Providers wait for hundreds of millions in delayed Medicaid payments

INDIANAPOLIS — Indiana nursing homes are owed hundreds of millions in back payments for services provided under the state's Medicaid program for long-term care.

The federal Centers for Medicaid and Medicare Services hasn't yet approved the methodology for the 2026 state fiscal year, which is nine months old. The data was originally submitted in June 2025 but the federal agency has responded with questions and seeking more data.

"The feds are in no hurry. So, we've now missed our December payment and our March payment heading into our June payment," said Jeff Huffman, chief operations officer for The Strategies.

The Strategies operates five nursing home and rehabilitation facilities across the state in Muncie, Loogootee and Vincennes and employs roughly 300 Hoosiers to care for 230 residents.

At issue are supplemental payments received up to the Medicare rate for long-term care under Indiana's PathWays for Aging system. The One Big Beautiful Bill Act passed by Congress in July 2025 added some wrinkles to the internal calculations behind the payments.

These payments are about $1 billion a year, and at least two quarterly payments have already been stalled. State officials said $462 million in payments to 496 nursing homes have been delayed.'We don't see the savings': Indiana Medicaid restructuring bill draws pushback

"We understand why nursing homes are concerned about delayed supplemental payments. The reality is that CMS has not yet approved Indiana's payment structure for the current policy year, and federal approval is required before any payments can be issued," a statement from the Indiana Family and Social Services Administration said.

"The current model — developed jointly with nursing home associations — was designed to maximize funding, and everyone involved understood that CMS could later require changes. That is what has happened. The state is working closely with federal officials to resolve this quickly, including exploring a new CMS grandfathering option that may preserve existing funding levels."

The providers have received their standard base rates for services provided but not the supplemental payments. It's still causing problems for some entities with tighter business margins.

"The only people this is really hurting are folks that are smaller companies, newer companies. We don't get paid, so we have to slow pay our vendors, and it kind of snowballs," Huffman said.

The Indiana Health Care Association, which advocates for senior care facilities around the state, acknowledged the situation but said providers were aware that last year's federal reconciliation bill might delay state submissions.

"That said, we are hopeful for their approval soon and appreciate FSSA's continued leadership as they work with their federal partners," President Paul Peaper said. "In the interim, our caregivers continue to provide high-quality care without impact to their payroll or services."

A CMS spokesperson provided the Indiana Capital Chronicle with this statement: "States are responsible for making provider payments, and CMS works with states on an ongoing basis to review financing arrangements and ensure compliance with federal requirements. In some cases, CMS may request additional information from a state as part of routine program oversight."

The latest issues are causing more concern for Indiana's controversial PathWays for Aging program.

PathWays for Aging began enrolling members in 2024, moving most long-term services and supports for older Hoosiers and certain disabled adults into managed care.

Under the existing model, the state pays private managed care entities a set rate to coordinate medical care and long-term services, including nursing facility stays and in-home and community supports designed to help people remain outside institutional settings.

The shift was intended to better coordinate care and control Medicaid spending, but providers have raised concerns about payment delays, administrative complexities and the growing waitlist for home-based services.

Indiana lawmakers in February passed legislation to reform the program. House Enrolled Act 1277 attempts to address the shortcomings by moving long-stay nursing home residents out of the PathWays for Aging program and into a fee-for-service model that is not run by insurance companies, starting July 1, 2027.