Big Changes Are Coming to Indiana Medicaid — Here's What Providers Need to Know
Indiana just passed a major piece of legislation — House Bill 1277 — that will change how home and community-based care is funded, managed, and delivered across the state. Whether you run a home health agency, an assisted living community, or provide waiver services, these changes affect you.
Here’s a plain-language breakdown of what’s happening and when.
The protection on home health rates is going away
Right now, the state is not allowed to cut home health reimbursement rates. That protection ends June 30, 2027.
Before that happens, FSSA is required to work with home health providers and their associations to build a brand new system for setting those rates. That new system has to be ready by November 30, 2026.
This is your window to get involved. The new rate structure will be shaped by whoever shows up to the table. Connect with your trade association and make sure providers like you have a voice in what comes next.
You’ll get less warning before a rate cut
In the past, the state had to give providers a full year’s notice before cutting reimbursement rates. That notice period has been cut to six months.
Six months sounds like a lot — but it goes fast when you’re adjusting staffing, budgets, and contracts. Start building a financial cushion and a contingency plan now, so you’re not caught off guard if and when a rate change is announced.
A dedicated waiver for assisted living is coming
By September 1, 2026, Indiana must apply for a brand new federal Medicaid waiver just for assisted living services — separate from the broader waiver programs that currently exist. This would cover adults 60 and older who need a nursing-facility level of care but can be served in an assisted living setting instead.
States like Illinois and Ohio have already done this, and it’s designed to help Indiana serve more people at a lower cost. If the federal government approves it, waiver slots will shift over to this new program.
If you’re an assisted living provider, this is a big deal. Facilities participating in the new waiver will need to offer private rooms and meet certain Medicaid facility standards. Now is a good time to start reviewing whether your community is ready.
There’s a new cap on individual HCBS service costs
Going forward, the total cost of home and community-based services for a single Medicaid member cannot exceed what it would cost to care for that same person in a nursing home.
Right now, some individuals receiving in-home services cost the state more than $200,000 a year. Nursing home care runs about half that. Assisted living? About one-fifth. By putting a ceiling on individual HCBS costs, the state can serve more people with the same budget.
What this means for providers: expect more scrutiny around billing and service levels. Make sure care plans are clearly documented and that services are well-justified.
12,000 more people could get off the waitlist this fall
This is the big one.
Right now, more than 17,000 Hoosiers are on the PathWays waitlist — meaning they qualify for services but aren’t receiving them yet. The new cost cap and the new assisted living waiver together are expected to open the door for around 12,000 of those people to finally get coverage.
That means a significant wave of new Medicaid members entering the system this fall. Providers who are ready — credentialed, staffed, and prepared — will be in a strong position to grow.
If you’ve been thinking about expanding your capacity or adding services, now is the time to plan for it.
Members will have more say in their own care
Under HB 1277, Medicaid members will have a bigger role in choosing who coordinates their care. Assisted living residents, for example, can decide whether their care coordination comes from their facility or from a managed care company.
More broadly, members will be working alongside their case managers — not just deferring to them — when making decisions about their services and providers.
For providers, this means the administrative process around care plans and service approvals will likely look different. It also means relationships matter more. Clients and families will have real choices to make, and the providers they trust and understand will have an edge.
Key dates to keep on your radar
- September 1, 2026 — FSSA must apply for the new standalone assisted living waiver
- November 30, 2026 — A new home health reimbursement system must be developed
- June 30, 2027 — Current home health rate protections expire; new system kicks in
- July 1, 2028 — The individual HCBS cost limit provision is set to expire
The bottom line
Indiana’s Medicaid system is changing, and the timeline is moving fast. The providers who come out ahead will be the ones who start preparing now — understanding the new rules, getting involved in shaping policy, and positioning themselves to serve the thousands of Hoosiers who will finally be able to access care this fall.
The opportunity is real. Make sure you’re ready for it.
Book a meeting with one of our agency strategists today to learn more!