The Indiana House Public Health Committee unanimously advanced House Bill 1277 on Jan. 13, which legislation supporters say would save hundreds of millions of dollars in Medicaid funding each year while expanding access to care for elderly and vulnerable Hoosiers.
The bill would reform the state’s PathWays for Aging Medicaid program, which serves older adults who need skilled nursing care, assisted living, or other home and community-based services. HB 1277 is authored by State Rep. Brad Barrett, R-Richmond.
Under current law, eligible individuals can receive services through the Health & Wellness and PathWays Medicaid waivers, allowing those who qualify for nursing home-level care to instead be served in their homes or communities. However, a waitlist for those services was imposed in April 2024 and has continued to grow. As of January, more than 16,000 Hoosiers remain on the waitlist.
The PathWays for Aging program launched July 1, 2024, and is overseen by Humana, Elevance Health and United Health Care on behalf of the state. The program covers Medicaid services for approximately 117,000 Hoosiers.
Shortly after launch, Humana and Elevance were placed on corrective action plans by the state due to billing, claims processing and other contract violations. According to information cited in support of the bill, the insurance companies owed more than $100 million in late payments and inappropriately denied Medicaid payments last year to the nursing home industry alone, in addition to other providers.
Program costs have also exceeded expectations. After its first year, PathWays for Aging is more than $300 million over budget.
“With a waitlist that grows every day, $300 million in cost overruns, and two of the three insurance companies selected to run the program placed on corrective action by the state, immediate action is warranted to prevent these problems from growing,” said Paul Peaper, president of the Indiana Health Care Association/Indiana Center for Assisted Living.
HB 1277 would move long-stay nursing home residents out of the PathWays for Aging managed care model and into a fee-for-service system not run by insurance companies, similar to the model used for individuals ages 59 and younger. The bill would also clarify that individuals receiving services through the PathWays for Aging waiver cannot exceed the annual cost of nursing home care.
State budget documents presented in December showed some individuals receiving waiver services costing the Medicaid program $150,000 to $200,000 or more per year, while nursing home care costs are nearly half that amount and assisted living care roughly one-fifth of the cost.
The bill would also require the Family and Social Services Administration to request federal approval for a standalone assisted living waiver, similar to waivers used in Illinois and Ohio. Supporters say savings from the proposed changes could be used to eliminate the waitlist for home and community-based services.
“The waitlist was in response to exploding Medicaid costs, and assisted living is being unfairly targeted,” Peaper said.
HB 1277 now moves to the House Ways and Means Committee for further consideration.
This reporting is made possible by a grant from the Indianapolis African-American Quality of Life Initiative, empowering our community with essential health insights. https://iaaqli.org/
Contact Health & Environmental Reporter Hanna Rauworth at 317-762-7854 or follow her on Instagram at @hanna.rauworth.
Hanna Rauworth is the Health & Environmental Reporter for the Indianapolis Recorder Newspaper, where she covers topics at the intersection of public health, environmental issues, and community impact. With a commitment to storytelling that informs and empowers, she strives to highlight the challenges and solutions shaping the well-being of Indianapolis residents.
