Indiana House Passes Bill to Overhaul PathWays Medicaid

INDIANAPOLIS – In a unanimous vote, the Indiana House of Representatives passed House Bill 1277, a piece of legislation aimed at overhauling the state’s embattled PathWays for Aging Medicaid program.

The bill, authored by State Rep. Brad Barrett (R-Richmond), seeks to address massive budget overruns and a growing waitlist of over 17,000 seniors by shifting care back to more cost-effective models.

Since its launch in July 2024, the PathWays program—managed by private insurance companies Humana, Elevance Health, and United Health Care—has struggled with operational failures. Reports indicate the program is currently $300 million over budget, with insurance entities owing millions in late payments to nursing homes.

House Bill 1277 proposes several major shifts:

Fee-for-Service Transition: Long-stay nursing home residents would move out of insurance-managed care and into a traditional fee-for-service model.
Assisted Living Waiver: The bill directs the FSSA to apply for a standalone “Assisted Living Waiver,” mirroring successful models in Ohio and Illinois to reduce costs.
Ending the Waitlist: By capping costs and aligning waivers with state law, the bill aims to free up funds to move 17,730 Hoosiers off the current Health & Wellness and PathWays waitlists.

“Immediate action is warranted to prevent these problems from growing,” said Paul Peaper, president of the Indiana Health Care Association. “House Bill 1277 makes targeted policy changes to help older Hoosiers, their families, and caretakers.”

A key driver of the bill is the disparity in care costs. According to the FSSA, some individual home-care services cost the state upwards of $200,000 annually, while nursing home care costs roughly half that, and assisted living care is nearly one-fifth of that cost.

The legislation also empowers seniors by allowing them to choose who coordinates their care—either the assisted living provider or the insurance company.

House Bill 1277 now moves to the Indiana Senate, where it is sponsored by State Sen. Michael Crider (R-Greenfield).