Nursing home care in the United States is financed primarily through the federal-state Medicaid program. Because Medicaid nursing home programs are administered within the individual states, there may be interstate differences in the characteristics of Medicaid nursing home residents and their utilization of medical care. We used Medicaid claims and enrollment data for calendar 1981 from three large states--Michigan, California, and New York--to study this question. We found that the populations of elderly Medicaid nursing home residents in each of the three states had similar characteristics. In contrast to the homogeneity of resident characteristics, there were pronounced interstate differences in the use of medical care, particularly for the relation between nursing homes and hospitals. California was characterized by frequent turnover among elderly Medicaid nursing home residents and a high rate of transfers to and from hospitals. One third of residents entered the nursing home in the study year, 43% of enterers came from the hospital, and 51% of enterers were discharged within 180 days of admission, usually to the community. In New York, both turnover among elderly Medicaid nursing home residents and interinstitutional transfers were less frequent. However, those residents entering from the hospital had an average pre-entry hospital stay of 60 days, three to five times that of the other two states. Medicaid payments per day of nursing home care totaled +60 per day, twice those in the other two states. Michigan was characterized by patterns of medical care utilization intermediate between these two extremes. These findings suggest caution in the interpretation of single-state studies of nursing home residents, particularly for those of the dynamic relation between nursing homes and hospitals. They also suggest that further study of the experience of the individual states could provide valuable insights into the effects of different levels of nursing home reimbursement and different policies for transfers between nursing homes and hospitals.