Indiana is rolling out a sweeping Medicaid financing shakeup that state leaders say is designed to do one big thing: lean on hospitals to bring down their commercial prices. The overhaul will steer more federal and state money to rural and lower‑cost providers while tamping down increases for the state’s highest‑priced systems, a move that could redirect billions in payments across the Hoosier State.
At the center of the plan is a new State Direct Payment program that will send up to $1.866 billion in supplemental Medicaid payments next year to hospitals participating in the Healthy Indiana Plan, Hoosier Healthwise and Hoosier Care Connect, according to Indiana Capital Chronicle. State officials say they have also pushed the Hospital Assessment Fee up to the federal 6% ceiling and shifted the assessment base from patient days to total net patient revenue to support the new structure. Reporting and state documents indicate that hospitals should expect formal assessment notices in the near future.
“This is the first time Medicaid has ever been used like this,” FSSA Secretary Mitch Roob told the Indiana Capital Chronicle. Under the plan, hospitals will be sorted into tiers based on their average commercial rates, with different Medicaid reimbursement levels attached. Public rural and critical access hospitals could see increases up to roughly 158% of current fee schedules, other lower‑priced hospitals about 155%, while the highest‑priced systems would be held closer to 125%. State officials say psychiatric facilities and hospitals without a calculated average commercial rate will fall into separate categories with more modest increases…