INDIANAPOLIS - Indiana will spend an extra $37 million per year to bump up the amount the state pays health care providers who treat Medicaid recipients, Gov. Mike Pence announced Wednesday.
That extra cash will allow the state to restore services that it once offered – including dental and vision coverage for adults who are enrolled in Medicaid, as well as lab work and radiology and speech and hearing therapy.
It also allows for what state officials said would be a net 2 percent increase in the reimbursement rate paid through Medicaid to hospitals and immediate care centers, nursing homes and home health care providers.
“A healthy Indiana is a strong Indiana,” Pence said in a statement announcing the changes.
“Thanks to the state’s solid fiscal condition, we are able to increase the reimbursement rates, and we encourage providers to make investments that will improve the quality of care for Medicaid recipients and all Hoosiers.”
Pence’s move reverses a host of budget cuts that former Gov. Mitch Daniels put in place in 2010, when the economic downturn had left the state’s tax collection totals far short of what lawmakers expected when they wrote the budget.
The increased payments give health care providers slightly better incentives to treat the 1.1 million Hoosiers who are enrolled in Medicaid, a program jointly funded by the federal and state governments.
“This decision is very important for our hospitals – it provides a more solid financial footing at this critical time given continued federal Medicare cuts,” said Doug Leonard, the president of the Indiana Hospital Association. “This is even more significant considering hospitals in other states are facing even further Medicaid cuts while Indiana is able to reverse them.”
The decision comes as Indiana is negotiating with the federal government over whether to expand coverage to 400,000 more Hoosiers as a part of the federal health care law – a move that hospitals have advocated.
The Pence administration has rejected expanding that coverage through the traditional Medicaid program.
Instead, it has applied to have the U.S. Department of Health and Human Services allow the state to use its own health savings account-based program as the vehicle to extend that coverage.
That program requires participants to contribute up to 5 percent of the costs of funding $1,100 annual health savings accounts, which advocates say makes users smarter consumers and gives them “skin in the game” to keep the costs of their own health care down.
The federal government would fund 100 percent of any such expansion in its first three years, and then the state’s share would gradually increase, topping out at 10 percent of the cost of covering the expanded population.