Ohio State Auditor Keith Faber has raised concerns about substantial Medicaid fraud in Ohio during a Capitol Hill hearing. Faber revealed that the state’s Medicaid system lost billions due to lax program controls. These shortcomings allowed ineligible recipients, including deceased individuals and enrollees from multiple states, to exploit the benefits system. In 2020, over $455 million in benefits were wrongly paid to ineligible recipients. Faber urged for immediate measures to prevent further taxpayer losses.
In response to a related issue, Ohio lawmakers have approved an $875 million payment package. This follows a decision by the Ohio Supreme Court which found that the state incorrectly calculated Medicaid reimbursements for nursing homes. This resulted in providers being shortchanged by hundreds of millions. The newly approved funds, part of a budget correction bill, address disputes surrounding payments to skilled nursing facilities dating 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,” said State Rep. Jean Schmidt. “Today we are correcting that wrong.”
In September 2025, the Ohio Supreme Court ruled that state officials had used incorrect methods when calculating Medicaid quality payments. This error resulted in significant underpayments to nursing homes. The court demanded the state to reassess the amounts owed to providers.
The solution proposed by lawmakers surpasses the amount specified in the legal decision. The new package allocates $875 million, comprised of approximately $310 million from the state and $565 million in federal contributions, to resolve the issue at hand. Ohio compensates nursing homes with a daily rate for Medicaid residents and additional payments for meeting quality benchmarks. Operators of nursing homes argued that the state had failed to consider the medical complexity of residents correctly, which affected reimbursement calculations for facilities caring for patients with severe conditions.
The formula used for these calculations was later adjusted, but the state retained responsibility for payments related to earlier budget cycles. The financial implications increased as the case advanced through court proceedings. Legal filings indicated that recalculating payments in accordance with the court’s ruling could result in costs approximately $285 million higher per year than originally projected, potentially nearing $1 billion over two budget cycles.
The legislation stipulates that providers accepting this financial settlement must waive future legal claims concerning the disputed formula. Scott D. Wiley, CEO of the Ohio Health Care Association, emphasized the importance of these funds. He urged Governor Mike DeWine to swiftly sign the proposed bill into law, recognizing its critical significance for Ohio’s healthcare providers and the families they assist.
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