Medicaid Expansion in Indiana

In January 2015, the Centers for Medicare and Medicaid Services (CMS) approved Indiana’s amendment of its § 1115 demonstration, the Healthy Indiana Plan (HIP).¹  The amended waiver implements the Affordable Care Act’s (ACA) Medicaid expansion by building on the prior HIP demonstration.²  Beginning February 1, 2015, the new demonstration will cover nearly all adults ages 19-64 with income from 0-138% of the federal poverty level (FPL, about $16,242 per year for an individual in 2015) – an estimated 350,000 beneficiaries.

Indiana describes its demonstration as a “consumer-driven health plan,”³ which seeks to  “[r]educe the number of uninsured, low income Hoosiers and increase access to healthcare services; [p]romote value-based decision-making and personal health responsibility; [p]romote disease-prevention and health promotion to achieve better health outcomes; [p]romote private market coverage. . . ; and [a]ssure State fiscal responsibility and efficient management of the program.”⁴

While all waivers involve some amount of administrative complexity, Indiana’s demonstration is more complex than others approved to date.  The program has multiple parts, including four different Medicaid benefit packages for the populations covered by the waiver (aside from premium assistance for employer-sponsored insurance).  It also requires administering and tracking a number of elements, such as premium payments or co-payments, compliance with healthy behaviors, health savings account balances and rollover funds, presumptive eligibility determinations, and services that would have been covered retroactively for certain groups.  Beneficiaries are treated differently based on their coverage group, and beneficiaries within the same coverage group are treated differently depending upon their income level, medical frailty status, and whether they have paid premiums.

Indiana’s waiver is different than other Medicaid expansion waivers approved to date in that it allows the state to prevent certain newly eligible beneficiaries (non-medically frail adults above the federal poverty level) from re-enrolling in coverage for six months after they are disenrolled for non-payment of premiums.  The waiver provides a less generous benefit package to newly eligible beneficiaries at or below the federal poverty level who do not pay premiums.  To receive the more generous benefit package, even beneficiaries with very little or no income (0-5% FPL, up to $589 per year for an individual in 2015) must pay premiums of $1.00 per month.  Medically frail beneficiaries have access to the state plan benefit package, in accordance with federal law, but those above the federal poverty level who do not pay premiums continue to be billed and must pay state plan co-payments; the waiver does not describe how medically frail beneficiaries will be identified.

Indiana’s waiver also differs from others approved to date in that it makes coverage effective on the date of the first premium payment (or at the expiration of a 60 day payment period for those at or below the federal poverty level), rather than on the date of application.  The waiver also includes § 1916(f) authority to test graduated co-payments for non-emergency use of the emergency room (ER) up to $25, which is over three times the amount in federal law.

Key elements of Indiana’s waiver include:

• Establishing premiums through monthly contributions to a Personal Wellness and Responsibility (POWER) health savings account for most newly eligible adults with income from 0-138% FPL, with services delivered through capitated managed care organizations (MCOs). Premiums are a condition of eligibility for non-medically frail beneficiaries from 101-138% FPL and are limited to 2% of income ($27/month for those at 138% FPL); premiums for those with income below 5% FPL ($49 or less per month for an individual in 2015) are $1.00 per month;
  • Beneficiaries who pay premiums will be eligible for HIP Plus, which includes expanded benefits and co-payments only for non-emergency use of the ER. Coverage in HIP Plus begins the first day of the month in which a beneficiary pays a premium, instead of the date of Medicaid application;
  • Most beneficiaries with income from 101-138% FPL who fail to pay premiums within a 60 day grace period will be disenrolled from coverage and barred from re-enrolling for 6 months;
  • Beneficiaries with income at or below 100% FPL who fail to pay premiums will receive HIP Basic, with fewer benefits (such as no coverage for adult dental and vision) and required co-payments in state plan amounts;
  • Non-expansion parent/caretaker relatives and those receiving Transitional Medical Assistance have the option of paying premiums in lieu of co-payments for services. These beneficiaries receive the Medicaid state plan benefit package;

• Waiving non-emergency medical transportation (NEMT) for most newly eligible adults for one year, to be extended based on the results of an evaluation assessing the impact on access to care;
• Establishing a two year demonstration under §1916(f) with a control group to evaluate whether graduated co-payments (first instance $8, subsequent $25) discourage non-emergency use of the ER by non-expansion parent/caretakers and newly eligible adults; and
• Offering optional Medicaid premium assistance for newly eligible adults with employer-sponsored insurance.

While not implemented through waiver authority, Indiana plans to increase Medicaid provider reimbursement rates to 75% of Medicare rates for physician and physician extender services.

Indiana sought waiver authority to require a work referral as a condition of eligibility, which was not approved by CMS.  Instead, Indiana may administer a voluntary state-run work search and job training program, which is separate from the Medicaid expansion demonstration.⁵  Indiana’s requested waiver of Early Periodic Screening Diagnostic and Treatment (EPSDT) benefits (specifically, vision and dental) for 19 and 20 year olds in the HIP Basic plan also was denied by CMS.

To date, CMS has approved waivers in Arkansas, Iowa, Michigan, and Pennsylvania to implement the ACA’s Medicaid expansion.  New Hampshire has a waiver application pending with CMS, and Tennessee and Utah have proposals pending at the state level.

Some features of Indiana’s demonstration are similar to those approved to date in other states.  For example, Iowa and Pennsylvania’s demonstrations include non-emergency medical transportation waivers for the first demonstration year and monthly premiums as a condition of eligibility for those above 100% FPL.⁶  Iowa, Michigan, and Pennsylvania also allow beneficiaries to reduce premiums and/or co-payments by completing specified healthy behavior activities.

Indiana’s demonstration is distinct from other states in its use of health savings accounts to fund covered services, its waivers of reasonable promptness and retroactive coverage making coverage effective on the date of initial premium payment, the six month lock-out for non-payment of premiums for beneficiaries above 100% FPL, and its testing of graduated co-payments (in amounts that exceed federal law) for non-emergency use of the emergency room.

In addition to changing how coverage works for beneficiaries who were covered under Indiana’s prior demonstration, implementation of the new demonstration also will require people between 100-138% currently enrolled in Marketplace coverage to transition to Medicaid, which will require terminating their Marketplace coverage and reconciling any premium tax credits that they may have received.  More details about Indiana’s demonstration are provided in Table 1.