(Story updated at 3:10 p.m. ET.)
Republican Indiana Gov. Mike Pence and HHS have reached an agreement on the state's Medicaid expansion proposal submitted in July, CMS and state officials confirm. As many as 350,000 uninsured people could gain coverage.
That means 28 states and the District of Columbia have now expanded Medicaid to people with incomes up to 138% of the federal poverty level. Prior to Indiana, Pennsylvania was the most recent state to reach an agreement with the Obama administration on an alternative Medicaid-expansion model.
“I continue to be encouraged by interest from governors from all across the country who want to bring healthcare coverage to low-income people in their states by expanding Medicaid. They understand both the economic benefits of Medicaid expansion and the health and financial security it brings to their residents,” HHS Secretary Sylvia Mathews Burwell said in a statement.
“Since the beginning of my administration, we have worked hard to ensure that low-income Hoosiers have access to a healthcare plan that empowers them to take charge of their health and prepares them to move to private insurance as they improve their lives,” Pence said in a statement. “This has been a long process, but real reform takes work.”
Pence's proposal, known as the Healthy Indiana Plan 2.0, or HIP, provides two levels of coverage: one for residents living above 100% of the federal poverty line, and one below. Those living under the poverty level will be able to get basic health coverage and have the option of paying $3 to $15 per month, depending on their income, for access to dental or vision benefits.
Those living above the poverty level will be mandated to pay a monthly contribution of up to $25.
The CMS rejected several conservative proposals requested by the Pence administration. For instance, the agency did not approve a work requirement as part of the agreement.
It also did not transfer several features of Indiana's previous HIP 1.0 waiver into this new demonstration waiver. The jettisoned policies include capped enrollment, premium payments as a condition of eligibility for people with incomes below the poverty level, and premium payments in excess of 2% of income.
However, the Pence administration did score a victory in that it can lock individuals with incomes above 100% of the poverty level out of coverage if they don't pay the monthly contributions. Indiana is the only state to have such permission, according to Deborah Bachrach, a partner in the law firm Manatt, Phelps & Phillips and former New York Medicaid director.
Iowa has a similar waiver that allows it to discontinue coverage for people above the poverty level for nonpayment of premiums, but if a person claims financial hardship they can continue to receive coverage.
Indiana may not have a hardship workaround, but HHS did have the state agree to some conditions under which people above the federal poverty level could maintain coverage even with nonpayment of their contributions. These include: obtaining and subsequently losing private insurance coverage; being a victim of domestic violence; residing in a county where a disaster is declared; or being deemed medically frail.
In addition to the 350,000 now uninsured people who will be able to receive coverage under HIP 2.0, the state also will be transitioning those now in HIP 1.0, as well as those in the state's traditional Medicaid program known as Hoosier HealthWise and a small group now in qualified health plans on the exchange. This could bring total enrollment in HIP 2.0 to 559,000, according to Indiana state documents.
Hospitals are pleased with the Medicaid expansion, said Douglas Leonard, president of the Indiana Hospital Association. Uncompensated care cost hospitals in the state $1.3 billion in 2012, according to the trade group.
Follow Virgil Dickson on Twitter: @MHVDickson