Coalition Opposes FSSA Plan to Divert Drug Discount Savings
INDIANAPOLIS — Indiana healthcare advocates are highlighting the potential risks of a state-led funding overhaul that they say could disrupt essential care for rural and low-income patients across the state.
The Good Trouble Coalition has formally announced its opposition to a proposed policy change by the Indiana Family and Social Services Administration (FSSA). The plan aims to shift federal drug discount savings—known as 340B funds—away from local clinics and hospitals and into the state treasury.
What is 340B?
Since 1992, the federal 340B program has allowed healthcare providers serving low-income populations to purchase medications at a significant discount. The savings generated are currently kept by local providers to fund essential “wrap-around” services, including:
Mental health integration
Mobile health units
School-based clinics
Transportation assistance and telehealth
Under the FSSA’s new proposal, these local discounts would be replaced by a state-run rebate system, effectively moving those dollars from community clinics to the state budget.
The Coalition describes the move as a “leaky bucket” fiscal strategy. Under current rules, 100% of these savings stay in Indiana communities. However, if the state moves to a rebate model, federal “matching rules” would require Indiana to return approximately 65% of those funds to the federal government.
“This results in a net loss of healthcare capital,” the Coalition stated. “We are surrendering ten dollars of local medical service for roughly three dollars and fifty cents of state budget offset.”
The timing of the proposal has also drawn criticism, as Indiana is currently projecting a $5 billion budget surplus for 2027.
An Immediate Budget Crisis
Dr. Mary Norine Walsh, President of the Good Trouble Coalition, warns that the policy would force safety-net organizations into an immediate financial tailspin while sending Hoosier resources back to Washington D.C.
“We cannot support a policy that sacrifices local healthcare capacity to shore up budget shortfalls when our state has a projected budget surplus in the billions,” said Dr. Walsh.
The Coalition outlined three primary concerns:
- Safety-Net Instability: Vital community programs could face immediate closure.
- Resource Drain: Prioritizing state rebates over local discounts reduces the total amount of healthcare funding remaining in Indiana.
- Better Alternatives Exist: Other states use claim-level tracking technology to satisfy federal rules without stripping funding from frontline providers.
The Good Trouble Coalition is calling on the FSSA to withdraw the proposal and work with healthcare leaders on alternative tracking solutions. Hoosiers have until March 27, 2026, at 5:00 PM to submit formal public comments regarding the policy change (Notice 20260225-IR-405260059ONA) to the FSSA.
