Elder law attorneys focused on aging in place planning often counsel families on the complexities and risks of long-term care options, including nursing homes and assisted living facilities. A recent article entitled, "States are reneging on promised nursing home payments" reports that providers are turning to the courts, highlighting a growing national trend: states failing to deliver on promised Medicaid payments to nursing home providers, prompting lawsuits across the country.
In Ohio, this issue has come to a head with a unanimous Ohio Supreme Court ruling on September 2, 2025, ordering the Ohio Department of Medicaid (ODM) to recalculate and increase quality incentive payments to nursing homes. This decision stems from a lawsuit by provider associations like LeadingAge Ohio, alleging that ODM miscalculated reimbursements under the 2024-2025 state budget, shortchanging facilities by millions in funds meant to reward high-quality care. While this ruling is a win for providers, it raises critical questions for Ohio families:
- Do these payment disputes threaten the quality of care in our state's nursing homes and assisted living facilities?
- Are the cost issues part of a larger pattern where states seek alternative ways to cut corners?
- And what can residents or their loved ones do to safeguard against potential impacts?
Unpacking the Ohio Ruling: A Victory with Lingering UncertaintyThe Ohio Supreme Court's decision in State ex rel. LeadingAge Ohio v. Ohio Dept. of Medicaid (Slip Opinion No. 2025-Ohio-3066) marks a significant enforcement of legislative intent. At its core, the case revolved around a statutory formula in ORC § 5165.26, amended in the 2024-2025 biennial budget to prioritize "quality incentives" for high-performing nursing homes. These incentives, intended to boost staffing, reduce readmissions, and improve resident satisfaction, were meant to receive a larger share of the Medicaid reimbursement pool following a "rebasing" process that updates base rates for inflation and costs.
ODM, however, calculated the incentive pool using pre-amendment math, resulting in an estimated $527 million shortfall for the 2024-2025 cycle alone. The Court rejected ODM's defenses, including claims of mootness (since the fiscal year ended in June 2025) and "unclean hands" by providers who participated in budget talks. In a per curiam opinion, the justices granted a writ of mandamus, mandating recalculation and emphasizing that "ensuring the department applies the statute as written is not reprehensible but laudable."
The ruling leaves key details unresolved, however. It didn't specify explicitly whether back payments apply only to 2024-2025 or extend to the current cycle, potentially doubling the impact to $1 billion. ODM has since filed for reconsideration, arguing the financial strain could jeopardize the state's budget and rainy day fund (currently over $3.8 billion). The Court has ordered mediation, a step that could delay resolutions for months.
Ohio's 926 Medicaid-certified nursing homes serve about 66,000 residents, mostly elderly, making up the backbone of long-term care. For families weighing nursing home placement as a backup to aging in place, this dispute signals vulnerability: Underfunded incentives could mean fewer resources for staff training or facility upgrades, indirectly eroding care quality.A National Crisis: States Cutting Corners Amid Budget PressuresOhio's case is no outlier; it's emblematic of a broader wave of state-level foot-dragging on Medicaid commitments, exacerbated by federal budget proposals and post-pandemic fiscal strains. The referenced article highlights how providers nationwide are suing to enforce promised payments, with Virginia's saga as a prime example. There, over 180 nursing homes petitioned the Virginia Supreme Court in September 2025 after Governor Glenn Younkin vetoed a new rate-setting methodology, despite full appropriations. The narrower calculation used by the state has led to daily per-patient losses of up to $23.12 in rural areas, threatening workforce investments and care standards.
This pattern reflects deeper systemic issues:
A Call to Action: Stability Starts with Planning
The Ohio ruling is a step forward, but until funds flow and national trends reverse, uncertainty looms for the 66,000 Ohioans in Medicaid-funded care. For families committed to aging in place, these battles reinforce a core truth: proactive planning, blending legal safeguards, financial foresight, and alternative care, turns vulnerabilities into resilience. Don't wait for the next court order; schedule a consultation today to audit your long-term care blueprint.
ODM, however, calculated the incentive pool using pre-amendment math, resulting in an estimated $527 million shortfall for the 2024-2025 cycle alone. The Court rejected ODM's defenses, including claims of mootness (since the fiscal year ended in June 2025) and "unclean hands" by providers who participated in budget talks. In a per curiam opinion, the justices granted a writ of mandamus, mandating recalculation and emphasizing that "ensuring the department applies the statute as written is not reprehensible but laudable."
