Indiana Medicaid Proposes Reduction in Medicaid Waiver Reimbursement for Live-In Caregivers

Indiana’s non-medical home care industry is closely watching developments this week following news that the Indiana Health Coverage Programs (IHCP) intends to reduce Medicaid waiver reimbursement rates for attendant care services provided by caregivers who reside in the same home as the participant receiving services.

According to the now-removed IHCP bulletin (BT202673), standard Attendant Care services under Indiana’s HCBS Medicaid Waiver PathWays program would continue to reimburse at approximately $8.59 per 15 minutes, or $34.36 per hour, for non-live-in caregivers. However, services provided by caregivers who live in the same residence as the participant would reportedly reimburse at approximately $7.57 per 15 minutes, or $30.28 per hour.

This represents a reduction of approximately $4.08 per hour.

The bulletin did not address Home and Community Assistance services and so at this time, we're unsure whether HCA reimbursement will be reduced and if so, by what amount.

The bulletin further stated that the reimbursement change “should not affect caregiver wages,” language that many providers interpreted as an expectation that agencies absorb the reduction internally rather than reduce caregiver compensation.

As expected, reaction from providers across Indiana has been swift and concerning.

Providers Raise Concerns Over Sustainability

Many agencies operating in Indiana’s Medicaid waiver space already function on narrow margins due to:

• rising labor costs,

• increased compliance obligations,

• insurance costs,

• administrative overhead,

• workforce shortages,

• and ongoing reimbursement pressures.

For providers already struggling to recruit and retain caregivers, particularly in rural areas, the prospect of absorbing an additional reimbursement reduction has raised serious sustainability concerns.

Adding to the complexity, Indiana Medicaid previously implemented a 70% pass through requirement (IHCP bulletin BT2025105) that mandates providers spend at least 70% of Medicaid reimbursement on direct care workforce and related expenses. While intended to ensure more funding reaches caregivers, many agencies report they are already operating at or near that threshold.

If agencies were to keep live-in caregiver wages the same despite the lower reimbursement rate for live-in caregivers, some providers warn that their workforce spending percentage could significantly exceed the 70% benchmark, further compressing already thin operating margins.

Family Caregivers Express Growing Frustration

Beyond provider concerns, many in Indiana’s caregiving community believe family caregivers are increasingly being squeezed by policy changes impacting the Medicaid waiver system.

In recent years, family caregivers providing Attendant Care services were already limited to a maximum of 40 hours per week under certain waiver arrangements (IHCP Bulletin BT202614). For many families caring for aging parents, disabled spouses, or medically fragile loved ones, those limitations created financial strain and staffing challenges.

Now, some providers and caregivers view the proposed live-in caregiver reimbursement reduction as another step that could discourage family caregiver participation within the traditional Attendant Care (ATTC) waiver model.

Additional Provider Concern

Many agencies are concerned that:

• if the state caps family caregiver hours at 40,

• reduces reimbursement for live-in caregivers,

• and simultaneously requires a 70% passthrough,

  
  

then agencies may face increasingly difficult financial and staffing decisions regarding:

• family caregivers,

• live-in caregivers,

• and ATTC versus SFC placement models.

IHCP Bulletin Removed Pending Revision

Shortly after industry discussion intensified, the IHCP bulletin in question was reportedly removed, with agencies being advised that revised guidance would be forthcoming.

At this time:

• the reimbursement structure has not been finalized,

• revised rates have not yet been confirmed,

• and providers remain uncertain whether the proposal will ultimately move forward in its current form.

However, the proposed effective date discussed in the bulletin was reportedly August 1, 2026, pending final approval and implementation.

Providers are encouraged to closely monitor future IHCP bulletins and FSSA communications for updated guidance.

Compliance and Documentation Considerations

If Indiana ultimately proceeds with a separate reimbursement structure for live-in caregivers, agencies will likely need to implement additional compliance procedures to determine and document whether a caregiver resides with a participant.

How can home care agencies protect themselves from appearance of impropriety or allegations of fraud?

Providers should begin considering:

• How caregiver residency status will be verified? Is asking for the address on the employment application considered enough due diligence?

• How frequently should residency status should be updated? How often should the agency be asking staff if their residency has changed since being hired?

  
  

• Should companies implement a company policy in their employee handbook advising that its employees are required to inform them of any residential changes and failure to do so could result in disciplinary action?

• Should employees be asked to sign an attestation upon being hired? How about annually or quarterly?

• Will these policies affect all live-in caregivers regardless of familial status?

• and what documentation should be maintained in employee and client files?

Potential best practices may include:

• Caregiver residency disclosure forms,

• Annual attestations,

• Onboarding questionnaires,

• Policy acknowledgements,

• or signed declarations confirming whether the caregiver resides in the participant’s household.

Such documentation may help demonstrate good faith compliance efforts and reduce exposure should a caregiver later misrepresent their residency status. Unfortunately, this additional due diligence also creates additional administrative time and costs for small business owners who are already operating at limited capacity. Keep in mind that if the state believes there is fraud of some sort, they will pursue the agency for recoupment of monies paid and not the caregiver. So, while the caregiver may not have much to lose, your agency certainly does.

Agencies may also wish to consult legal counsel or compliance advisors regarding fraud and overpayment risk associated with inaccurate billing classifications.

Industry Watching Closely

For now, Indiana home care providers remain in a holding pattern as they await clarification from IHCP and FSSA. As additional guidance becomes available, providers are encouraged to review policies, evaluate financial exposure, and participate in industry discussions regarding the potential impact of these proposed changes on both agencies and the caregivers who serve Indiana’s aging and disabled populations.

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