Following the State of Indiana’s announcement regarding federal approval for updates to the Hospital Assessment Fee program and the State Directed Payment initiative—the IHA issued a statement and shared additional background on how Indiana hospitals have reduced prices over time.
Indiana Secures Federal Approval for Medicaid Hospital Payment Reforms
Statement from Scott B. Tittle, President, Indiana Hospital Association (IHA):
“Today’s announcement marks an important step forward for Hoosier patients. We thank the Braun administration and the Indiana General Assembly for the multi‑year effort to begin to address the significant financial challenges facing Indiana hospitals, and for working to bring much-needed supplemental federal dollars back to Indiana. This action provides a critical lifeline, underscoring a simple reality: base Medicaid rates do not cover the cost of care. We also thank Rep. Carbaugh and Sen. Garten for carrying the legislation that made this possible.
"While Indiana’s specific approach is unique, the State is now joining more than 40 others that have taken this step to address chronic Medicaid underpayment by utilizing federal supplemental payments. This funding is certainly significant; however, it does not fully close the gap, and more work remains to ensure Medicaid reimbursement is sustainable long-term.
"Importantly, this approach relies on hospitals stepping up—paying enhanced fees to draw down additional federal matching funds—while continuing the progress Indiana hospitals have made to lower prices and improve affordability.
"As implementation begins, we look forward to working with the administration and lawmakers to ensure the policy works as intended for all hospitals, including independent and rural providers, and that it is built on accurate data that reflects operating realities across Indiana’s diverse health care landscape.”
Background: Indiana Hospitals Have Made Significant Progress on Health Care Affordability
Report: Indiana’s Hospital Systems Lowered Prices in 2024
- A new state‑commissioned analysis shows Indiana’s five largest nonprofit hospital systems reduced their commercial prices by nearly 7 percentage pointson average in 2024 compared to the year before.
- This marks one of the most significant year‑over‑year improvements to-date in the effort to make healthcare more affordable for Hoosiers.
- Commercial prices for all 5 systems averaged 252% of Medicare in 2024—a full 33 percentage points below the state benchmark set by the Indiana General Assembly.
National Rankings Show Indiana Hospitals are Making Care More Affordable for Hoosiers
- Indiana ranked 8th best in the nation for health care costs in 2025, up from 15thin 2021, per WalletHub.
- A 2024 Forbes analysis ranked Indiana 24th out of 50 states in health care costs— improving 13 spots from the prior year.
- Employer-basedinsurance premiums in Indiana have remained at or below thenational average since 2020, according to KFF.
- RAND Corporation studies show a clear downward trend in Indiana hospital prices, moving from the most expensive state in RAND 2.0 (2019) to ninthin the RAND 5.1 report (2024). While IHA has raised concerns about RAND’s methodology, the RAND study has reflected Indiana’s consistent improvement across reports, pointing to meaningful progress.
- All five of Indiana’s largest nonprofit systems had prices under the state benchmark of 260% of Medicare in 2025, according to the State’s report
- IHA Statement on Direct to Employer Arrangements
- DTE examples: Indiana Hospital Direct-to-Employer Market Solutions Fact Sheet
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