LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6510 NOTE PREPARED: Jan 25, 2021
BILL NUMBER: SB 114 BILL AMENDED: Jan 25, 2021
SUBJECT: Medicaid Reimbursement for Children's Hospitals.
FIRST AUTHOR: Sen. Mrvan BILL STATUS: CR Adopted - 1st House
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State
X DEDICATED
X FEDERAL
Summary of Legislation: This bill requires the Office of the Secretary of Family and Social Services to
reimburse a children's hospital located in a state bordering Indiana for covered Medicaid services provided
to a qualifying Medicaid child recipient at the same reimbursement rate at which the Office reimburses a
children's hospital located in Indiana.
Effective Date: July 1, 2021.
Explanation of State Expenditures: The bill will likely result in an indeterminable increase in
reimbursement for border state children’s hospitals by Indiana Medicaid and the Children’s Health Insurance
Program (CHIP). The total additional reimbursement will depend on the number of covered children who
require covered services that are either:
1. not being provided in Indiana; or
2. medically necessary to be obtained in a children’s hospital in a bordering state, as determined by the
child’s provider.
Based on information from the Family and Social Services Administration (FSSA) claims and encounter
database, Indiana Medicaid and CHIP paid an estimated $9.3 M in total reimbursement to border state
children’s hospitals for inpatient and outpatient services in CY 2019. If total reimbursement were to increase
by between 10% and 30%, these hospitals would receive an estimated $900,000 to $2.8 M in additional
annual reimbursement. Indiana’s state share of this amount would be between $300,000 and $950,000.
Additionally, the bill may have an indeterminable impact on Medicaid reimbursement for non-emergency
medical transportation (NEMT). If border state children’s hospitals begin accepting more Indiana Medicaid
patients, there may be more NEMT trips made across borders and fewer long-distance trips made within the
state.
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The bill also requires FSSA to apply to the federal government for any state plan amendment or waiver
necessary to implement the revised rates. Applying for a state plan amendment or waiver is within the
FSSA’s routine administrative functions and should be able to be implemented with no additional
appropriations, assuming near customary agency staffing and resource levels. If FSSA submits a state plan
amendment or waiver to implement the enhanced rates, additional Medicaid expenditures would not occur
until after federal approval is received.
Additional Information -
Out-of-State Provider Regulations: Indiana Administrative Code currently allows certain border state
hospitals to be reimbursed as if they were in-state, with the exception that out-of-state hospitals do not
receive additional payments from the hospital adjustment factor that in-state hospitals receive by paying the
Hospital Assessment Fee (HAF). The hospital adjustment factor is designed to ensure that Indiana hospitals
receive aggregate Medicaid reimbursements that approximate the federal Medicare upper payment limit.
Although out-of-state hospitals do not pay the HAF, certain border state children’s hospitals are eligible to
receive an enhanced base rate from Indiana Medicaid for inpatient care. The bill does not reference the HAF,
but it is assumed that the bill would require eligible services to be reimbursed as if the border state hospital
paid the HAF.
Medicaid and CHIP State Share: Medicaid and CHIP are jointly funded between the state and federal
governments. The standard state share of costs for most Medicaid medical services for FFY 2021 is 34%.
The standard state share of CHIP costs is 24%. Under federal COVID-19 relief legislation, the state share
of costs is decreased to 28% for traditional Medicaid enrollees and 20% for CHIP enrollees for the duration
of the federally declared public health emergency.
Explanation of State Revenues: Summary - If children’s hospitals in border states begin accepting more
Indiana Medicaid patients, revenue from the Hospital Assessment Fee (HAF) could potentially decrease as
a result of those patients not being treated at in-state hospitals. The total reduction in HAF revenue is
indeterminable, but likely to be small.
Additional Information - Indiana Hospitals are subject to the HAF, which is based on a percentage of total
inpatient and outpatient revenue generated by the hospital (up to a maximum of 6%). The HAF generated
$751.6 M in FY 2020. Of this revenue, 71.5% ($537.4 M in FY 2020) is used to increase hospital Medicaid
reimbursement up to specified limits. Any remainder of the 71.5% not used to increase hospital
reimbursement is distributed to the Hospital Medicaid Fee Fund. The remaining 28.5% ($214.2 M in FY
2020) of the HAF revenue is distributed to the General Fund to offset Medicaid costs incurred by the state.
Out-of-state hospitals are exempt from the HAF.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Family and Social Services Agency.
Local Agencies Affected:
Information Sources: 405 IAC 5-5; 405 IAC 1-8; 405 IAC 1-10.5; FSSA Claims and Encounter Database.
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Fiscal Analyst: Adam White, 317-234-1360.
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