How does Medicaid determine covered services?

Medicaid was established in 1965 as part of the Social Security Amendments of 1965, the same legislation that created Medicare. Since its inception, Medicaid has evolved greatly. The changes to Medicaid have been aimed to reduce the amount of low-income individuals who lack insurance and improve access to care. 

Medicaid is a jointly funded program by the state and federal governments, with the primary purpose of providing comprehensive health coverage to low-income individuals within the United States. The state of Indiana provides Medicaid health coverage to one in five Hoosiers. Common Indiana health coverage programs include Health Indiana Plan (HIP), Hoosier Care Connect (HCC), Hoosier Healthwise (HHW), Indiana PathWays for Aging, and Traditional Medicaid. Current enrollment for each health program can be found on the Medicaid Enrollment Dashboard. 

The federal guidelines have two categories of benefits—mandatory and optional Medicaid benefits. States are required to provide all mandatory benefits and may provide optional benefits, which are added through the state plan process.

Each state establishes and administers the Medicaid program, including the coverage policies. The state determines the type, amount, duration, and scope of services within the federal guidelines. Since states have the flexibility to determine services to cover and how to deliver care, there is considerable variation across state Medicaid programs.

Indiana Medicaid coverage policy is determined by three main sources: Indiana Code (IC), Indiana Administrative Code (IAC), and the Indiana State Plan. IC are statutes passed by the state legislature, while the IAC are regulations created by state agencies to implement laws. The Indiana State Plan is the written agreement between Indiana and the Centers for Medicare and Medicaid Services (CMS), which outlines how Medicaid is administered. Changes to IC can require state plan amendments to be sent to CMS for review and approval and changes to IAC.

The Family and Social Services Administration (FSSA) is the state agency that offers different programs under the umbrella term of Indiana Health Coverage Programs (IHCP). The covered program and accompanying services are determined by eligibility criteria. Eligibility criteria includes, but is not limited to, income and assets, current health insurance coverage, family size, age, pregnancy, disability status, and special medical or developmental needs. IHCP has two delivery systems for medical coverage, fee-for-service (FFS) and managed care. Approximately 84% of IHCP members are enrolled with a managed care entity (MCE). For more information about FFS and managed care benefits, refer to the IHCP Member Eligibility and Benefit Coverage Reference Module. Providers can utilize the Professional Fee Schedule, Outpatient Fee Schedule, and provider reference modules to determine coverage for specific medical services.

For implementation of coverage and benefits, IHCP uses a prior authorization and utilization management hierarchy as outlined in BT2025102 for all managed care programs.

Medical review criteria must be reviewed in the order listed below to determine

medical necessity:

1. Federal Law

2. Indiana Code (IC)

3. State plan

4. Indiana Administrative Code (IAC)

5. National clinical guidelines (InterQual or MCGs), MCE-developed PA-UM policy and criteria, IHCP policy

IHCP has a process for members, providers, or other parties to submit requests for policy consideration. Policy considerations can include adding coverage for specific medical codes or services, revising current policy, and/or revising code sets. A policy consideration can be submitted through the submission portal.

Each year states are measured on Child and Adult Core sets which are sets of standardized health quality measures to ensure quality of healthcare delivered and health outcomes. The core sets are broken down into behavioral health care, primary care access and preventive care, maternal and perinatal health, care of acute and chronic conditions, dental and oral health services, experience of care, and long-term services and supports. The measurements help identify disparities in care and allow for development of improvements in medical coverage. For specific core set data, please refer to The Core Set Data Dashboard. 

Medicaid is much more than a health coverage program—it is a complex system that continues to evolve alongside the needs of the people it serves. Understanding how benefits are determined, how coverage decisions are made, and how policies can change provides valuable insight into the decisions that shape access to care for millions of Americans, including one in five Hoosiers. Whether you're a provider, policymaker, advocate, or simply someone interested in how healthcare works, having a foundational understanding of Medicaid helps bring clarity to the policies that impact individuals, families, and communities every day. 

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Sources:

• https://www.medicaid.gov/medicaid/benefits/mandatory-optional-medicaid-

• benefits

• https://www.medicaid.gov/medicaid/benefits

• https://www.kff.org/medicaid/health-policy-101-medicaid/?entry=table-of-

• contents-what-is-medicaid#content

• https://www.in.gov/medicaid/members/apply-for-medicaid/eligibility-guide/

• https://www.in.gov/fssa/ompp/medicaid-enrollment-dashboard/

• https://www.medicaid.gov/medicaid/quality-of-care/performance-measurement/adult-and-child-health-care-quality-measures

• https://www.medicaid.gov/medicaid/quality-of-care/core-set-data-dashboard/main?focusStates=%5B%22IN%22%5D

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Sarah Slaughter is a proud advocate for public health. She received her undergraduate degrees in Brain and Behavioral Sciences and Family and Developmental Sciences from Purdue University. She went on to continue her education at Purdue and earned a Master of Public Health (MPH). Sarah’s career consists of case management for Medicaid members with physical and mental disabilities, writing and developing policy for Indiana Medicaid, and currently as a home and vehicle modification specialist for Pathways members. 

Summit Managed Solutions is a management consulting and professional services firm that partners with healthcare organizations across the private, public, and social sectors to create value. By providing comprehensive solution management and inclusive business operation services, Summit helps deliver specific, transformative outcomes. With consulting and managed service offerings, Summit helps partners overcome the critical challenges associated with people, process, and technology, while providing partners with flexibility, reliability, and innovation that will propel growth.