Columbus, OH — Ohio’s multibillion-dollar push to reward better nursing home care is showing early gains, with fewer hospital readmissions and more top-rated facilities. A recent Ohio Supreme Court ruling has added fresh momentum, ordering the state to recalculate and distribute hundreds of millions more in incentive payments to providers.
Launched in 2023 as part of the state budget, the Skilled Nursing Facility Quality Incentive Payment Program ties Medicaid dollars to performance on a set of quality measures. By this fall, more than $500 million had flowed to over 900 facilities, according to state data and industry reports. Those funds helped drive a 15% drop in hospital readmissions and a 12% increase in the share of Ohio facilities earning five stars from the federal Centers for Medicare & Medicaid Services since the program began.
How the program works
Ohio’s model rewards facilities quarterly for meeting targets across 10 metrics, including nurse staffing hours per resident day, infection control, antipsychotic use, and resident satisfaction. Top performers can earn bonuses of up to $25 per resident per day, creating a direct link between measured outcomes and operating revenue.
The incentives were part of a broader two-year, $1.2 billion nursing home package in House Bill 33 and were designed to stabilize an industry rocked by the pandemic and chronic Medicaid underpayment. Operators say the program has helped fund retention bonuses, technology upgrades, and expanded training. Average registered nurse staffing hours have climbed roughly 20% since launch, while antipsychotic use has edged down, state and federal data show.
A court-ordered cash infusion
The turning point came Sept. 2, when the Ohio Supreme Court unanimously ruled that the Department of Medicaid miscalculated payments during the program’s first two years. The decision in Case No. 2024-0456 requires the state to recalculate and redistribute an estimated $200 million to providers for 2023–2024, after a lawsuit alleged underpayments tied to incomplete data and methodology errors.
“This program isn’t just about money—it’s about saving lives and homes,” said Ohio Health Care Association CEO Cheryl M. Moore in an October statement. “The Supreme Court ruling ensures that quality efforts aren’t undermined by bureaucratic errors, allowing us to retain staff and deliver the care Ohioans deserve.”
Medicaid Director Barbara R. Sears said the agency “respects the court’s decision and is committed to fair implementation,” adding that recalculations will not delay future payments. A legal analysis from Bricker Graydon LLP noted the ruling clarifies state law (Ohio Revised Code § 5168.60) around including all eligible metrics—guidance that could echo in other Medicaid disputes.
On the ground: stability and upgrades
Providers report the incentives are changing operations. One Columbus-area facility improved its federal star rating from two to four in 2024 after boosting registered nurse hours, earning more than $1 million in bonuses that financed retention pay and software upgrades, according to industry sources. A statewide survey this fall found 85% of facilities reported improved financial stability following the ruling and recalculations.
Families are seeing more transparency as well. Ohio’s Nursing Home Quality Navigator, launched in March 2024, offers real-time performance data to help with placement decisions. AARP Ohio praised the court decision while urging continued oversight. “Families applaud this, but we need ongoing audits to ensure incentives translate to better resident experiences, not just profits,” the group said in a post.
National pressures, Ohio model
Ohio aligned its incentives with new federal staffing requirements that took effect in 2024, a move providers say helped offset burnout and turnover. Early indicators suggest statewide turnover has fallen by about 10%, bucking national pressures as facilities compete for nurses and aides.
The program has also drawn bipartisan backing at the Statehouse. Lawmakers who built the incentives into the 2023 budget argued that financial “carrots” would move quality faster than penalties alone—an approach other states are now watching. Policymakers in Michigan and Pennsylvania have floated similar ideas for 2026, according to industry surveys.
What’s next
Ohio officials are preparing a second phase of the program in the next budget cycle, with a proposed expansion to $400 million in annual incentives. Still, risks loom. Potential federal Medicaid cuts could constrain future payments, and watchdogs say the state should pair bonuses with rigorous audits to ensure gains persist, especially in rural communities that continue to lag on key metrics.
For now, the combination of data-driven targets and court-enforced funding has given Ohio’s nursing homes a rare dose of stability—and a clear signal that measurable quality will be rewarded.
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