THE ARISING · Markets & Strategy
OIG Finds Indiana Public Entities Recouped $205 Million Intended for Nursing Homes
Indiana nursing facilities did not retain $205.2 million in Medicaid supplemental payments intended to increase their reimbursement. Nonstate government-owned entities recovered the money instead, according to a November report from the HHS Office of Inspector General.
The report found that nonstate government-owned entities, such as county hospitals, recovered $479.8 million of Indiana's supplemental payments. That is nearly half of the state's total. Of that sum, $274.6 million was the state share that those entities had first contributed.
The structure behind the flows matters for operators. During the audit period, nonstate government-owned entities, including county hospitals, owned or operated about 97% of Indiana nursing facilities, according to OIG.
Scale explains why OIG looked at Indiana. In fiscal 2022 the state received about $1.02 billion of the $2.36 billion in nursing facility supplemental payments reported nationwide. That was the highest of any state. A 2020 Indianapolis Star investigation helped prompt the audit. The paper reported that officials across Indiana acquired the licenses of private nursing homes, which gave them access to extra Medicaid funding available only to government-owned nursing homes.
OIG also found errors in how the state handled the payments. State officials failed to report overpayments, carried an extra leap-year day into a non-leap-year calculation and used an incorrect federal matching rate. Indiana claimed $12.2 million in federal payments that did not comply with federal and state requirements.
OIG made four recommendations. They include exploring ways to increase the share of supplemental payments that participating nursing facilities keep, and refunding the $12.2 million in excess payments to the federal government.
The report frames the issue as a national one, citing longstanding concerns about complexity, scale and limited transparency in Medicaid supplemental payments. It points to a 2019 Senate Finance Committee report on the same subject.
OIG explicitly noted that nothing prohibited the entities from recovering the $205.2 million, although that money did not increase nursing facility reimbursement as intended. This finding is distinct from the $12.2 million in federal payments that did not comply with requirements.
Indiana did not indicate concurrence or nonconcurrence with the recommendations. It said it would consider ways to increase the share retained by nursing facilities and described steps taken or planned in response to the other recommendations.