Ohio approves nearly billion dollar payment after court ruled state shortchanged nursing homes

Ohio lawmakers approved an $875 million payment package Wednesday after the Ohio Supreme Court found the state used the wrong formula to calculate certain Medicaid reimbursements for nursing homes, shortchanging providers by hundreds of millions of dollars.

The funding, included in a budget correction bill that now heads to Republican Gov. Mike DeWine's desk, is intended to resolve a dispute over payments to skilled nursing facilities that dates back to the 2024-25 budget cycle.

"This is the most egregious thing we could have done to individuals that help our elderly live a quality, comfortable life," state Rep. Jean Schmidt said. "And today we are correcting that wrong."

In a September 2025 ruling, the Ohio Supreme Court said state officials used the wrong methodology when calculating certain Medicaid quality payments, resulting in hundreds of millions of dollars in underpayments to nursing homes. The court ordered the state to recalculate what providers were owed.

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Lawmakers' solution carries a larger price tag than the amount identified in the ruling. The package sets aside $875 million, including roughly $310 million from the state and $565 million in federal funding, to settle the issue.

Ohio pays nursing homes a daily rate for Medicaid residents and provides additional payments to facilities that meet certain quality benchmarks. Nursing home operators argued the state failed to properly account for the medical complexity of residents when calculating those payments, reducing reimbursement for facilities caring for some of the sickest patients.

Lawmakers later revised the formula, but the state remained responsible for payments tied to earlier budget cycles.

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The financial stakes grew as the case moved through the courts. In legal filings, Ohio Medicaid warned that recalculating the payments under the court's interpretation could cost about $285 million more per year than lawmakers originally intended, potentially approaching $1 billion over two budget cycles.

The legislation requires providers that accept the money to waive future legal claims related to the disputed formula.

Scott D. Wiley, CEO of the Ohio Health Care Association, urged DeWine to sign the bill.

"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.