The Ohio state legislature on Wednesday night approved an $875 million Medicaid payment aimed at correcting what the Ohio Supreme Court found was a yearslong formula error that left nursing homes underpaid by hundreds of millions of dollars.
The funding was included in a budget correction measure approved by the Republican-controlled legislature this week and now heads to Gov. Mike DeWine (R) for his signature. The payment is intended to resolve litigation brought by nursing home operators who argued the state failed to properly calculate Medicaid reimbursement rates, resulting in facilities receiving less money than required under state law.
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Nursing homes receive a daily rate from the state for each Medicaid resident, with facilities that meet higher quality standards receiving additional funding. The state is supposed to adjust those rates for inflation, known as rebasing, which is where the dispute began.
Nursing home operators said the state did not consider each patient’s complexity, meaning facilities serving the most medically vulnerable patients received less funding. The state legislature changed the formula, but Ohio was still liable for underpayments from previous budgets.
The Ohio Supreme Court ruled in September that the formula error shortchanged nursing homes by $527 million in the 2024-25 budget.
Ohio Medicaid argued that the court’s interpretation of recalculating the payments could cost about $285 million more per year than lawmakers had intended, potentially approaching $1 billion over two budget cycles. The legislation that passed Wednesday includes a stipulation that providers who accept the money waive future legal claims related to the disputed formula.
Ohio lawmakers included the correction in a broader bill of budget-related adjustments considered by lawmakers before the end of the fiscal year. The legislation also addressed several other state spending issues, though the nursing home payment was one of the bill’s largest components. Under the legislature’s approved correction, Ohio will provide $310 million, and the $565 million needed to settle the issue will come from federal funding.
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Scott Wiley, CEO of the Ohio Health Care Association, urged DeWine to approve the bill and sign it into law.
“These funds are critically important to Ohio’s providers and the families they serve, and we urge Governor Mike DeWine to sign HB 479 into law without delay,” Wiley said.
