Abstract
Providers and recipients of nursing home care under Medicaid are currently classified into two levels of care to facilitate appropriate placement, care, and reimbursement. The inherent imprecision of the two level system leads to problems of increased cost to Medicaid, lowered quality of care, and inadequate access to care for Medicaid recipients. However, a more refined system is likely to encounter difficulties in carrying out the functions performed by the broad two-level system, including assessment of residents, prescription of needed services, and implementation of service plans. The service type-service intensity classification proposed here can work in combination with a three-part reimbursement rate to encourage more accurate matching of resident needs, services, and Medicaid payment, while avoiding disruption of care.