Beginning in April 2000 and continuing for 21 months, Florida's legislature allocated $31.6 million (annualized) to nursing homes through a Medicaid direct care staffing adjustment. Florida's legislature paid the highest incentives to nursing homes with the lowest staffing levels and the greatest percentage of Medicaid residents-the bottom tier of quality. Using Donabedian's structure-process-outcomes framework, this study tracks changes in staffing, wages, process of care, and outcomes. The incentive payments increased staffing and wages in nursing home processes (decreased restraint use and feeding tubes) for the facilities receiving the largest amount of money but had no change on pressure sores or decline in activities of daily living. The group receiving the lowest incentives payment (those highest staffed at baseline) saw significant improvement in two quality measures: pressure sores and decline in activities of daily living. All providers receiving more resources improved on deficiency scores, suggesting more Medicaid spending improves quality of care regardless of total incentive payments. © 2013 Copyright Taylor and Francis Group, LLC.