States' Medicaid Fee-for-Service Nursing Facility Payment Policies
               In order to better inform analysis of existing policies and development of future policies that affect Medicaid payments, this table documents each state’s fee-for-service (FFS) nursing facility payment policy, including how individual 
               states set their payment rates and policies. The tab labeled “Summary” presents summary data for each state in each of the categories. The data in the summary tab are linked to state-specific tabs that present a more detailed 
               picture of each state’s payment policies.
               State policies are dynamic. If you would like to clarify or update the data presented here, please send a brief explanation and contact information to comments@macpac.gov.
               Methodology 
               George Washington University, under contract to the Medicaid and CHIP Payment and Access Commission (MACPAC), originally worked with MACPAC to collect state Medicaid nursing facility payment policies between March and May 
               2014.
               MACPAC staff updated data between October 2018 and July 2019 from the following sources: state plan amendments, state regulations and administrative codes, provider manuals and bulletins, and Medicaid agency websites. In 
               some cases, state officials were contacted for further information. Specific sources are provided in individual state tabs.
               The compendium does not include dollar figures for payment rates. It does not include Medicaid programs in the U.S. territories, nor does it include payments to providers in Medicaid managed care organizations. 
               Letters in parentheses below refer to the corresponding column in the summary table.
               General payment methodology
               • Basic payment policy approach (B): The basic approach used to pay nursing facilities describes how states account for costs and determine allowable payments to nursing facilities. States generally choose to pay using some form 
               of a per diem, which is a daily rate calculation. 
               • Underlying basis for rates (C): States generally utilize facility costs or set a specific allowable price, which varies by type of facility, patient, or service, to determine the maximum payment to facilities.
               • Cost report (D): Source used to calculate the rates, which is either the Medicare cost report or a state-generated Medicaid cost report (indicated as a state report).
               • Rebasing frequency (E): States update the maximum allowable payment rates periodically, which is called rebasing. Here, we compile state policies for how often rebasing is set to occur.
               • Inflation factor (F): Policies or indices used by states to determine how to inflate the rates paid to nursing facilities when rebasing. Due to a consolidation of companies over the past several years, states which indicated that they 
               used Data Resources Inc. (DRI), Global Insight, or IHS Markit are listed as Economics and Country Risk, which is the business unit that conducts economic forecasting for IHS Markit and is also used by the Centers for Medicare & 
               Medicaid Services to estimate inflation.
               • Outlier payments (G): Unique payment policies for nursing facilities caring for patients who have a combination of extraordinary or exceptional medical, behavioral or social needs and no satisfactory placement can be made within 
               the established payment categories.
               • Bed-hold policy (H): Number of days Medicaid pays for reserving resident beds due to a leave of absence for a temporary hospitalization or therapeutic or personal leave.
               • New nursing facility; new owner (I): How rates are calculated when a new nursing facility is constructed or when a new owner takes over a current nursing facility.
               • Out-of-state (J):  Payment policy for out-of-state nursing facilities. These facilities are generally paid using the policies of their state of origin (the out-of-state rate) or the policies of the state from which they are seeking payment 
               (the in-state rate). 
               Primary cost centers
               Cost centers are the cost and rate components that are used used in calculating the payments to nursing facilities. The cost centers specified here are the most frequently used rate categories and the most common general 
               definitions and inclusions. Each state's unique definitions are included in its tab.
               • Direct care (K): Generally comprised of nursing salaries, fringe benefits, and medical supplies.
               • Indirect care (L): Generally includes social services, patient activities, medical directorship, and clinical consultants and associated fringe benefits.
               • Administrative (M): Includes all other nursing facility operating expenses, e.g. administration, dietary, housekeeping, maintenance, laundry, or utilities.
               • Capital (N): Includes depreciation, mortgage interest, lease expense, and property taxes. If capital is paid based on fair rental value (FRV), the FRV payment is in lieu of property costs with the typical exception of property taxes.
               • Other costs (O): Includes pass-through payments and other costs allocated to the Medicaid program that are fully reimbursed without limitation such as the Medicaid share of provider taxes and sometimes the Medicaid share of 
               property taxes.
               • Occupancy rate minimum (P): Many states set a minimum percentage of occupied beds per facility at which payment will be based for one or more cost centers. The state generally pays the facility based on the higher of that 
               occupancy threshold or the facility’s actual occupancy level.
               Adjustments
               Includes adjustments to the basic payment methodology for specific types of facilities or patients.
               • Acuity system (Q): Adjustments based on resident acuity levels using the Resource Utilization Groups (RUG) or state-specific classifications.
               • Peer grouping (R): Adjustments based on peer grouping such as number of beds or geographic grouping.
               • Geographic (S): Adjustments based on geographic location, e.g. counties, metropolitan statistical area, or urban or rural.
