Indiana House of Representatives Sends Legislation to the Senate to Save Millions in Medicaid Funding, Expand Access to Care for Elderly Hoosiers
February 3, 2026 | Press Release
STATEHOUSE (Feb. 2, 2026) – The Indiana House of Representatives unanimously passed House Bill 1277 today on 3rd reading, sending the bill to the Senate for further consideration. The bill, authored by State Rep. Brad Barrett (R-Richmond) and sponsored by State Sen. Michael Crider (R-Greenfield), would reform the PathWays for Aging Medicaid program for elderly and vulnerable Hoosiers in need of skilled nursing, assisted living or other home and community-based services.
The PathWays for Aging program has been plagued with issues since it launched July 1, 2024. The program allows Humana, Elevance Health and United Health Care to oversee, on behalf of the state, the Medicaid coverage for 117,000 Hoosiers in need of nursing home level of services. Humana and Elevance were placed on corrective action plans with the state soon after the program’s launch due to a multitude of billing, claims processing and other contract violations. All three of the insurance companies last year owed more than $100 million in late and inappropriately denied Medicaid payments to the nursing home industry.
After the first year of the managed care entities overseeing the PathWays program, the program is more than $300 million over budget. Given the managed care entities’ many documented shortcomings in running the PathWays for Aging program, House Bill 1277 seeks to move long-stay nursing home residents out of the PathWays for Aging program and into a fee-for-service model that is not run by the insurance companies, similar to what is currently in place for those 59 years old and younger.
House Bill 1277 would also save hundreds of millions of dollars in Medicaid funding annually by aligning the Health & Wellness and PathWays Medicaid waivers with current state law that caps costs at nursing home expenditures. Doing this will open the door for more individuals to come off of the current Health & Wellness and PathWays waitlists, which has grown to 17,730 Hoosiers who need and are eligible for services. These Medicaid waivers allow individuals who qualify for nursing home level of care to be served in their home or community, such as in an assisted living community. As has been shared publicly by FSSA, thousands of individuals are costing the Medicaid program $150,000-$200,000 or more per year for care, while nursing home care is nearly half that and assisted living care is a fifth of that cost.
“With a waitlist that grows every day, $300 million in cost overruns, and two of the three insurance companies selected to run the PathWays program having been issued corrective action plans by the state, immediate action is warranted to prevent these problems from growing,” said Paul Peaper, president of the Indiana Health Care Association/Indiana Center for Assisted Living. “House Bill 1277 makes targeted policy changes to help older Hoosiers, their families and caretakers. We appreciate State Representative Barrett for his leadership on this issue and Sen. Crider for sponsoring the legislation in the Senate.”
The bill goes on to require FSSA to file a request with the Centers for Medicare and Medicaid Services to establish a standalone waiver for assisted living services similar to what Illinois and Ohio have done as another cost saving measure for the program. It also allows Medicaid recipients to decide who coordinates their care in an assisted living community – the assisted living provider or the managed care entity.
“The waitlist was in response to exploding Medicaid costs, and assisted living is being unfairly targeted,” Peaper said. “A separate waiver creates a clear path to the most affordable HCBS service that generates the clearest savings to the state. A separate waiver also allows the state to specifically assess the population using those services and the resulting cost savings realized versus lumping assisted living in with more than a dozen other HCBS, as is currently the case for PathWays and the corresponding waitlist.”