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Indiana County Hospitals Gaming Medicaid for Billions, Diverting from Nursing Homes

By Jack H. FarnbauchApril 1, 2020

Indiana received $679 million last year in extra Medicaid payments to care for nursing home residents. That's more than California, New York, Illinois and every other state. With all that money, one would think, Indiana should have the best nursing homes in America. From reading these blog entries, it is clear Indiana does not have the best nursing homes, however. 

An IndyStar investigation found at least $1 billion in supplemental Medicaid funding, meant for nursing homes, has been diverted to the state’s county hospitals since 2003. The total is likely much more. It could be nearly $3 billion. To get that money, the hospitals embraced a plan pioneered by Matthew Gutwein, the chief executive of Marion County’s public health system.

An investigation by the IndyStar has uncovered Gutwein’s scheme to divert this money from nursing homes by exploiting a loophole in Medicaid’s system. Medicaid provides extra funding to nursing homes that are owned by a local government. So two decades ago, Gutwein's agency, Health & Hospital Corp. of Marion County (HHC), began buying nursing homes, at least on paper, to qualify for those funds. Then, it exploited lax federal and state rules that allowed the hospital to pocket much of the money.

Other county hospitals jumped in on the scheme and now 93% of the state’s nursing homes are owned by county hospitals. County hospital executives acknowledge not all the money goes to nursing homes. They insist it has funded significant improvements in medical care for Indiana residents as public hospitals face severe financial pressure. They say nursing home residents benefited, too. These are hard to believe when looking at Indiana’s rankings in elder care statistics. 

You can read more here