State kicking MDwise from Indiana Medicaid program

Some 300,000 people covered by Indiana’s Medicaid program will have less than two months to change their health insurance company as state officials are kicking MDwise off the provider list.

The Indiana Family and Social Services Administration announced Wednesday that MDwise would no longer be among the managed care health plan options for the Healthy Indiana Plan and Hoosier Healthwise programs as of Jan. 1.

Indianapolis-based MDwise, which said it has provided Indiana Medicaid services for over 30 years, has already launched a court challenge to the state’s action.

The four-year contract was signed in 2023. Indiana’s transparency portal shows MDwise has received more than $300 million over the last three fiscal years.

MDwise argues that FSSA officials have acted improperly in terminating the company’s four-year contract that was slated to run through the end of 2026, but a Marion County judge denied a request to temporarily block the state’s decision.

The state agency’s action comes as Gov. Mike Braun’s administration has been pushing to stem the Medicaid program’s fast-growing costs — which were projected in April to jump by 9.5% during the current state fiscal year and 7.7% next fiscal year.

“Indiana Medicaid exists to provide dependable, high-quality care for the Hoosiers who rely on it,” FSSA Secretary Mitch Roob said in a statement. “Our review found that, of the four plans, MDwise was both the most expensive and the lowest in quality. Federal rules require us to maintain at least three plans, and this decision allows us to meet those standards while safeguarding members’ access to care.”

Impact on those covered by MDwise

The agency said those covered by MDwise will not lose Medicaid benefits but must select new coverage from among three remaining providers — Anthem, CareSource, or Managed Health Services. Those not making a selection will be assigned to one of those plans.

MDwise clients will receive letters with detailed instructions on how to select a new plan, FSSA said. 

MDwise, a subsidiary of Michigan-based McLaren Health Care, filed a lawsuit against the FSSA in October, seeking to head off the agency’s decision. Marion County Superior Court Judge Christina Klineman on Wednesday gave the company permission to appeal her decision rejecting a temporary restraining order against FSSA.

MDwise said Tuesday that FSSA officials had ignored the company’s proposed performance improvement plan and a request for a three-month delay in the termination so that the company could pursue a sale to another business.

“FSSA is trying to avoid paying the true cost of care for Hoosiers,” the company said in a statement. “During discussions with FSSA in September, it became clear that FSSA’s real motivation for pursuing a termination was not MDwise’s performance, but rather because the State’s policies put Medicaid spending on an unsustainable path.”

The state’s decision risks disrupting medical care for MDwise clients, including pushing some to other insurers whose networks don’t include the same health care providers, the company said.

“Instead of working together toward an orderly solution, the state has chosen a rushed path that jeopardizes care for hundreds of thousands of Hoosiers,” the company said. “MDwise presented multiple proposals to ensure a smooth, responsible transition — all of which have been ignored.”

“Despite this setback, MDwise is not giving up. We remain committed to finding a responsible path forward that preserves access to care, protects local jobs and honors our 30-year legacy of serving Indiana’s most vulnerable residents.”

Indiana Medicaid covered about 1.7 million people as of October, according to an FSSA online dashboard. Among the plans offered under Medicaid, Anthem covered 36%, with MDwise and Managed Health Services following at 17% each.

FSSA officials did not immediately have an estimate of cost savings by dropping MDwise.

“The state does anticipate there will be savings from the MDwise termination because members will be assigned to health plans who have better quality ratings and manage members more efficiently,” FSSA Deputy Chief of Staff Marcus Barlow told Indiana Capital Chronicle.

The agency judged MDwise’s quality of service based on ratings from the Washington-based nonprofit National Committee for Quality Assurance and regulatory reporting to the state, Barlow said. FSSA also compared MDwise’s reported spending on medical costs to other health insurers working with the Medicaid program, he said.

MDwise fighting decision in court

The company said in a Marion County court filing that the FSSA’s action would cause “substantial disruption to the enrollees’ own health care services, and the irreversible, quick, and painful destruction of MDwise, including the loss of hundreds of jobs at MDwise and the termination of numerous business relationships with its many Indiana providers and vendors.”

“This begins a series of actions that will lead to a chaotic transfer of 300,000 Medicaid health care plan enrollees and the complete destruction of MDwise’s entire business,” a company court filing said.

The judge on Oct. 23 denied MDwise’s request to temporarily block the state from terminating the company from the Medicaid program, writing that she did not see a “compelling likelihood of success on the merits of the action.”

“The harm that MDwise claims it is likely to face is reasonably calculable by the income it stands to lose as a result of the potential termination of the Contracts,” Klineman wrote. “There is nothing in the record before the Court to suggest that MDwise would be harmed in such a manner that it is not able to be made whole with money damages if they are appropriate.”

Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.