Indiana sets rules for 140,000 Medicaid exemptions

The state of Indiana estimates that approximately 140,000 residents will be exempt from upcoming federal Medicaid work requirements due to medical conditions. This figure was provided by state officials this week as they unveiled the official definition of medical frailty. The exemption status is critical for enrollees who must work 80 hours per month to maintain their coverage starting in January. Those hours can be fulfilled through employment, education, or volunteering.

Federal rules changed recently, narrowing the scope of who qualifies for an exemption. The new federal standard applies only to individuals who are actively unable to work because of their health status. Indiana adjusted its own definitions to match this standard. The state delayed releasing guidance for several months while it clarified how these changes would affect specific members. The final guidance was presented on Tuesday during a quarterly meeting of the Family and Social Services Administration.

Medicaid Chief Clinical Officer Katrina Etter explained a three-tiered tool used to determine eligibility. The first tier includes diagnoses from a specific state list that automatically qualify a member for an exemption. These conditions include substance use disorder, cerebral palsy, and blindness or disability for certain individuals. If a member has a tier one diagnosis, they are immediately identified as exempt from the work requirement.

The second tier requires both a qualifying condition and evidence of ongoing treatment or medication. This pathway identifies individuals whose health status renders them medically frail. For example, a member with depression does not qualify based on the diagnosis alone under tier one. However, if that member has evidence of treatment in a setting that indicates the severity is functionally limiting, they qualify through the tier two pathway, according to Etter. The third tier involves a review by state staff and submission by a managed care organization.

State estimates suggest that roughly 54,000 people are currently in danger of losing their Medicaid coverage. This number reflects individuals who are not meeting work requirements and do not qualify for other exemptions. This estimate is slightly lower than the 58,000 figure the state projected earlier this year. FSSA Secretary Mitch Roob urged healthcare groups to assist members in keeping their coverage. He stated that the Healthy Indiana Plan was created to address community needs, not to remove individuals from the program.

Health advocates have raised concerns about the specific conditions included in the tier one list. Many people living with HIV rely on Medicaid to afford their medication. Alan Witchey, CEO of the Damien Center, noted that stopping medication can cause a dramatic change in health. He said the state’s plan presents a policy paradox. Witchey argued that waiting for significant functional impairment or opportunistic illness before protecting access to care contradicts the goal of preventing disease progression.

Witchey and other advocates had requested clarity on how the state would define medical frailty. They were concerned that people living with HIV were not included in the automatic tier one diagnosis list. A state spokesperson confirmed that people living with HIV could still qualify for the exemption. However, these individuals would need to provide proof of their condition to state staff.

The work requirements are set to take effect on January 1. Members who are not exempt must document their 80 hours of activity each month to remain eligible for benefits. The state’s three-tiered system will be the primary method for determining who is exempt from these reporting obligations.