Explaining state Medicaid nursing home reimbursement

Medicaid nursing home reimbursement methods and per diem rates affect costs, quality, equity, and access. State rate-setting is a laboratory of policymaking, which can inform state and federal Medicaid reform initiatives. This paper explains state Medicaid nursing facility rates in 1979-1994. Findings suggest that prospective facility-specific methods constrained rates in some but not all periods, particularly when older cost-reports were employed in rate-setting. Analysis failed to show that prospective class rate-setting methods constrained rate increases. Findings suggest that the efficacy of reimbursement methodology to control rates depends upon wider health care policy trends and that future facility-level analyses should consider policy contexts as between states.