Indiana Medicaid ‘back in black’

The Indiana Family and Social Services Administration returned $310 million to the state’s general fund this year, a dramatic turnaround for an agency once staring down a $1 billion deficit for Medicaid.

FSSA Secretary Mitch Roob credited the reversal to a series of reforms the agency enacted during his tenure: regular financial reviews, must-return mailers, stricter oversight of Applied Behavioral Analysis therapy and urging senior Medicaid members to enter into dual enrollment with Medicare — without any changes to eligibility.

Roob offered his outlook on Medicaid Wednesday during FSSA’s quarterly financial review to close out fiscal year 2026.

While he channeled optimism — entering the Indiana Government Center auditorium to the sound of AC/DC’s “Back in Black”— Roob warned the reversal does not mean the state has fixed its “unsustainable” Medicaid cost trajectory.

“Medicaid is a fiscal chronic illness,” he said, “and like a chronic illness, oversight of the Medicaid budget requires constant management, not a one-time cure. We are no longer drowning in debt. Our head is above water. The question is: Can we keep it there?”

Coverage shifts to sickest Hoosiers

FSSA reported a 23% decline in Medicaid enrollment since Gov. Mike Braun took office last January, but overall expenditures fell by just 2%.

The Indiana Capital Chronicle this week found procedural closures exceeded determinations that benefit recipients were no longer eligible for coverage, with thousands of Hoosiers eventually returning to Medicaid.

The average cost per member is rising as coverage shifts to the sickest Hoosiers, with the greatest enrollment declines recorded in lower-cost programs like the Healthy Indiana Plan, otherwise known as the Medicaid expansion population.

On Wednesday, Roob referenced a report from Paragon Health Institute finding Indiana ranked third in the nation for improper Medicaid expansion enrollments.

FSSA spent an average of $513 per member each month for HIP members who exited the program in 2025 — far below the $885 average monthly cost per HIP member who maintained their coverage and the $710 monthly cost for new entrants, according to data released Wednesday.

“We had every expectation that this would happen,” Roob said, though he said historically, costs associated with new entrants declined as members started maintenance medications.

‘Unsustainable’ growth

State and federal spending on HIP grew from $2.9 billion in 2017 to an estimated $6.4 billion in fiscal year 2027, according to FSSA projections.

Costs are climbing for other Medicaid programs too.

The state and federal government spent $3.1 billion on Hoosier Care Connect and Hoosier HealthWise, the Medicaid programs for pregnant women, children and disabled adults, in 2017. Those costs are projected to rise to $4.3 billion, despite a decline in enrollment.

Meanwhile, the annual cost for Medicaid waivers and PathWays for Aging, which covers long-term and in-home care for older Hoosiers, is projected to rise from $4.2 billion to $10.9 billion in fiscal year 2027.

Roob set a target of 2% growth to stabilize Medicaid spending to mirror General Fund growth.

“Every dollar we give to a hospital is a dollar we don’t give to a school,” he said.

FSSA saved the state $24 million by moving nearly 3,200 Medicare-eligible Medicaid members to dual-enrollment status. The agency intends to urge more senior members to do the same to further mitigate costs.

The agency is also working with the federal Centers for Medicare and Medicaid and tech company Oracle to use artificial intelligence software to analyze Medicaid claims for suspect billing patterns, and will soon roll out work requirements for HIP members.