Explaining state policy adoption: The case of Medicaid nursing facility reimbursement.

Abstract

This dissertation sought to explain why states choose the Medicaid nursing facility reimbursement policies that they do. Supplementing traditional political and economic explanations with insights derived from the new institutionalism in sociology, I proposed that the determinants of adoption arose from factors within each state's external and internal environment, with external factors consisting of federal policy changes related to the Boren Amendment and prior adoptions by neighboring states, and internal factors consisting of a particular state's economic and political circumstances. Though I relied primarily on event history analysis, ordered logit, and mixed modeling techniques, I also analyzed the content of 84 Boren Amendment case decisions along with transcripts from 101 interviews. Within statistical models, dependent variables included incremental changes, such as the number of years since the last cost report and percent reductions in per diem rates and payments per recipient, in addition to non-incremental changes, such as adoption of fair rental reimbursement, case mix methods, and more cost containing general methodologies. Results show that the federal government influenced states' reimbursement policy choices, though not always as intended. While court decisions and other federal actions made it more difficult for states to reduce per diem rates, they also spurred the adoption of fair rental methods as states sought alternative ways of meeting their cost containment goals. By providing states with models of reimbursement, the federal government spurred case mix adoption as well. Although results provide evidence of regional diffusion in the context of the incremental outcomes, they provide no such evidence in relation to the non-incremental outcomes, the diffusion of which may be more national than regional in orientation. Unemployment and medically needy programs were also positive significant predictors of incremental outcomes but not of non-incremental outcomes, while governing capacity was a negative significant predictor of incremental outcomes and a positive significant predictor of non-incremental outcomes. Findings also indicate that the extent to which federal and interstate factors influenced adoption depended, in part, on internal state characteristics. In general, my study has important and timely implications for state and federal officials and nursing home residents and providers. Given the pervasiveness of federal influence in the past, it is likely that states will take advantage of available discretion now that the Boren Amendment has been repealed and they face their worst fiscal conditions since World War II.