Do Medicaid wage pass-through payments increase nursing home staffing?

Objective: To assess the impact of state Medicaid wage pass-through policy on direct-care staffing levels in U.S. nursing homes.

Data Sources: Online Survey Certification and Reporting (OSCAR) data, and state Medicaid nursing home reimbursement policies over the period 1996-2004.

Study Design: A fixed-effects panel model with two-step feasible-generalized least squares estimates is used to examine the effect of pass-through adoption on direct-care staff hours per resident day (HPRD) in nursing homes.

Data Collection/extraction Methods: A panel data file tracking annual OSCAR surveys per facility over the study period is linked with annual information on state Medicaid wage pass-through and related policies.

Principal Findings: Among the states introducing wage pass-through over the study period, the policy is associated with between 3.0 and 4.0 percent net increases in certified nurse aide (CNA) HPRD in the years following adoption. No discernable pass-through effect is observed on either registered nurse or licensed practical nurse HPRD.

Conclusions: State Medicaid wage pass-through programs offer a potentially effective policy tool to boost direct-care CNA staffing in nursing homes, at least in the short term.