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OBJECTIVE: This study investigates the level, time course, and stability of functional impairment in a population of persons with symptomatic HIV disease, and illustrates the application of hierarchical linear modeling (HLM) to trajectories of functional status in unbalanced longitudinal data. STUDY POPULATION: We utilized longitudinal interview data on a demographically diverse cohort of 246 individuals participating in New Jersey's Medicaid waiver program for persons with AIDS or symptomatic HIV disease, with a mean of nine repeated observations per individual. MEASURES AND STATISTICAL METHODS: Impairment in ability to perform 16 activities of daily living (ADL) and instrumental activities of daily living (IADL) was assessed at monthly intervals. To achieve unbiased, efficient estimation of the level and within-individual rate of change of functional status utilizing all observations for each individual, hierarchical linear models were used. Time slopes were compared to those from a single-level model estimated on the pooled observations. Stability of functional status within individuals was also evaluated. PRINCIPAL FINDINGS: A single-level pooled model showed no significant time trend in functional impairment, while the multilevel models did indicate such a trend. In the final HLM model, functional impairment was estimated to increase at a rate of .32 tasks per month. Female gender was associated with impairment in an additional 1.88 tasks and AIDS diagnosis with an additional 1.35 tasks. There was substantial variability within individuals over time, most of which was not explained by time trend. CONCLUSIONS: The multilevel models indicated a significant month-to-month worsening of functional status that was masked in the single-level model by between-person variation. Impairment was found to increase over time, but followed a variable and episodic course rather than a steady or consistent decline. Women appeared to experience special problems in performing ADL and IADL tasks. RELEVANCE/IMPACT: Results demonstrate the need for flexible and responsive systems for authorizing and managing in-home services for persons with HIV disease, systems that can respond to frequent changes in the functional status and level of care needs of these individuals. They suggest further attention to special care needs that may be experienced by women with HIV disease. They illustrate that hierarchical linear modeling can be an important tool in understanding change in functional status over time, providing a multilevel model that disaggregates within-individual and between-individual variation in functional status. This approach can be generalized to a wide variety of problems in health services research in which outcomes are observed over time with unbalanced longitudinal data.