Suburban Health Organization member Hospitals support the modernization of Indiana Medicaid payment models.
Suburban Health Organization (SHO) member hospitals are actively supporting efforts to modernize Indiana’s Medicaid payment models, recognizing the urgent need for reform. With nearly one in three Indiana residents relying on Medicaid, the current system’s strain on hospitals is evident. In 2023 alone, Indiana hospitals faced over $700 million in income losses due to outdated Medicaid base rates, which haven’t been increased in more than 30 years and are now among the lowest in the United States. This financial pressure is exacerbated by rising medical supply costs and insufficient reimbursement rates, leading to staff layoffs, service cuts, and even hospital closures.
Raising the Hospital Assessment Fee (HAF) is seen as a crucial step towards modernization. The HAF, a state tax on hospitals, currently brings in about $1.5 billion, but hospitals only receive 57 cents back for each dollar of care provided to Medicaid patients. By increasing the HAF, more funds would flow into the state’s Medicaid program, which would then be matched by federal contributions, potentially raising reimbursement rates to around 80 cents per dollar. This increase would help alleviate the financial burden on hospitals, reduce the hidden healthcare tax on private insurance, and ensure that hospitals can continue to serve the many Hoosiers who depend on them.
Health Assessment Fee (HAF) Talking Points (click for details)
Sources for Additional Information
“How Increasing Medicaid Payment Can Help Lower Costs,” Indianapolis Business Journal
“Report shows Indiana hospitals lost more than $700 million in income in 2023,” WRTV Indianapolis (8 May 2024)
“New Analysis: Indiana Medicaid Rates Lowest Among Surrounding States,” Indiana Hospital Association (5 Dec 2023)
“Indiana hospitals struggling financially, asking lawmakers to increase Medicaid reimbursement rates,” WRTV Indianapolis (28 Dec 2023)