The researchers examined the effect of changes in state nursing home bed hold payment policies. Bed hold policies are designed to prevent facilities from discharging low paying (i.e., Medicaid), costly, or complicated patients and to encourage continuity of residence by continuing to reimburse nursing homes if a resident is transferred to a hospital. The researchers studied the impact of these policies on the rate of hospitalization of nursing home residents, as well as on whether residents returned to their originating nursing home following hospital discharge. In particular, they: 1) described variation in the rates of hospitalization between 1999 and 2005; 2) described changes in the pattern of post-hospitalization discharge locations; 3) tested the effect of changes in state Medicaid bed-hold payment policies between 1999 and 2005 on the rate of all hospitalizations of long stay nursing home residents; 4) tested whether state bed-hold policies differentially affected the occurrence of “potentially avoidable” and “terminal” hospitalizations among nursing home residents; 5) tested the effect of changes in state Medicaid bed-hold payment policies between 1999 and 2005 on the discharge location; 6) quantified the financial implications of changes in state bed hold policies; and 7) examined changes in residents’ functional status associated with hospitalization in the periods before and after changes in bed-hold policies. The objective of this study was to inform the debate about how best to address increasing hospitalizations of nursing home residents.