Medicaid Payment and Risk-Adjusted Nursing Home Quality

Various studies have observed low quality in the nursing home industry. Although Medicaid is the dominant payer of U.S. nursing home services, the association of Medicaid payment rates and quality is not entirely clear, in part because resident-level, risk-adjusted information on quality is lacking. This study examined the relationship between Medicaid payment rates and three risk-adjusted quality measures, controlling for market and facility characteristics. Higher payment was associated with lower incidence of pressure ulcers and physical restraints but not daily pain. Quality of nursing home care may suffer if budget shortfalls force state legislatures to freeze or reduce Medicaid rates. (September 2004)