Nursing home associations in Ohio have sued the state Department of Medicaid last week over a Medicaid rate that does not match what’s needed to meet quality incentives.

Ohio’s rebasing process splits Medicaid funding into two categories, with 60% based on meeting certain quality incentives and 40% reserved for the “base rate,” or a calculation based on fixed costs, care costs and taxes, among other factors, according to a report from Cleveland.com.

The state Department claims the associations’ interpretation of the incentive program would tack on a weighty $286 million to its budget. Justices with the Ohio Supreme Court on Wednesday asked both parties to attempt mediation before moving ahead with court proceedings.

“We tried every avenue to convince the department that they are misinterpreting the clear language of the statute, to no avail,” Pete Van Runkle, executive director of the Ohio Health Care Association (OHCA), said in a statement. “Our members read the budget bill and expected a much stronger commitment to quality-based funding. They are extremely disappointed that it did not materialize.”

The Academy of Senior Health Services, LeadingAge Ohio and OHCA together allege the quality incentive part of the funding formula was “significantly shortchanged” by the Medicaid Department and as a result the increase in this area was smaller than the base rate. 

Specifically, the Medicaid Department didn’t correctly calculate the value per quality point, the nursing home associations argue.

“Because the quality incentive component is being shortchanged, [the Ohio Department of Medicaid] is depriving Ohio’s nursing facilities – and thus the vulnerable residents of those facilities – of Medicaid funding that the legislature has specifically required ODM to spend,” the associations wrote in a court filing.

Quality incentives consider care outcomes for residents, including the use of antipsychotic drugs, or developing bed sores or urinary tract infections.