Committee extends temporary enhanced Medicaid reimbursements for out-of-state pediatric hospitals two years

The Appropriations Committee voted 8-2 to advance a bill that preserves enhanced Medicaid reimbursement rules allowing out-of-state pediatric hospitals to receive additional state payments that boost federal matching dollars. Representative Hal Slager, the bill’s sponsor in committee, said the change is intended to keep reimbursement rules in place while the legislature monitors Medicaid and related finances.

Representative Slager told the panel the measure grew out of a 2019 policy that expanded reimbursement for providers serving Indiana children in neighboring states. He said the bill’s purpose is to remove a sunset or to extend the policy; an amendment the committee adopted keeps a sunset but moves it two years, to 2027, so the legislature can reassess next budget cycle.

Why it matters: The policy affects how Medicaid pays for pediatric care provided at facilities close to Indiana’s borders, including hospitals in Chicago, Cincinnati and Louisville. Slager said enhanced reimbursement is a small line-item in the budget on the state side because the policy is structured to leverage federal matching funds; the fiscal note cited an estimated state cost of roughly $500,000 in the first year and $600,000 the second year for the enhanced payments.

Committee debate included concerns that reimbursing out-of-state hospitals could disadvantage in-state providers and that the state’s Medicaid program faces budget pressures. Senator Garten said she opposed the amendment and the bill in committee because she was “unclear on how we justify reimbursing out of state hospitals for Medicaid more than we reimburse in state hospitals,” and raised questions about fairness and the hospital assessment tax. Senator Rotz supported the two-year extension, saying it gives families and providers time while lawmakers review policy.

Actions and votes: - Sponsor’s amendment (move sunset to 2027): adopted; final committee vote recorded as 8 yes, 2 no on the amended bill (transcript: “passes 8 to 2”). - Final passage (committee): bill passed 8-2 and advances to floor consideration.

Implementation notes: Representative Slager said updated provider capacity — including recently announced facilities such as a University of Chicago Medicine facility in Crown Point — may reduce cross-border care in the future, but current patient flows include tens of thousands of families who use hospitals across state lines. The amended sunset gives the legislature two years to reassess the arrangement and Medicaid’s fiscal condition.

Ending note: The committee framed the amendment as a temporary, fiscally cautious step: maintain the enhanced reimbursement while reserving the option for future changes in the next budget cycle.