The ruling leaves key details unresolved, however. It didn't specify explicitly whether back payments apply only to 2024-2025 or extend to the current cycle, potentially doubling the impact to $1 billion. ODM has since filed for reconsideration, arguing the financial strain could jeopardize the state's budget and rainy day fund (currently over $3.8 billion). The Court has ordered mediation, a step that could delay resolutions for months.
Ohio's 926 Medicaid-certified nursing homes serve about 66,000 residents, mostly elderly, making up the backbone of long-term care. For families weighing nursing home placement as a backup to aging in place, this dispute signals vulnerability: Underfunded incentives could mean fewer resources for staff training or facility upgrades, indirectly eroding care quality.A National Crisis: States Cutting Corners Amid Budget PressuresOhio's case is no outlier; it's emblematic of a broader wave of state-level foot-dragging on Medicaid commitments, exacerbated by federal budget proposals and post-pandemic fiscal strains. The referenced article highlights how providers nationwide are suing to enforce promised payments, with Virginia's saga as a prime example. There, over 180 nursing homes petitioned the Virginia Supreme Court in September 2025 after Governor Glenn Younkin vetoed a new rate-setting methodology, despite full appropriations. The narrower calculation used by the state has led to daily per-patient losses of up to $23.12 in rural areas, threatening workforce investments and care standards.
This pattern reflects deeper systemic issues:
- Federal Squeeze: Proposed 2025 budget cuts could slash Medicaid by $793 billion over a decade, including limits on state-directed payments (SDPs) to nursing facilities—capping them at 100-110% of Medicare rates. Nearly two-thirds of nursing home residents rely on Medicaid, funding $3 of every $4 in facility spending.
- State Budget Games: Amid rising costs, states like Virginia and Ohio are reinterpretating formulas to redirect funds, often prioritizing short-term savings over quality incentives. In Indiana and 19 other states, lawsuits target federal staffing mandates, arguing they strain resources without adequate reimbursement.
- Ripple Effects: Experts warn these tactics could force millions into understaffed facilities or push families toward costlier private-pay options, undermining home- and community-based services (HCBS) that support aging in place.
- Diversify Care Options Early: Don't default to nursing homes! Age in Place, staying home with family caregivers, paid caregivers, and/or in-hime PT/OT. Prioritize HCBS waivers like Ohio's PASSPORT program, which covers in-home aides and adult day care for those 60+ with income under $2,901/month and limited assets. These are less vulnerable to facility-specific funding fights and align with aging in place.
- Conduct Facility Due Diligence: When nursing home placement is inevitable, scrutinize quality metrics beyond stars—review staffing ratios (aim for 3.5+ hours/resident/day) and recent surveys via Medicare's Nursing Home Compare tool. Ask about Medicaid rate stability and contingency plans for payment shortfalls. Review this Blog's article, "Choosing a Nursing Home or Skilled Nursing Facility: Navigating the Long-Term Care Crisis" for detailed guidance.
- Leverage Medicaid Planning Tools: Use irrevocable trusts or spousal transfers to protect assets (e.g., the Community Spouse Resource Allowance up to $154,140 in 2025), ensuring eligibility without depleting savings. For couples, the Minimum Monthly Maintenance Needs Allowance safeguards the healthy spouse's income.
- Consider an Advantage Plan: By choosing a Medicare Advantage plan with robust supplemental benefits, you can better afford and structure home-based care, potentially delaying or avoiding facility costs.
- Monitor and Advocate: Track ODM updates via LeadingAge Ohio's resources and join family councils at facilities to voice concerns. If disputes arise, consult an elder law attorney for appeals or private-pay transitions.
- Build Financial Buffers: Incorporate long-term care insurance or hybrid life policies into your plan, hedging against Medicaid gaps. Annual reviews can adjust for state changes.
Risk Factor | Potential Impact | Mitigation Strategy |
|---|---|---|
Payment Shortfalls | Reduced staffing, care delays | Opt for HCBS; verify facility reserves |
Federal Cuts | SDP limits, higher out-of-pocket | Asset protection trusts; LTC insurance |
State Delays | Facility closures in rural areas | Diversify options; legal advocacy |
Quality Erosion | Higher infection rates, burnout | Demand transparency; join oversight groups |
The Ohio ruling is a step forward, but until funds flow and national trends reverse, uncertainty looms for the 66,000 Ohioans in Medicaid-funded care. For families committed to aging in place, these battles reinforce a core truth: proactive planning, blending legal safeguards, financial foresight, and alternative care, turns vulnerabilities into resilience. Don't wait for the next court order; schedule a consultation today to audit your long-term care blueprint.
