The effect of state policies on nursing home resident outcomes.

Objectives: To test the effect of changes in Medicaid reimbursement on clinical outcomes of long-stay nursing home (NH) residents.

Design: Longitudinal, retrospective study of NHs, merging aggregated resident-level quality measures with facility characteristics and state policy survey data.

Setting: All free-standing NHs in urban counties with at least 20 long-stay residents per quarter (length of stay > 90 days) in the continental United States between 1999 and 2005.

Participants: Long-stay NH residents

Interventions: Annual state Medicaid average per diem reimbursement and the presence of case-mix reimbursement in each year.

Measurements: Quarterly facility-aggregated, risk-adjusted quality-of-care measures surpassing a threshold for functional (activity of daily living) decline, physical restraint use, pressure ulcer incidence or worsening, and persistent pain.

Results: All outcomes showed an improvement trend over the study period, particularly physical restraint use. Facility fixed-effect regressions revealed that a $10 increase in Medicaid payment increased the likelihood of a NH meeting quality thresholds by 9% for functional decline, 5% for pain control, and 2% for pressure ulcers but not reduced use of physical restraints. Facilities in states that increased Medicaid payment most showed the greatest improvement in outcomes. The introduction of case-mix reimbursement was unrelated to quality improvement.

Conclusion: Improvements in the clinical quality of NH care have been achieved, particularly where Medicaid payment has increased, generally from a lower baseline. Although this is a positive finding, challenges to implementing efficient reimbursement policies remain.