Medicaid Reimbursement and the Quality of Nursing Home Care: A Case Study of Medi‐Cal Long‐Term Care Reimbursement Act of 2004 in California

• Author: Laurent G. Glance,Jingping Xing,Ning Zhang,Helena Temkin‐Greener,Dana B. Mukamel
• DOI: http://doi.org/10.1002/wmh3.194
• Published date: 01 September 2016
• Date: 01 September 2016

Medicaid Reimbursement and the Quality of Nursing

Home Care: A Case Study of Medi-Cal Long-Term Care

Reimbursement Act of 2004 in California

Jingping Xing, Dana B. Mukamel, Laurent G. Glance, Ning Zhang,

and Helena Temkin-Greener

Poor nursing home (NH) quality of care has been a matter of great concern. In 2005, the Medi-Cal

Long-Term Care Reimbursement Act (AB1629) was enacted in California, changing NH

reimbursement methodology from f‌lat rate to cost-based, facility-specif‌ic rate. We examined changes

in time trends for risk-adjusted quality measures before and after AB1629 implementation (2002–

08). Stratif‌ied analyses were performed by the proportion of Medi-Cal revenues, which were related

to the payment incentives. Three of the f‌ive quality measures—pressure ulcers, physical restraints,

and incontinence—exhibited improvement while two (functional decline and potentially avoidable

hospitalization) did not change. The decline in physical restraints was larger among NHs with high

Medi-Cal revenues than NHs with low Medi-Cal revenues. This study provides evidence that

linking Medicaid reimbursement rate to each NH’s own expenditures and incentivizing NHs to

invest in direct care may be effective in achieving quality improvement in some but not all areas.

KEY WORDS: nursing home, Medicaid reimbursement, quality of care, incentives

Introduction

Poor nursing home quality of care has been a matter of great concern for

decades (Institute of Medicine, 1986; U.S. Senate, 1975). Because the Medicaid

program is responsible for approximately 41 percent of nursing home expendi-

tures (Centers for Medicare & Medicaid Services, 2010), and states have

considerable f‌lexibility in developing Medicaid payment methods and rate setting

(Grabowski, Feng, Intrator, & Mor, 2004), the option of reforming Medicaid

reimbursement has long received consideration as a potential policy tool to

improve quality of care (Institute of Medicine, 2001).

On August 1, 2005, California, which has long experienced serious problems

with nursing home quality of care (California Healthcare Foundation, 2004;

Harrington, Carrillo, & Garf‌ield, 2005), implemented the Medi-Cal Long-Term

Care Reimbursement Act (Assembly Bill [AB] 1629), in an effort to incentivize

World Medical & Health Policy, Vol. 8, No. 3, 2016

329

1948-4682 #2016 Policy Studies Organization

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford, OX4 2DQ.