Nursing home reimbursement: implications for cost containment, access, and quality.

The individual states have many options in designing Medicaid reimbursement systems for nursing homes. Each option has a differential effect on incentives--and outcomes--for containing costs, providing quality care, and maintaining access to care. The mix and consequences of specific choices are analyzed in a framework that disaggregates costs into three components. Tradeoffs among competing elements will be inevitable, but reimbursement policy can maximize both efficiency and equity.