Indianapolis, IN — The Indiana House of Representatives has unanimously passed legislation aimed at reining in Medicaid overspending and expanding access to long-term care services for older Hoosiers.
House Bill 1277 cleared the House on Monday and now moves to the Senate. The measure is authored by Brad Barrett, R-Richmond, and sponsored in the Senate by Michael Crider, R-Greenfield.
The bill focuses on reforming Indiana’s PathWays for Aging Medicaid program, which serves roughly 117,000 elderly and medically vulnerable residents who qualify for nursing facility–level care or home- and community-based services.
Launched in July 2024, the PathWays program shifted care coordination to three managed care companies. Since then, the rollout has been marred by billing issues, delayed claims, and contract violations. Two insurers were placed on corrective action plans shortly after launch, and industry sources say the managed care entities owed more than $100 million in late or improperly denied Medicaid payments to nursing homes last year.
State officials have also reported significant financial strain. After its first year, the PathWays program is running more than $300 million over budget.
House Bill 1277 would move long-stay nursing home residents out of the managed care model and back into a traditional fee-for-service Medicaid structure, similar to the system used for younger beneficiaries. Supporters say the shift would improve reliability for providers and stabilize costs.
The legislation also seeks to generate long-term savings by aligning spending under the PathWays for Aging and Health & Wellness Medicaid waivers with state law that caps costs at nursing home care levels. Advocates argue the changes could save hundreds of millions of dollars annually and help reduce a growing waitlist of 17,730 eligible Hoosiers awaiting services.
According to the Family and Social Services Administration, some individuals currently cost Medicaid between $150,000 and $200,000 per year, far exceeding the cost of nursing home care and assisted living.
The bill further directs the agency to pursue federal approval for a standalone assisted living waiver and allows Medicaid recipients in assisted living settings to choose who coordinates their care.
Industry groups say the reforms would restore balance to the program while expanding access to more affordable care options. The bill now awaits consideration in the Indiana Senate.