               • Ventilator (T): Adjustments or add-ons to the rate for nursing facilities with ventilator-dependent patients.
               • Mental health or cognitive impairment (U): Adjustments or add-ons to the rate for nursing facilities caring for patients suffering from mental, behavioral, or cognitive impairments, such as traumatic brain injuries, dementia, and 
               Alzheimer's disease.
               • Other high-need condition (V): Adjustments or add-ons to the rate for nursing facilities caring for patients suffering from conditions requiring specialized assistance, such as AIDS.
               • Public facilities adjustment (W): Adjustments to the rate for nursing facilities which are state-owned-or-operated facilities.
               • Adjustments related to provider taxes (X): Adjustments to the rate due to provider taxes and assessments.
               • Other adjustments (Y): Other adjustments to payment policies not listed below.
               Supplmental payments
               Includes additional payments for certain types of facilities or services.
               • Public facilities supplemental payments (Z): Add-ons to the rate for state-owned-or-operated facilities.
               • Supplemental payments related to provider taxes (AA): Add-ons to the rate to offset provider taxes and assessments.
               • Other supplemental payments (AB): Other supplemental payments not listed above.
               Incentive payments
               Includes additional payments to facilities for special circumstances, generally to encourage cost-saving practices.
               • Quality and pay for performance (AC): Payment incentives that link payments to value instead of volume or are intended to improve health outcomes and other quality indicators.
               • Bed program (AD): Utilizing a bed buyback or bed-banking program, which may include developing new uses for some of their beds or taking beds out of circulation.
               • Efficiency (AE): Incentive payments for for efficient operation of the nursing facility or keeping costs below ceilings.
               • Other incentive payments (AF): Other incentive payments not listed above.
            Medicaid Nursing Facility Fee-for-Service Payment Policies
                                                                                                General
                                      Basic 
                                    payment       Underlying                                                     Outlier 
                                      policy        basis for                      Rebasing       Inflation     payment
            State                   approach          rates       Cost report     frequency         factor          s
                                                                                               Economics 
                                                 Facility                                      and Country  None 
            Alabama               Per diem       costs          State report     Annually      Risk            found
                                                                                 Every two     Economics 
                                                 Facility       Medicare,        to four       and Country  None 
            Alaska                Per diem       costs          State report     years         Risk            found
                                                                                               Consumer 
                                                                                               price index, 
                                                                                               Economics 
                                                                Medicare,                      and Country  None 
            Arizona               Per diem       Price          State report     Annually      Risk            found
                                                                                               Economics 
                                                 Facility       Medicare,                      and Country  None 
            Arkansas              Per diem       costs          State report     Other         Risk            found
                                                 Facility                                      Consumer        None 
            California            Per diem       costs          State report     Annually      price index     found
                                                                            Economics 
                                       Facility                             and Country  None 
          Colorado         Per diem    costs       State report Annually    Risk        found
                                                                Every two   Economics 
                                       Facility                 to four     and Country  None 
          Connecticut      Per diem    costs       State report years       Risk        found
                                       Facility 
          Delaware         Per diem    costs       State report Annually    Other       Yes
                                                                            CMS 
                                                                            prospective 
                                                                            payment 
                                                                            system 
                                                                            skilled 
                                                                Every two   nursing 
                                       Facility                 to four     facility input  None 
          District of ColumbiaPer diem costs       State report years       price index found
                                                                Every two   State-
                                       Facility                 to four     specific    None 
          Florida          Per diem    costs       State report years       factor      found
                                                                            State-
                                       Facility                             specific    None 
          Georgia          Per diem    costs       State report None found factor       found
                                                                                Economics 
                                                      Medicare,                 and Country  None 
          Hawaii             Per diem    Price        State report  Other       Risk         found
                                                                                Economics 
                                         Facility                               and Country  None 
          Idaho              Per diem    costs        State report  Annually    Risk         found
                                                                                Economics 
                                         Facility                               and Country  None 
          Illinois           Per diem    costs        State report  Annually    Risk         found
                                                                                Economics 
                                         Facility                               and Country  None 
          Indiana            Per diem    costs        State report  None found Risk          found
                                                                                CMS total 
                                                                                skilled 
                                                                                nursing 
                                                                    Every two   facility 
                                         Facility                   to four     market       None 
          Iowa               Per diem    costs        State report  years       basket index found
                                                                                Economics 
                                         Facility                               and Country  None 
          Kansas             Per diem    costs        State report  Other       Risk         found
                                                      Medicare with             Economics 
                                                      Medicaid                  and Country  None 
          Kentucky           Per diem    Price        supplement    Other       Risk         found
                                                      Medicare with Every two   Economics 
                                                      Medicaid      to four     and Country  None 
          Louisiana          Per diem    Price        supplement    years       Risk         found