Indiana Code Title 16. Health § 16-21-10-8.5

(1) Subject to available state share funding and federal medical assistance available to the plan for coverage of plan participants described in Section 1902(a)(10)(A)(i)(VIII) of the federal Social Security Act in effect on January 1, 2025, the reimbursement rates for inpatient and outpatient hospital services under the state directed payment program may be established at a rate greater than Medicare equivalent reimbursement rates, but may not exceed the maximum reimbursement rates established by federal law.

(2) The office may implement the state directed payment program through the establishment of classes of hospitals with different rates of reimbursement among the classes, as set forth in subsection (c), and in a manner that is consistent with federal law.

(3) Before January 1, 2026, the office shall apply to the United States Department of Health and Human Services for the review and approval of a state directed payment program.  The office may receive input from hospitals and other interested parties in the development of the documentation submitted with the application under this subdivision.

(4) The office may not implement the state directed payment program without the approval of the United States Department of Health and Human Services.  To the extent allowed by the United States Department of Health and Human Services, the office shall implement the state directed payment program on or after July 1, 2025.

(5) The office may not implement a fee under the state directed payment program without the approval of the fee by the United States Department of Health and Human Services, including any waiver related to the fee, to fund the state share of the payments under the state directed payment program.  To the extent allowed by the United States Department of Health and Human Services, the office shall use the fee to fund the state directed payment program on or after July 1, 2025.

(6) The office shall make payments under the state directed payment program to managed care organizations that contract with the office to provide medical assistance to Medicaid recipients as follows:

(1) Class 1 hospitals consist of critical access hospitals and rural hospitals.

(2) Class 2 hospitals consist of a hospital licensed under IC 16-21-2 that is not described in subdivision (1) and that is:

(3) Class 3 hospitals consist of psychiatric hospitals, rehabilitative hospitals, and acute long term care hospitals and that are not described in subdivision (1) or (2).

(4) Class 4 hospitals consist of any hospital not described in subdivision (1) through (3) and that are subject to this chapter.