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Indiana Healthcare Reform Update


Email Alert

By Allison Taylor*

September 10, 2009

The Indiana General Assembly adjourned its regular session on April 29, 2009, without passing a state budget. As a result, the Assembly was called back into a "Special Session" on June 11, 2009, ultimately passing the constitutionally required state budget just hours before the end of the fiscal year (FY) on June 30, 2009. Here are the significant healthcare-related legislative and case-law developments that have occurred so far in Indiana in 2009.

Significant 2009 Legislative Reform in the Indiana General Assembly

Biennial Budget

  • SS 1001-Special Session Budget Bill (Passed): The budget bill is expected to fully fund the estimated enrollment growth in Medicaid of 5% in state FY (SFY) 2010 and 8% in SFY 2011, although most dollars provided by the federal stimulus were reprogrammed to stabilize spending in other areas. Despite limited resources, the budget allocates $10 million each year to Indiana Innovation Alliance (a partnership between Purdue and Indiana universities bringing together Indiana's health and life sciences industries to grow the state's bioscience economy), including $3 million annually for statewide expansion of Indiana University's medical education centers.


  • SB 75: Payment to Health Providers without Contracts (Failed): This bill would have required insurers to make benefit payments directly to the provider when a patient has assigned his or her benefits to an out-of-network provider, a process known as Assignment of Benefits (AOB). An AOB bill has been introduced regularly during the last several sessions and is strongly supported by most provider groups.
  • SB 87: Health Benefit Payments (Failed): This legislation would have required notice of certain payment requirements when direct payments of health benefits are made to covered individuals. Both SB 75 and SB 87 failed as provider groups and the insurance industry were unable to reach a compromise.
  • HB 1300: Health Plan Requirements and Study (Passed): Requires the insurance commissioner to study the savings and costs of implementing AOB and report this information to Indiana's Health Finance Commission this summer for further review. In addition, the legislation requires insurers who pay an insured for healthcare services provided by an out-of-network provider to include with the payment a written notice including the name and address of the provider, the amount paid by the insurer, and an explicit, twenty-four-point, bold type warning that it is the insured's responsibility to pay the out-of-network provider.


  • SB 554: Breast Cancer Screening and Medicaid Eligibility (Passed): Requires the Indiana State Department of Health (ISDH) to change its Breast and Cervical Cancer Screening Program plan to designate Indiana as an "Option 3" state. Previously, only women in need of treatment who were screened through the Option 1 Program administered by ISDH were eligible for Medicaid. The new law allows women screened and diagnosed by any other Indiana provider to enroll in Medicaid, so long as other eligibility criteria are met.
  • SB 472: Medicaid Matters (Failed): Originally this bill contained a hospital tax/assessment that would have been used to fund certain expansions of the Health Indiana Plan (HIP), a state-sponsored health insurance program for certain adults. The bill would have also allowed a nonprofit organization and certain health insurers and health maintenance organizations to contribute to POWER accounts or health savings accounts associated with the HIP program.
  • HB 1194: Disproportionate Share Payments (DSH) Program Study (Passed): This law requires the Indiana Office of Medicaid Policy and Planning (OMPP) to develop, maintain, and use a computer system to store specified documents concerning the Disproportionate Share Hospital (DSH) payment program. In addition, the act establishes the Indiana Interim Study Committee on Medicaid Supplemental Programs to review intergovernmental transfers (IGT) and expansion of the HIP program to cover additional childless adults.

Managed Care

  • HB 1572: Medicaid Managed Care (Passed): This act creates the Indiana Medicaid Managed Care Quality Strategy Committee to look at policy issues concerning Medicaid. The Committee is directed to study issues related to emergency room utilization, prior authorization, and standardization of procedures and forms.


    Indiana is in its second year of modernizing the eligibility intake process of welfare services within its Family & Social Services Administration (FSSA). The $1.6 billion plan includes contracting for back-office services to improve customer service, reduce waste and fraud, and improve Indiana's poor welfare-to-work record. Amid concerns that modernization was moving too fast, FSSA halted the rollout of the modernization earlier this year until the state could establish that its contractors could handle the work.
  • HB 1572: Medicaid Managed Care (Passed): In response to the modernization, this law requires certain contractors that process eligibility intake information for Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and the Medicaid program to review certain procedures (including the eligibility intake process for document management), direct client assistance at county offices, call wait times, and abandonment rates.


  • HB 1182: County Jail Healthcare Reimbursement Rate (Passed): Requires county jails to reimburse hospitals at Medicare rates plus 4%. When no Medicare rate is applicable, the jail will pay 65% of charges. This law will not preempt any existing contracts or supersede future agreements between hospitals and sheriffs. Moreover, this enactment holds sheriffs/county jails financially responsible for care given to detainees who have been released on their "own recognizance" for purposes of obtaining healthcare treatment and then placed back under arrest once care is completed.

Workforce Issues

  • HB 1210: Loan Forgiveness Programs (Passed): This law creates two unfunded loan forgiveness programs for providers serving in mental health and primary-care fields.

  • 1573: Various Professional Matters (Passed): As introduced, this bill would have significantly expanded the Indiana scope of practice of a Physician Assistant (PA). Most of this language was removed in committee. What remains are amendments to the list of approved PA programs, the definition of "accrediting agency," and certain licensure requirements. In addition, the bill:

    • Provides immunity from civil liability for providers who maintain health records that are destroyed in connection with a disaster as well as disaster emergencies as declared by Governor Mitch Daniels (R), unless the provider was negligent in failing to maintain the record;

    • Requires licensure of genetic counselors; and

    • Requires a certified registered nurse anesthetist to administer anesthesia under the direction of and in the immediate presence of a physician.

  • HB 1593: Practicing as a Surgical Technologist (Passed): This law requires surgical technologists to be certified by specified national accrediting agencies, but it also gives all hospitals the ability to use an individual in the operating room who has the "appropriate abilities," as determined by the hospital. Those who have completed surgical technology programs provided by the armed services branches and those practicing before July 1, 2009, are grandfathered. In addition, individuals practicing surgical technology during the one-year period following completion of a degree from an accredited school (but before taking the certification exam) are exempted from the requirements. Also, this act permits circulating nurses to step out of the operating room for short periods of time when a surgical tech or other individual with the appropriate abilities is assisting in an operating room.

*AHLA would like to thank Allison L. Taylor, Government Relations Specialist (Hall Render Killian Heath & Lyman PC, Indianapolis, IN), for providing this healthcare reform update.

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