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Research Report

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Medicaid is the major purchaser of nursing home care in the United States. State governments design their methods of reimbursing nursing homes to achieve desired policy objectives related to facility cost and quality, access to care, payment equity, service capacity, and budgetary control.

Often, participation in the process of developing Medicaid payment policy is limited to state agency officials and providers of care and, occasionally, union representatives and state legislative staff. Invited less frequently to reimbursement policy discussions are consumer representatives. Lack of consumer involvement in the development of state rate setting systems has the potential to result in the adoption of methodologies that favor industry and government interests at the expense of issues important to residents and their families. It also has the potential to result in less creative changes to state reimbursement systems than might otherwise have been possible. All stakeholders, including consumer advocates, must be at the table if truly informed reimbursement policy reform is to take place.

New York and Minnesota are two states where policymakers have prioritized consumer involvement in the development and implementation of Medicaid nursing home reimbursement policy. This has contributed to improvements in each state’s payment system to better encourage access, care quality, and quality of life. To understand the consumer role in Medicaid nursing home reimbursement, 24 in-depth interviews were conducted with 27 individuals in these states, including state agency officials, state legislators and legislative staff, consumer advocates (including ombudsmen), union staff, and nursing home industry representatives. Pertinent documents were reviewed as well.


The purpose of this brief is to draw lessons from our case studies of New York and Minnesota to convince you, as a state policymaker, to reserve room “at the table” for consumers and their representatives when Medicaid nursing home reimbursement is being discussed, developed and implemented. This is important because reserving a place for consumers and their advocates will further the promulgation of reimbursement systems with attributes that more effectively promote the welfare of current and future nursing home residents and their families.



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