Does an Increase in the Medicaid Reimbursement Rate Improve Nursing Home Quality?

OBJECTIVES: Numerous studies have documented poor nursing home quality over the last 3 decades. Previous research has questioned the effectiveness of Medicaid reimbursement policy in improving quality in the presence of certificate-of-need (CON) and construction moratoria regulation. This study evaluated how the Medicaid reimbursement rate may influence a home's decision to provide quality under CON and moratoria. METHODS: Linking national data from the On-Line Survey, Certification, and Reporting system, the Area Resource File, and aggregate reimbursement information, the author examined the effect of Medicaid reimbursement on a range of quality measures in the context of CON and moratoria. RESULTS: An increase in Medicaid reimbursement improved quality as measured by professional staffing, but there was not a statistically significant effect when quality was measured by nonprofessional staffing, various procedural measures, or regulatory deficiencies. However, this study did not support previous research showing a negative effect of Medicaid reimbursement on nursing home quality in the context of CON laws. DISCUSSION: This study supports recent trends suggesting that nursing home CON laws may be lessening in importance for the nursing home market. Nevertheless, further work is necessary to determine the quality returns to increased Medicaid reimbursement.