The Ohio state legislature approved an $875 million Medicaid payment on Wednesday night to correct a formula error identified by the Ohio Supreme Court, which determined that nursing homes had been underpaid by hundreds of millions of dollars. This funding is part of a budget correction measure that will be sent to Governor Mike DeWine for his signature. The payment aims to resolve litigation from nursing home operators who claimed the state improperly calculated Medicaid reimbursement rates, leading to insufficient funding for facilities serving vulnerable patients.
Nursing homes receive a daily rate for each Medicaid resident, with additional funding for those meeting higher quality standards. The state is required to adjust these rates for inflation, a process known as rebasing, which was at the center of the dispute. The Ohio Supreme Court ruled in September that the formula error resulted in a $527 million shortfall in the 2024-25 budget.
Ohio Medicaid officials noted that the court's interpretation could lead to an additional cost of approximately $285 million per year, potentially totaling around $1 billion over two budget cycles. The legislation includes a provision requiring providers to waive future legal claims related to the formula in order to receive the funds. The correction is part of a broader bill addressing various state spending issues, with $310 million coming from the state and $565 million from federal funding.