Medicaid cost containment: prospective reimbursement for long-term care

Payments to long-term care facilities have risen from 38% of the national Medicaid budget in 1975 to an estimated 43% during 1983. To contain these spiraling Medicaid costs and ease the fiscal burdens facing most state governments, reform of the Medicaid reimbursement system for nursing home care is essential. This study analyzes the impact of prospective rate setting by state programs on Medicaid payment and utilization rates for long-term care. For each year between 1975 and 1982, the use of prospective reimbursement was always associated with lower Medicaid payments for long-term care without adversely affecting recipient access to care.