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 6668 NOTE PREPARED: Dec 16, 2020
BILL NUMBER: SB 322 BILL AMENDED:
SUBJECT: Out of State Children's Hospitals and Medicaid.
FIRST AUTHOR: Sen. Bohacek BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State
X DEDICATED
X FEDERAL
Summary of Legislation: This bill specifies the reimbursement rate for inpatient and outpatient Medicaid
services that are provided by an out-of-state children's hospital located in a state bordering Indiana.
Effective Date: July 1, 2021.
Explanation of State Expenditures: Summary - The bill provides that for inpatient and outpatient services
provided by children’s hospitals in states bordering Indiana and enrolled as Indiana Medicaid providers, the
Indiana Medicaid program and Children’s Health Insurance Program (CHIP) must issue reimbursement at
rates that are:
• comparable to the current federal Medicare reimbursement rate for the service provided by
the children’s hospital; or
• equal to 130% of the Medicaid reimbursement rate for a service that does not have a
Medicare reimbursement rate.
These rate requirements will likely result in an indeterminable increase in reimbursement for border state
children’s hospitals. 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.
The bill also requires the Family and Social Services Administration (FSSA) to apply to the federal
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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 - CY 2019 Reimbursement: Based on information from the FSSA claims and
encounter database, Indiana Medicaid and CHIP paid an estimated $9.2 M in total reimbursement to border
state children’s hospitals for inpatient and outpatient services in CY 2019.
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.
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. 71.5%, or about $537.4 M, is used to increase hospital Medicaid reimbursement up
to specified limits. 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.
Fiscal Analyst: Adam White, 317-234-1360.
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