n = 291) or CVA (n = 283). MEASURES: The authors developed and tested scales reflecting domains of nursing process, evaluated interrater and interitem reliability, and assessed the extent to which items and scales predicted overall ratings of the quality of nursing care. RESULTS: Interrater reliability for 14 of 16 scales (CHF) or 10 of 16 scales (CVA) was > or = 0.40. Interitem reliability was > 0.80 for all but 1 scale (both diseases). Functional Assessment, Physical Assessment, and Medication Tracking ratings were the strongest predictors of overall nursing quality ratings (P < 0.001 for each). CONCLUSIONS: Nurse peer review with SIR has adequate interrater and excellent scale reliabilities and can be a valuable tool for assessing nurse performance.