Ohio Auditor Warns of Medicaid Fraud and Budget Adjustments

Ohio State Auditor Keith Faber raised concerns about significant Medicaid fraud during a Capitol Hill hearing. He pointed out that weak program controls have led to billions in losses. Ineligible recipients, including the deceased and residents enrolled in multiple states, have been exploiting the system. Faber noted that over $455 million went to ineligible recipients in 2020, stressing the need for immediate corrective measures to stop further taxpayer money wastage.

Recently, Ohio lawmakers approved a significant $875 million payment package. This decision followed a ruling from the Ohio Supreme Court, which found the state used the incorrect formula to calculate Medicaid reimbursements. This resulted in nursing homes receiving considerably less than they should have, with providers collectively shortchanged by hundreds of millions of dollars.

The agreed funding addresses payment disputes with skilled nursing facilities traced back to the 2024-25 budget cycle. State Rep. Jean Schmidt remarked, “This is the most egregious thing we could have done to individuals that help our elderly live a quality, comfortable life. And today we are correcting that wrong.” The court’s September 2025 decision identified the state’s error in the methodology used for Medicaid quality payments, mandating a recalculation of what providers were owed.

The newly approved financial package, set to be signed by Republican Gov. Mike DeWine, exceeds the initial amount pinpointed by the court’s ruling. It allocates $875 million, comprising approximately $310 million from state funds and $565 million from federal sources, to address this issue.

Ohio employs a daily rate system for compensating nursing homes for Medicaid residents, with additional monetary rewards for facilities meeting quality standards. Nursing home operators argued that the state neglected the medical intricacies of residents, leading to reduced payments for facilities managing some of the most complex cases.

Although the formula was subsequently adjusted, the obligation remained to resolve prior budget cycle payment issues. The financial implications of the court’s decision became apparent as the case advanced. Ohio Medicaid cautioned that recalibrating payments based on the court’s directive might increase costs by approximately $285 million annually, potentially nearing $1 billion over two budget cycles.

The legislation stipulates that providers receiving these funds must forfeit future legal claims concerning the contentious formula. Scott D. Wiley, CEO of the Ohio Health Care Association, advocated for the bill’s swift enactment, stating, “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.”