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Journal Article


Do Medicaid Incentive Payments Boost Quality? Florida's Direct Care Staffing Adjustment Program



The Issue

States have sought to improve the quality of nursing home care by increasing Medicaid payments for nurse aides, orderlies, and other frontline staff, or by implementing pay-for-performance policies. In this study, Commonwealth Fund–supported researchers evaluate the effects of a Florida incentive program intended to improve care at nursing homes whose low staffing levels and high Medicaid enrollment put them most at risk for providing poor-quality care. Changes in structural, process, and outcomes measures of quality were examined over the 21-month period following the introduction of incentive payments in April 2000.

What the Study Found

  • Incentives led to increased staffing levels at the lowest-staffed facilities and higher wages for frontline staff at all facilities.
  • Nursing homes receiving the highest incentive payments decreased their use of physical restraints and feeding tubes—two key problem areas.
  • Residents of nursing homes receiving the lowest payments saw significant improvement, including lower likelihoods for developing pressure sores and experiencing decline in activities of daily living, such as eating, dressing, and bathing.
  • All of the nursing homes receiving incentive payments improved their “deficiency scores,” based on an assessment of nursing home standards and violations.



The findings suggest that "increased Medicaid payments increase staffing, and processes of care follow," write the researchers, who add that "states experimenting with [pay-for-performance] might take note of our findings and tailor ... payments for low-quality providers to changes in structure and process measures, at least for a start-up period." Incentive payments linked solely to outcomes might curtail lower-resourced nursing homes’ ability to improve care quality.

Publication Details



K. Hyer, K. S. Thomas, C. E. Johnson et al., “Do Medicaid Incentive Payments Boost Quality? Florida’s Direct Care Staffing Adjustment Program,” Journal of Aging and Social Policy, Jan. 2013 25(1):65–82.