A stethoscope on top of a pile of money

A new lawsuit alleges that eight Indiana hospitals — owners of 250 of the state’s 527 nursing homes — are violating state open record laws by withholding information on extra public funding doled out to them through the Medicaid system.

The supplemental Medicaid dollars are distributed to hospitals through the Indiana Family and Social Services Administration, which makes allotments based on a provider’s number of Medicaid-covered nursing home residents.

While the money isn’t required to be spent on nursing home services, an IndyStar Marion County lawsuit argues that the public should be able to see how and where nursing homes benefit from the program. The newspaper, which has previously targeted the state’s complex nursing home ownership and funding mechanisms, alleges the eight named hospitals are “preventing the public from knowing how their tax dollars are being spent.”

Those targeted in the quest for financial information are Hancock Regional Hospital, Hendricks Regional Health, Henry Community Health, Johnson Memorial Health, Major Health Partners, Rush Memorial Hospital, Witham Health Services and Riverview Health. None of the hospitals had provided public comment on the suit as of McKnight’s production deadline.

The Indiana supplemental Medicaid funds support only publicly owned nursing homes, giving them 50% to 60% more money than what private nursing homes in the state receive, according to the IndyStar.  

Indiana gets more supplemental Medicaid funding than any other state, the newspaper said. In total, the state’s hospital nursing home owners split about $825 million last year. A previous IndyStar investigation found about 20 county hospitals had acquired more than 90% of Indiana’s nursing homes. 

The newspaper has alleged that the hospitals divert nursing home-related funds to other uses, including hospital construction projects.

Since the launch of a 2021 investigation, 12 hospitals have shared financial information that indicates what portion of supplemental funding they spend on nursing homes. The eight hospital systems named in IndyStar’s lawsuit have declined to, citing trade secrets.

“They said disclosing the amount of money they spend on their nursing homes could allow other county hospitals to poach the private management companies they use to operate the facilities,” the IndyStar reported about their denials.