Federal judge orders temporary relief for families who sued Indiana over Medicaid changes

A federal judge has ordered a state agency to provide immediate relief to two families of medically complex children who sued the state , claiming recent policy changes in response to a billion-dollar Medicaid budgeting shortfall would cause their kids "irreparable harm."

The judge's preliminary injunction against the Indiana Family and Social Services Administration handed down just before Labor Day does not actually halt these policy changes, as the families had asked. Rather, it's a temporary Band-Aid while the families pursue a permanent injunction.

By Judge Tonya Walton Pratt's estimation, the plaintiffs' likelihood of winning such an injunction is "strong."

Nevertheless, the plaintiffs today filed an emergency motion asking for more safeguards, arguing the temporary solution ordered by the court still leaves these families in dire straights.

Context: After $1 billion Medicaid budget shortfall, Indiana to cut program paying family caregivers

Why families sued FSSA

In late 2023, the state Medicaid office informed state lawmakers that they had under-budgeted Medicaid expenditures by nearly $1 billion due to a forecasting error and some unforeseen growth in costs. One of the big drivers of that cost explosion was a sharp uptick in the use of a previously little-known program in which "Legally Responsible Individuals," such as parents or spouses, could receive an hourly wage to care for their family members with medically complex conditions.

State spending on this program, called attendant care, roughly quadrupled from $317 million in 2022 to a projected $1.4 billion in 2024, coinciding with when many families learned from a March 2022 FSSA bulletin that they could do this as an alternative to relying on the increasingly scarce skilled-nursing labor force.

The largest growth occurred among families getting approved for more than 40 reimbursable hours a week.

More: Groups sue to stop state Medicaid cuts to family caregivers after $1B budgeting shortfall

That includes the two families represented in this lawsuit, filed in May by the Indiana Protection and Advocacy Services Commission. In the case of a 6-year-old boy from rural Lawrence County who has a rare genetic disorder, his mother, who was not able to find skilled professionals to provide in-home services, got approved for 112 hours a week, earning roughly $2,000 a week. The mother of another child, a 10-year-old from Johnson County, was approved for 84 hours a week and 18 hours for a skilled nurse.

Under the policy change FSSA instituted on July 1 ― but agreed to extend for these families until Sept. 1 ― families in the attendant care program either have to find a new attendant caregiver who is not a family member, or they must transition to Structured Family Caregiving, a program that provides a daily rate to caregivers and wraparound services.

Both of these services were never meant to be a replacement for the skilled care an in-home nurse provides. But with the nursing shortage, attendant care became a gap-filler, and these parents have come to depend entirely on this income. To them, the per diem of $79-90 a day from Structured Family Caregiving amounts to a more than 50% pay cut, even though the program was never intended to be an income supplement.

So the plaintiffs argue, and the Southern District Judge agrees, that the Structured Family Caregiving rate is inadequate to support a family, meaning these mothers would have to find outside work. Because in-home skilled nurses have not been available for these families, they argue their only option would be to institutionalize their children, which would would violate federal mandates in the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973.

What FSSA said

FSSA argued that the plaintiffs are leaving services on the table, such as not using the skilled-nursing hours that they've been approved for. The judge disputed this.

"All this fact highlights is that despite Medicaid approving reimbursement for skilled services, they have not provided the staff needed to provide this care," she wrote.

FSSA also argues that the inability to obtain this skilled nursing care is due to factors outside the agency's control ― Indiana's nursing shortage. Judge Pratt acknowledged FSSA has taken steps helping families with this problem, but those steps include instructing parents on how to recruit nurses, rather than showing how the agency itself is actively recruiting nurses.

A spokesperson said FSSA is still reviewing the judge's order.

Why the judge didn't grant the families' request

The judge ordered FSSA to "take immediate and affirmative steps" to arrange a certain number of hours of in-home skilled nurse services for the two children, as well as to reimburse the two mothers at the Structured Family Caregiving rate.

The judge would not, however, grant the plaintiff's actual request of allowing the mothers to stay on as hourly attendant caregivers.

Doing so would risk violating the terms of Indiana's federally approved Medicaid waiver program, putting the state at risk of losing federal funding and therefore preventing others from receiving Medicaid services. Though, as the judge noted, FSSA had for years already "willingly chosen to violate" its own Medicaid waiver, which technically never allowed Legally Responsible Individuals to provide attendant care, with no threat from the federal government.

In their emergency motion today, the plaintiffs argue the injunction should be modified to reflect their original ask ― to allow the mothers to continue being paid hourly as attendant caregivers ― or, alternatively, re-written to compel FSSA to ensure their needs are met if nursing services are unavailable.

Arranging nursing services is "not an overnight endeavor," and even if it were, those nurses would need to be trained to care for the very unique needs of these children in order to enable their mothers to work outside the home. During that time, "the only thing keeping the children out of institutions is their mothers’ ability to be at home to provide the needed care."

Contact IndyStar state government and politics reporter Kayla Dwyer at kdwyer@indystar.com or follow her on Twitter @kayla_dwyer17 .

This article originally appeared on Indianapolis Star: Federal judge orders temporary relief for families who sued Indiana over Medicaid changes