In a unanimous decision on September 2, 2025, the Ohio Supreme Court delivered a major win to nursing home operators by ordering the Ohio Department of Medicaid (ODM) to recalculate the quality incentive payments for nursing homes.
By way of background, in the 2024-2025 biennial budget legislation, the Ohio General Assembly amended the statutory formula set forth in Ohio Revised Code 5165.26 that is used to determine the total amount to be spent on quality incentive payments to nursing homes from a pool of funds known as the “quality-incentive pool” or “QI pool.” In July 2024, LeadingAge Ohio, the Ohio Health Care Association, and the Academy of Senior Health Sciences, Inc. (collectively, “the associations”) brought forth a mandamus action asserting that ODM did not follow the amended Ohio Revised Code 5165.26(E) that specifies that the contribution to the QI pool for each nursing home for each of the nursing home’s Medicaid days for the prior year include 60 percent of the change in the “rate for direct care costs” that is determined as a result of the rebasing. In calculating the amount to allocate to the QI pool, ODM used the increase in the “cost per case mix unit,” also known as the “price,” claiming that this was the same as the increase in the rate for direct care costs. The associations argued that the ODM calculation clearly reflected a misreading of the statute, pointing out that the statute specifies that the amount the “rate for direct care costs” changes as a result of rebasing must be used in the calculation, not the amount the price changes as a result of rebasing. The associations further argued that by using the price, ODM vastly reduced the amount of extra funding it should have added to the QI pool.
The associations sought the writ of mandamus on behalf of their member nursing homes to force ODM to recalculate and pay all nursing home quality incentive payments, dating from July 1, 2023, forward, as required pursuant to the plain, unambiguous language of Ohio Revised Code 5165.26 as amended by the 2024-2025 budget legislation.
The Ohio Supreme Court granted the writ of mandamus, finding that the associations proved that ODM failed in its duty to apply the statute as enacted by the General Assembly. It ordered ODM to recalculate the QI pool based on the words the legislature enacted—using the change in the rate for direct care costs, not merely the change in the price for its calculation under the Ohio Revised Code.
The Court also dismissed ODM’s attempt to dismiss the case as moot, as the statutory formula remains in effect for future payment periods.
The full decision can be found here [State ex rel. LeadingAge Ohio v. Ohio Dept. of Medicaid]. Bricker Graydon will be following this closely, as further guidance regarding the recalculation and redistribution of funds is expected soon.
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