istics (Weissert and Musliner, 1992a,b). As Fries and colleagues (1994) point out, the development of classification systems and resource use groups is primarily a technical process, but the development and assignment of reimbursement categories is primarily a political process.

Several studies have been conducted of case-mix (Weissert et al., 1983; Cameron, 1985; Fries and Cooney, 1985; Arling et al., 1987, 1989; Schneider et al., 1988; Fries et al., 1994). Weissert and Musliner (1992a,b) have summarized the results of the many studies of case-mix reimbursement. These studies reported that most states that have used case-mix reimbursement have improved access for some heavy-care residents (Ohio, Illinois, Maryland, and New York). On the other hand, there continued to be problems with access in some case-mix reimbursement states such as West Virginia (Holahan, 1984; Butler and Schlenker, 1988; Weissert and Musliner, 1992a,b). Access problems under case-mix, such as lengthy waiting lists for admissions, have occurred especially in areas where there is a low supply of beds (Nyman, 1988b), where there are Medicaid processing delays (Weissert and Cready, 1988), and where reimbursement rates are low. Access problems occurred for those with low-care needs and where community-based alternatives were not necessarily available (Butler and Schlenker, 1988; Feder and Scanlon, 1989).

Critical to the success of case-mix reimbursement is the adequacy of the case-mix measures themselves. The committee construes analysis of the underlying technical issues to be beyond the scope of its charge. (There is an extensive literature on this subject. See, for example, Fries and Cooney, 1985; Hu et al., 1986; Rohrer et al., 1989; Fries et al., 1994.) However, although attempting to base payment on severity is meritorious in principle, there may be problems in implementation. Classification errors may actually discourage delivery of quality therapeutic care, for example, if the system does not adequately account for comorbidities such as behavioral problems stemming from mental illness (Rohrer et al., 1989).

Case-mix reimbursement generally has not led to increases in nursing staff-to-resident ratios. In Maryland, there was no evidence that extra nursing home payments were used to add more staff (Feder and Scanlon, 1989). New York also did not increase staff even though resident case-mix increased (Butler and Schlenker, 1988). Although West Virginia had some evidence of poor quality (e.g., increased catheterization), nursing resources did increase in 1979–1981 (Holahan and Cohen, 1987; Weissert and Musliner, 1992a,b). In the San Diego experiment, where facilities were given financial incentives to take more heavy-care residents, there was no evidence that extra payments were spent on extra care (Meiners et al., 1985). Of the six state systems reviewed by Weissert and Musliner (1992a,b), only Illinois was rated as having improved quality (Holahan, 1984; Butler and Schlenker, 1988).

HCFA is undertaking a demonstration project to introduce Medicaid case-mix reimbursement in four states in 1994–1995. As Weissert and Musliner

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