Indiana nursing homes missed out on $205.2 million in Medicaid supplemental payments – funds that were intended to increase Medicaid reimbursement to participating nursing facilities. Instead, the money was recouped by county hospitals in the state, which operate a vast majority of these facilities in the state, a federal oversight agency’s report released Tuesday found.
The Office of Inspector General’s (OIG) report suggests that in total, nearly half of Indiana’s supplemental payments, or $479.8 million, were recovered by nonstate government-owned (NSGO) entities such as county hospitals. Of that amount, $274.6 million represented the state share of supplemental payments that NSGO entities had initially contributed.
During the audit period, about 97% of Indiana nursing facilities were operated by county-owned hospitals, OIG noted.
Lack of transparency related to these Medicaid supplemental payments has plagued the program nationwide, OIG said, noting a 2019 Senate Finance Committee report on the matter.
“Federal oversight of Medicaid supplemental payments has long been a concern because of their complexity, scale, and limited transparency,” the OIG report noted as the reason for the investigation. “[These] payments often lack provider-level detail, obscuring how taxpayer dollars are actually used and whether they achieve intended outcomes.”
And, OIG focused its audit on Indiana because the state received the highest nursing facility supplemental payments in the nation in fiscal 2022, accounting for approximately $1.02 billion of the $2.36 billion reported nationwide, the federal oversight agency said in its report, also highlighting a 2020 investigation by the Indianapolis Star that in part prompted OIG’s investigation.
The Star had called attention to the fact that much of the money wasn’t being used in nursing homes but instead was going toward funding county hospital operations.
“Officials across Indiana acquired the licenses of private nursing homes. That gave them access to extra Medicaid funding available only to government-owned nursing homes,” the article stated.
The audit found that state officials failed to report overpayments, included an extra day in leap-year calculations and used an incorrect federal matching rate.
OIG also determined that Indiana claimed $12.2 million in federal payments that did not comply with federal and state requirements.
The audit resulted in four recommendations to Indiana, including exploring ways to increase the share of supplemental payments retained by participating nursing facilities and refunding the $12.2 million in excess payments to the federal government.
