Ohio auditor sounds alarm on billions in Medicaid fraud at Capitol Hill hearing
During a recent hearing on Capitol Hill, Ohio State Auditor Keith Faber issued a stark warning about the significant financial losses Ohio faces due to rampant Medicaid fraud. Faber pointed out that the program’s weak controls have enabled ineligible parties, such as deceased individuals and people registered in multiple states, to abuse the system. He revealed that in 2020 alone, over $455 million in benefits were wrongly allocated to those who didn’t qualify, and he called for urgent measures to curb further misuse of taxpayer money.
In response to these issues, Ohio lawmakers approved a substantial $875 million payment package on Wednesday. This move comes after the Ohio Supreme Court determined that the state had been using an incorrect formula for calculating Medicaid reimbursements to nursing homes, which had resulted in a significant shortfall of funds for providers amounting to hundreds of millions of dollars.
The newly approved funding, part of a budget correction bill now awaiting the signature of Republican Governor Mike DeWine, aims to address and resolve the longstanding payment dispute with skilled nursing facilities that dates back to the 2024-25 budget cycle.
“This is the most grievous oversight we could have committed against those who care for our elderly, ensuring they lead dignified and comfortable lives,” stated state Representative Jean Schmidt. “Today, we are setting that mistake right.”
The Ohio Supreme Court’s decision in September 2025 highlighted that state officials had employed an incorrect approach in calculating specific Medicaid quality payments. This error led to significant underpayments to nursing homes. Consequently, the court ordered the state to reassess and correct the owed amounts to the providers.
HOUSE GOP LAUNCHES NEW TASK FORCE, PROBES ALLEGED $250B MEDICAID FRAUD IN OHIO
Ohio Gov. Mike DeWine poses for a group photo with the Ohio Congressional delegation after the ceremonial swearing-in of Sen. Jon Husted in the Old Senate Chamber at the Capitol on Jan. 21, 2025. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
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.
The Ohio Statehouse in Columbus. Ohio lawmakers approved an $875 million payment package for nursing homes after the Ohio Supreme Court found the state underpaid providers through a Medicaid reimbursement formula. (Maddie McGarvey/For The Washington Post via Getty Images)
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.
An elderly resident sits with a walker at a nursing home. Ohio lawmakers moved to correct hundreds of millions of dollars in nursing home Medicaid underpayments after a state Supreme Court ruling. (Getty Images)
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.
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