Effect of state medicaid reimbursement rates on hospitalizations from nursing homes

OBJECTIVES: To estimate the effect of state Medicaid nursing home reimbursement rates on hospitalizations of nursing home residents. DESIGN: Cross-sectional sample of nongovernment-owned nursing homes with 25 beds or more in one Metropolitan Statistical Area in each of 10 states in 1993, with 6 months follow-up on mortality and hospitalizations. SETTING: Two hundred fifty-three nursing homes. PARTICIPANTS: Eight to 16 randomly selected residents from each facility, totaling 2,080. MEASUREMENTS: Minimum Data Set assessments conducted by research nurses at baseline. A three-category 6-month outcome was defined as (1) any hospitalization; for those not hospitalized, (2) death versus (3) alive in the facility. RESULTS: Using multinomial logistic regression, adjusted to survey design, controlling for resident and facility characteristics, a $10 increase in 1993 Medicaid reimbursement rate above the mean rate of approximately $75 resulted in a 9% reduction in a resident's risk of hospitalization (P<.05). CONCLUSION: State Medicaid reimbursement rates appear to affect clinical decisions regarding the need for hospital admission and thresholds for nursing home use. The findings from this study reemphasize the importance of properly aligning state Medicaid and federal Medicare long-term care policies because, currently, states have no incentive to increase reimbursement rates to avoid hospitalization.