Members of the Indiana House Public Health Committee voted 11-0 in favor of House Bill 1586, designed to provide Medicaid relief for hospitals and improve access to care for Hoosiers.
The Indiana Hospital Association reports that Medicaid base pay to hospitals has not been raised for over 30 years. The reimbursement rate currently sits at $0.57 on the dollar for every Medicaid patient served, resulting in $2.7 billion in unpaid statewide health care costs each year.

HB 1586 is authored by Chair Rep. Brad Barrett (R-Richmond) and would allow Indiana hospitals to be assessed to the federal maximum through the Hospital Assessment Fee to leverage additional federal funding to raise the reimbursement rate. The model, called a State Directed Payment Program, has been enacted in 38 other states and territories.
“The current shortfall in unpaid Medicaid costs not only hurts our state’s hospitals, but harms consumers, who must pay increasing premiums to cover this cost-shifting gap,” said Scott B. Tittle, president of the Indiana Hospital Association.
In 2023, Indiana hospitals operated on less than a 1% margin, lagging behind the national 2.3% average. Indiana struggles to keep up with necessary services, with 13 birthing units closing since 2019.

“Without immediate assistance, ongoing Medicaid underpayments will only exacerbate the closure of health care services across the state,” Tittle said. “HB 1586 would allow Indiana to join our surrounding states and utilize a federal program that would boost these low rates and protect access to care in all communities.”
Several hospital leaders from hospitals across the state testified in support of the bill, including Matthew Doyle, president and CEO of Methodist Hospitals serving Northwest Indiana from Lake County.
“As a safety net hospital that relies heavily on government funding to serve a disproportionate share of Medicare and Medicaid patients, I am here to tell you we cannot wait one more session,” Doyle said. “This is the path for Methodist to remain viable in our community, protect access for the patients we serve and help every hospital in the state do the same.”
The bill will move to the House Ways and Means Committee for consideration.
For more information, visit iga.in.gov/legislative/2025/bills/house/1586/details.
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/
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Contact Health & Environmental Reporter Hanna Rauworth at 317-762-7854 or follow her on Instagram at @hanna.rauworth.