Medicaid, prior authorization to be major topics for Legislature in 2025

A revenue report from mid-December determined that incoming monies would be sluggish over the next two years, with barely any new dollars expected to hit Indiana’s coffers. Much of that funding will be swallowed up by Medicaid costs, which are growing at a faster rate than the state’s revenues.

Unlike many of his colleagues, Sen. Ed Charbonneau remains upbeat, noting that projected funds are still above current levels and not dipping lower — allowing for some wiggle room.

“I’m approaching this next session, I think, a little bit more positively than most everybody else,” said the Valparaiso Republican at an annual legislative conference in mid-December. “My fear was that if the revenue projections were not … as good as they are … (budget writers would) go ahead and start looking for places to cut.”

But Republican leaders quickly dismissed any notion that 2025 could be the year Indiana ends its prohibition on marijuana. In addition to Charbonneau, House Speaker Todd Huston and Senate Majority Leader Rodric Bray both expressed concerns about legalizing the drug for either medicinal or recreational use.

Bray said states like Colorado, one of the first to legalize the drug for recreational use, aren’t making much tax revenue because proceeds have to be reinvested into social services and crime prevention. Huston, R-Fishers, pointed to an uptick in cannabis use disorder and conflicting studies about mental health benefits.

“It’s no secret that I am not for this. I don’t have people coming to me with really compelling medical cases as to why it’s so beneficial,” said Bray, R-Martinsville. “And any case that I’ve ever seen, or any state that I’ve seen, pass medical marijuana is essentially passing recreational marijuana.”

Gov.-elect Mike Braun, also a Republican, has indicated his openness to exploring medical marijuana but opposed legalizing cannabis for recreational use.

Senate Democrats, on the other hand, pushed for legalization, pointing to the potential for revenue, its popularity among Hoosiers and potential for treating medical conditions.

“Polls suggest it is very highly desired by Hoosiers, I think, and brings in additional tax revenue. Sooner or later, We’re going to have to create more policy because all the states around us (have access),” said Sen. David Niezgodski, whose South Bend district borders Michigan, which has recreational access.

“People are going across and they’re buying more than the residents,” the Democrat continued.

The future of Medicaid

Even as funds dwindle, Democrat Rep. Robin Shackleford said the services provided by Medicaid are also a way to measure the program, which covers nearly two million Hoosiers.

“I know we have less revenues coming in and Medicaid rates increasingly keep going up, but, at the end of the day, I’m going to define success in what our Medicaid program looks like,” Shackleford said.

Shackleford, an insurance broker, pointed to the need for more dollars invested in prevention. For elderly Hoosiers, falls — which can be averted by installing bars or using bath seats — are the number one cause of injury-related deaths.

And though elderly Hoosiers account for a smaller portion of Medicaid enrollees, just 6%, this same population accounts for 44% of Medicaid expenditures.

Additionally, most of Indiana’s Medicaid costs are covered by the federal government — roughly two-thirds of most programs and 90% of Healthy Indiana Plan beneficiaries. The remaining 10% of the latter program is covered by cigarette taxes and hospital fees.

Rep. Brad Barrett, at the same panel, noted that both the state and federal governments will have new leaders, bringing the potential for massive change.

“Where all these other pieces are changing, I feel like we have an opportunity,” said Barrett, a Republican from Richmond.

One particular focus for Shackleford and Barrett will be lowering Indiana’s obesity rate, which Shackleford said cost the state economy $9.3 billion in 2022, $966 million of which had a direct impact on the state budget.

“One of my pieces of legislation is to see if Medicaid can cover those drugs for chronic obesity,” Shackleford said, referring to the coverage of GLP-1s. That drug category includes medications produced by Eli Lilly but can be prohibitively expensive for insurance plans to cover.

“I haven’t received the fiscal impact on it but, in my eyes, to do a true cost-benefit analysis on it you will have to think about what is our investment that we pay for this drug versus someone now having to come off of all their diabetic drugs,” Shackleford said.

What to expect in terms of legislation

At least one bill in the upcoming session will be familiar to the legislature: a bill seeking to restrict the use of prior authorization.

Emergency room physician Sen. Tyler Johnson said he regularly saw patients in the emergency department whose health worsened while waiting for prior authorization approvals or had previously been denied care.

“If you’re in the physician world for two seconds, you realize very quickly that it’s just a strain on the system,” said Johnson, R-Leo. “I didn’t go into medicine to fight back and forth with the insurance company to get paid for something or give the patient an appropriate procedure, right?

“That’s really the answer: we’re providing something that we think the patient needs and now the insurance company is saying, ‘Well, they don’t need that,’” he continued.

According to the American Medical Association, 94% of physicians reported care delays due to prior authorization, including 24% who reported that such delays had led to a serious adverse event.

Johnson’s effort in the 2024 legislative session was considered a priority by his caucus but didn’t get out of the chamber. To improve its chances in 2025, Johnson said he spent the interim meeting regularly with stakeholders to identify “sticking points.”

“We’ve found a very good framework on how to (improve) the back and forth between the insurer and the hospitals. They both really didn’t like how they interacted with each other, but could never really come to a solution,” Johnson said. “… hopefully we can streamline and get a lot of questions and inefficiency out of it.”

Other familiar topics include the potential to regulate pharmacy benefit managers, non-compete agreements for health care providers, scrutinizing medical debt and increasing tobacco taxes.

The House has passed such an increase a handful of times but Johnson and Charbonneau’s chamber has declined to act.

Charbonneau said circumstances could be different in 2025 with such a tight budget.

“With the revenue picture looking like it does, with Medicaid being such a huge part of the problem, maybe it’s time we really look at this,” Charbonneau said.

The committee chair also had at least one previously unheard idea: prohibiting any Hoosier born after June 30, 2004 from ever purchasing tobacco products. He said he believed the fiscal impact would be relatively small but rewards could be huge — Indiana has a higher adult smoking rate than the national average, according to the Campaign for Tobacco Free Kids. Curbing tobacco use is frequently a target of public health funding efforts because it brings down Indiana’s overall health metrics.

According to the state’s public health program, youth e-cigarette use — or vaping — has exploded, increasing from 3.8% in 2012 to 19.8% in 2021.

“It’s going to take 50 years or something but we’ll be smoke free,” Charbonneau said.

Another potential target could be gathering information on Indiana hospital enrollment in the national 340B program, which is funded by medication discounts meant to help safety net hospitals. Some question whether the program actually assists needy patients or simply helps hospitals generate more revenue.

“I think that’s why we need data to really understand — and for the public to understand — what’s going on,” Charbonneau said. “And it may be totally legal, but it just doesn’t seem right.”