Nearly two dozen county-owned hospitals in Indiana have used a legal loophole to reroute billions in supplemental Medicaid funds from nursing homes to hospital projects, according to a March 18 investigative report from IndyStar.
The IndyStar has been investigating the financial implications of the ownership structure since 2020. The IndyStar’s report includes information obtained as a result of a public records lawsuit settlement with eight county-owned hospitals. Though the hospitals were required to disclose financial data from the 2018 to 2023 as part of the settlement, they admitted to no wrongdoing.
Here are five things to know from the investigation:
1. State and federal Medicaid rules in Indiana allow local government-owned nursing homes to claim a 36% higher reimbursement rate compared to privately owned facilities.
The higher reimbursement rate is intended to provide government-owned nursing homes with additional funding as those facilities often treat more disadvantaged patients, the IndyStar report said.
2. The IndyStar investigation found that county hospitals have acquired “nearly all” of Indiana’s nursing homes over the past 15 years.
In total, 21 public hospitals have kept around 46% of the $5.6 billion generated by about 500 Indiana nursing homes.
3. The hospitals have spent the diverted Medicaid funding on new buildings, renovations, equipment, ambulances and technology, the report said.
The county-owned nursing homes have spent their share of the Medicaid funding on buildings, equipment and administrative expenses, not direct patient care, according to researchers from Iowa City-based University of Iowa who analyzed cost reports for Indiana’s nursing homes from 2009 to 2017.
The analysis also showed a decrease in spending on clinical expenses and nursing salaries during the study period.
4. Through this ownership structure, Indiana has collected more nursing home Medicaid funding than any other state, the IndyStar reported.
At the same time, federal data shows that Indiana nursing homes have the second lowest total nurse staffing hours per resident out of all 50 states and Washington, D.C., a measure commonly used to gauge care quality.
5. Becker’s has reached out for comment to the Suburban Health Organization, whose hospital members are identified in the IndyStar report. This story will be updated if more information becomes available.