What is the impact of New York state's nursing home payment system using Resource Utilization Groups II (RUGS II) on access to long-term care services for Medicaid beneficiaries? What is its impact on changes in case mix, financial status, and management practices of nursing homes in the state? This study, conducted by the Greater New York Hospital Foundation, Inc., used various quantitative analyses of nursing home cost reports and resident characteristic data, and interviews with key management staff and trustees to examine the period 1985-1990. The objective of the study was to provide policymakers with an assessment of this payment system's long-term impacts and to judge its replicability for Medicaid and/or Medicare beneficiaries in other states.