Ohio nursing homes win Medicaid-payment ruling: What could it mean for local care?

Oak Grove Manor in Mansfield — a 75-bed nursing home where nearly every bed is full — is among the Richland County facilities owed money after the Ohio Supreme Court ruled Sept. 18 that the state shortchanged nursing homes on quality-incentive pay.

The unanimous ruling said the Ohio Department of Medicaid used the wrong formula for the quality incentive pool, shortchanging the money meant to reward better-performing nursing homes. The court ordered the department to recalculate and pay the incentives under state law.

What the court found

State law says the department must set each facility's per-Medicaid-day quality incentive rate using the facility's quality score, so a higher-performing facility gets a larger share. The court said the department should have calculated the pool using 60% of the change in each facility's direct care cost rate — not 60% of the change in price or cost per case mix unit, which is what the department did.

The total owed to Ohio nursing homes is up to roughly $1 billion over two budget cycles. Lawmakers set aside $875 million in back payments — about $310 million in state money and $565 million in federal matching funds — and Gov. Mike DeWine signed it.

The money and the conditions

Under House Bill 479, any facility that takes the $875 million must waive future legal claims tied to the disputed formula. The Ohio Health Care Association, the statewide trade group for nursing homes, calls the back payments money owed for care already provided. Pete Van Runkle, the group's executive director, said the underpayments have put providers in a more difficult financial position, with cascading effects on employee raises and other cost obligations.

What it means for Richland County

Richland County is home to several Medicaid-certified nursing homes in Mansfield, including Oak Grove Manor and Liberty Nursing Center of Mansfield. Because the quality incentive payments are calculated facility-by-facility from each facility's quality score and Medicaid days, the recalculated dollars will go to individual Richland County facilities in proportion to their quality scores — not as a flat county-wide payment.

Oak Grove Manor, a for-profit facility in Mansfield with 75 beds and about 95% occupancy, holds a 1-star federal rating for overall quality and health inspections. That means its share of the recalculated pool would be smaller than a higher-rated facility's — but the court said the state owes the money regardless of rating, because the formula itself was wrong.

The payout

When the money arrives is still unclear. As of Sept. 17, the department was still working through the logistics and said it would share distribution details soon. The federal Centers for Medicare & Medicaid Services has approved sending the money directly to nursing facilities rather than through managed-care plans, and has asked Ohio to submit a waiver to pay claims older than two years. The department has finished preliminary per-facility calculations and favors a single lump-sum payment once federal approval comes through.

Lawmakers also changed the statute going forward to match the department's interpretation of the formula, while keeping the court's interpretation for earlier years.

The court's ruling puts the responsibility for the shortfall on the Ohio Department of Medicaid. The department has not said when payments will arrive, and no Richland County facility has publicly said whether it will accept the money or what it would do with it.