Ohio Lawmakers Approve $875 Million Fix For Nursing Home Medicaid Pay
Ohio lawmakers approved an $875 million payment package on June 10, 2026, to resolve Medicaid underpayments to nursing homes and included it in a budget correction bill.[1]
The package uses about $310 million in state funds and about $565 million in federal funds and will be sent to Gov. Mike DeWine for his signature.[1] Providers accepting the money must waive future legal claims tied to the disputed reimbursement formula.[1]
In the 2024-2025 biennial budget, the Ohio General Assembly changed the statutory formula in R.C. 5165.26 to increase the quality incentive pool after rebasing rather than limit increases to annual price adjustments. The Ohio Department of Medicaid applied a different interpretation when making payments, and nursing-home groups sued. On September 2, 2025, the Ohio Supreme Court unanimously ordered the department to recalculate payments using the enacted formula.
Ohio has about 926 Medicaid-certified nursing homes serving roughly 66,000 residents, with Medicaid covering about 65% of nursing home residents as of 2025. State officials had warned the recalculation could raise costs by about $285 million per year beyond earlier projections.
The mainstream summary does not address the broader implications of the $875 million payment package, particularly the ongoing issues of Medicaid program integrity, which include fraud and improper payments. According to a 2025 KFF analysis, a significant portion of Medicaid's improper payments—79.1% in 2024—arises from insufficient documentation rather than intentional fraud, highlighting systemic vulnerabilities that could affect future funding and reimbursement processes. This context suggests that while the immediate financial relief for nursing homes is crucial, the underlying administrative challenges remain unaddressed, potentially leading to recurring disputes over reimbursement formulas.
Additionally, the summary overlooks the Ohio Supreme Court's ruling, which emphasized that the Department of Medicaid misinterpreted statutory language regarding quality-incentive calculations. This misinterpretation, which was based on 'price' rather than 'rate for direct care costs,' illustrates a common issue where legislative changes to complex reimbursement formulas are not effectively communicated to the implementing agencies. Such gaps can lead to significant financial repercussions for both providers and the state, as noted in the court's decision regarding the need for accurate application of the new formula.[2][3][4]
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📊 Relevant Data
Ohio has approximately 926 Medicaid-certified nursing homes serving about 66,000 residents, with Medicaid covering the care of about 65% of all nursing home residents in the state.
State Must Recalculate Medicaid Payments to Nursing Homes — Court News Ohio
Ohio's total Medicaid program spending exceeded $43 billion in state fiscal year 2025.
Changes to Medicaid financing in Ohio — Health Policy Institute of Ohio
📌 Key Facts
- On June 10, 2026, Ohio’s legislature approved an $875 million payment package to resolve Medicaid underpayments to nursing homes.
- The package allocates about $310 million in state funds and $565 million in federal funds and is included in a budget correction bill sent to Gov. Mike DeWine.
- A September 2025 Ohio Supreme Court ruling found the state used the wrong formula for certain Medicaid quality payments and ordered recalculation, with officials warning the fix could cost about $285 million more per year than planned.
- Providers accepting the money must waive future legal claims related to the disputed reimbursement formula.
📰 Source Timeline (1)
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