Indiana Nursing Homes Are Owed $462 Million — and the Federal Government Still Hasn’t Signed Off on Their Payments

Indianapolis, Indiana — Nearly 500 nursing homes across Indiana are waiting on hundreds of millions of dollars they were supposed to receive months ago — and a federal approval bottleneck is the reason the checks haven’t arrived.

State officials confirmed that $462 million in supplemental Medicaid payments owed to 496 nursing facilities remain frozen, pending federal sign-off on Indiana’s payment structure for the current fiscal year. The state submitted its methodology to the Centers for Medicare and Medicaid Services back in June 2025 — nine months ago — but CMS has continued to respond with questions and requests for more data.

“The feds are in no hurry,” said Jeff Huffman, chief operations officer for The Strategies, a company operating five nursing home and rehabilitation facilities in central and southern Indiana. “We’ve now missed our December payment and our March payment heading into our June payment.”

The Strategies employs around 300 workers caring for 230 residents. The delayed money represents supplemental payments that bring reimbursements up to Medicare-level rates for long-term care — roughly $1 billion a year when flowing normally. So far, at least two quarterly payments have been stalled.

A tangled bureaucratic knot

The holdup traces back to a provision in the One Big Beautiful Bill Act, passed by Congress in July 2025, which introduced new wrinkles into how Indiana calculates these payments under its PathWays for Aging managed care program. CMS has not yet approved the revised methodology, which means no supplemental payments can go out.

Indiana’s Family and Social Services Administration said the state is “working closely with federal officials to resolve this quickly,” including exploring a CMS grandfathering option that could preserve existing funding levels. Providers have continued receiving their standard base rates — just not the supplemental top-up payments that many rely on to stay solvent.

For well-capitalized operators, the delay is manageable. For smaller or newer companies, it’s creating a slow-motion cash crisis.

“We don’t get paid, so we have to slow pay our vendors, and it kind of snowballs,” Huffman said.

Managed care under fire

The payment freeze is adding fuel to an already contentious debate over Indiana’s managed care experiment. PathWays for Aging, which began enrolling members in 2024, moved long-term services and supports for older Hoosiers into managed care — a shift meant to coordinate care and control Medicaid spending. Providers have pushed back almost from the start, citing payment delays, administrative complexity, and a growing waitlist for home-based services.

Indiana lawmakers responded in February by passing House Enrolled Act 1277, which will move long-stay nursing home residents out of PathWays and into a fee-for-service model starting July 1, 2027. The move mirrors what other states have done — including Nebraska, which voted unanimously to pull nursing homes out of managed care and protect their Medicaid rates.

The Indiana Health Care Association said providers were aware that the federal reconciliation bill could delay state submissions, but expressed hope for a quick resolution.

“In the interim, our caregivers continue to provide high-quality care without impact to their payroll or services,” said President Paul Peaper.

CMS, for its part, offered only that “states are responsible for making provider payments” and that the agency works with states on an ongoing basis to review financing arrangements — a response that offered little comfort to facilities waiting on cash they’ve already earned.