Healthy Indiana Plan lawsuit ruling just in time to prevent Medicaid loss, advocates say

A recent federal ruling stopped Indiana's plan to bring back monthly payments for Medicaid members on the Healthy Indiana Plan, or HIP. Advocates say people will be less likely to lose Medicaid coverage as a result.

The ruling says the federal government’s 2020 approval of HIP failed to further the main objective of the Medicaid Act by allowing policies that threaten coverage and access.

One of those policies included POWER account contributions, which are monthly payments required to access HIP Plus, which has better coverage. Nonpayment could result in being knocked down to the basic plan or losing coverage entirely.

Adam Mueller, executive director of the Indiana Justice Project, said the ruling came at a critical time to prevent people from losing coverage due to the planned return of POWER account contributions in July.

“It's also going to be incumbent upon the state and the feds if they want to do anything, they need to go back and look and make sure that anything that they want to do, doesn't cause people to lose coverage,” Mueller said.

Advocates were concerned the requirement would lead to people losing coverage or being disenrolled, but now the Indiana Family and Social Services Administration said they will remain paused.

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Another policy highlighted in the lawsuit also included denial of retroactive coverage. If a Medicaid member is kicked out of a program, they have a “reconsideration period.” In most programs, when someone regains eligibility during that period they get retroactive coverage – meaning they don’t have to wait until the next month to be fully covered. For HIP, the state had been allowed to deny that coverage.

The lawsuit also pointed to the ability to not provide non-emergency medical transportation, or NEMT, as a barrier to access.

“We know that this is a reason why people sometimes miss appointments, sometimes aren't able to access the care they need, especially in rural communities and communities without good public transportation,” Mueller said.

These policies were implemented under what’s known as a Section 1115 waiver. These waivers allow states to include policies that deviate from Medicaid law as long as they further the objectives of the Medicaid Act. Indiana’s 1115 waivers were meant to set the program up to “resemble commercial, high-deductible insurance.”

These insurance programs often don’t offer NEMT, retroactive coverage and require premiums. For the Medicaid program, Mueller said these policies were limited people’s access to care and coverage, and increasing medical debt.

“We focused on those because they are essentially the pieces in the Healthy Indiana Plan that are burdensome and harmful,” Mueller said.

The ruling says the most recent approval of HIP failed to consider how some of Indiana’s 1115 waivers would impact Medicaid coverage for Hoosiers.

The Indiana Family and Social Services Administration said it disagrees with the ruling and is pursuing “legal remedies.” Medicaid officials have also raised concerns about how the ruling has “implications that conflict with Indiana state law.”

Some of the waivers include policies that are written into Indiana statute, including POWER account contributions. However, Muller said the state can make the needed changes.

“The secretary of the FSSA is allowed to make changes to the plan if required under federal law,” Muller said. “This would be an example of that. If the judge found that federal law doesn't, doesn't allow for the approval as it was written. Then changes to the plan can be made.”

The state has done this before. Muller said there was a six month lockout period for people who lost coverage because they failed to pay their premiums.

This meant if a member was disenrolled, they would not be allowed to reapply for the next six months. It was a policy required by state law, but is no longer a part of the program.

The ruling said the concerns about coverage are supported by data from evaluations of the program. Muller said the ruling was based on a thorough assessment of the administrative record.

“It was a really, really strong validation that evidence and facts matter,” Muller said.

The ruling also said the program doesn’t need POWER account contributions to run, based on it surviving the absence of them for four years during the COVID-19 public health emergency. Muller said the ruling arrived before the cost-share restart in July which allows the state to maintain the current status quo.

“The fact that within the span of a week at the beginning of the pandemic that these were waived and it didn't seem to disrupt anything," Muller said. "I think it's pretty good evidence that we're in a sort of a better position now."

While this lawsuit criticizes some applications of the Section 1115 waiver, Muller said states can use them to expand coverage.

“It's important to say, look, ‘You want to be innovative. There are opportunities to do that,’” Muller said. “There are opportunities to say, ‘What can we do to improve health care, improve health coverage?’ And that's something we ought to be thinking about.”

Mueller says some states have used these waivers to address disparities that may not fall into the Medicaid program, such as housing insecurity. He says it may benefit Hoosiers to explore what that could look like in the future.

Other Medicaid programs are not affected by the ruling. Cost-sharing, including copayments and premiums, for the Children’s Health Insurance Program, or CHIP, and MEDWorks will resume as planned.

Abigail is our health reporter. Contact them at aruhman@wboi.org.