HB 1277

           Second Regular Session of the 124th General Assembly (2026)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
  Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2025 Regular Session of the General Assembly.
    HOUSE ENROLLED ACT No. 1277
    AN ACT to amend the Indiana Code concerning human services.
    Be it enacted by the General Assembly of the State of Indiana:
   SECTION 1. IC 12-8-1.6-2, AS ADDED BY P.L.174-2025,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. (a) As used in this chapter, "home and
community based services waiver" refers to a federal Medicaid waiver
granted to the state under 42 U.S.C. 1396n(c) to provide home and
community based long term care services and supports to individuals
with disabilities and the elderly.
   (b) The term does not include home and community services offered
as part of the approved Medicaid state plan.
   SECTION 2. IC 12-8-1.6-4, AS ADDED BY P.L.174-2025,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 4. (a) The office of the secretary has all powers
necessary and convenient to administer a home and community based
services waiver.
   (b) The office of the secretary shall do the following:
     (1) Administer money appropriated or allocated to the office of
     the secretary by the state, including money appropriated or
     allocated for a home and community based services waiver.
     (2) Take any action necessary to implement a home and
     community based services waiver, including applying to the
     United States Department of Health and Human Services for
     approval to amend or renew the waiver, implement a new
     Medicaid waiver, or amend the Medicaid state plan.
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    (3) Ensure that a home and community based services waiver is
    subject to funding available to the office of the secretary.
    (4) Ensure, in coordination with the budget agency, that the cost
    of a home and community based services waiver does not exceed
    the total amount of funding available by the budget agency,
    including state and federal funds, for the Medicaid programs
    established to provide services under a home and community
    based services waiver.
    (5) Establish and administer a program for a home and
    community based services waiver, including the assisted living
    waiver described in IC 12-15-1.3-26, to provide an eligible
    individual with care that does not cost more than services
    provided to a similarly situated individual residing in an
    institution.
    (6) Within the limits of available resources, provide service
    coordination services to individuals receiving services under a
    home and community based services waiver, including the
    development of an individual service plan that:
        (A) addresses an individual's needs;
        (B) identifies and considers family and community resources
        that are potentially available to meet the individual's needs;
        and
        (C) is consistent with the person centered care approach for
        receiving services under a waiver.
    (7) Monitor services provided by a provider that:
        (A) provides services to an individual using funds provided by
        the office of the secretary or under the authority of the office
        of the secretary; or
        (B) entered into one (1) or more provider agreements to
        provide services under a home and community based services
        waiver.
    (8) Establish and administer a confidential complaint process for:
        (A) an individual receiving; or
        (B) a provider described in subdivision (7) providing;
    services under a home and community based services waiver.
    (9) Establish a procedure for documenting compliance with
    subdivision (6) in the individual service plan of an individual
    receiving services under a home and community based
    services waiver, which must include provider attestation that
    services delivered to a recipient align with the recipient's
    individual service plan.
  (c) The office of the secretary may do the following:
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     (1) At the office's discretion, delegate any of its authority under
     this chapter to any division or office within the office of the
     secretary.
     (2) Issue administrative orders under IC 4-21.5-3-6 regarding the
     provision of a home and community based services waiver.
   SECTION 3. IC 12-8-1.6-9, AS ADDED BY P.L.174-2025,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 9. A home and community based services waiver,
including the delivery and receipt of services provided under the home
and community based services waiver, must meet the following
requirements:
     (1) Be provided under public supervision.
     (2) Be individualized and designed to meet the needs of
     individuals eligible to receive services under the home and
     community based services waiver.
     (3) Meet applicable state and federal standards.
     (4) Be provided by qualified personnel.
     (5) Be provided, to the extent appropriate, with services provided
     under the home and community based services waiver that are
     provided in a home and community based setting where
     nonwaiver individuals receive services.
     (6) Be provided in accordance with an individual's:
        (A) service plan; and
        (B) choice of provider of waiver services.
   SECTION 4. IC 12-8-1.6-9.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 9.5. (a) An individual receiving
services under a home and community based services waiver shall
do the following:
     (1) Review any record or statement the individual receives
     under IC 12-15-11-11.
     (2) Not later than forty-five (45) days after receiving a record
     or statement described in subdivision (1), report to the office
     of the secretary, the provider, or other appropriate entity
     any:
        (A) error in the record or statement; or
        (B) inconsistency between the record or statement and
        services received.
   (b) Upon request, the case manager of a recipient described in
subsection (a) shall do the following:
     (1) Assist the recipient in reviewing the recipient's record or
     statement described in subsection (a)(1).
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       (2) Assist in reporting and resolving any error or
       inconsistency under subsection (a).
    SECTION 5. IC 12-8-1.6-10, AS AMENDED BY THE
TECHNICAL CORRECTIONS BILL OF THE 2026 GENERAL
ASSEMBLY, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 10. (a) This section applies to the following:
       (1) A home and community based services waiver that included
       assisted living services as an available service before July 1,
       2025.
       (2) An assisted living waiver described in IC 12-15-1.3-26.
    (b) As used in this section, "office" includes the following:
       (1) The office of the secretary of family and social services.
       (2) A managed care organization that has contracted with the
       office of Medicaid policy and planning under IC 12-15.
       (3) A person that has contracted with a managed care organization
       described in subdivision (2).
    (c) Under a home and community based services waiver that
provides services to an individual who is aged or disabled, the office
shall reimburse for the following services provided to the individual by
a provider of assisted living services, if included in the individual's
home and community based service services plan:
       (1) Assisted living services.
       (2) Integrated health care coordination.
       (3) Transportation.
    (d) If the office approves an increase in the level of services for a
recipient of assisted living services, the office shall reimburse the
provider of assisted living services for the level of services for the
increase as of the date that the provider has documentation of providing
the increase in the level of services.
    (e) The office may reimburse for any home and community based
services provided to a Medicaid recipient beginning on the date of the
individual's Medicaid application.
    (f) The office may not do any of the following concerning assisted
living services provided in a home and community based services
program:
       (1) Require the installation of a sink in the kitchenette within any
       living unit of an entity that participated in the Medicaid home and
       community based services program before July 1, 2018.
       (2) Require all living units within a setting that provides assisted
       living services to comply with physical plant requirements that
       are applicable to individual units occupied by a Medicaid
       recipient.
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      (3) Require a provider to offer only private rooms.
      (4) Require a housing with services establishment provider to
      provide housing when:
         (A) the provider is unable to meet the health needs of a
         resident without:
            (i) undue financial or administrative burden; or
            (ii) fundamentally altering the nature of the provider's
            operations; and
         (B) the resident is unable to arrange for services to meet the
         resident's health needs.
      (5) Require a housing with services establishment provider to
      separate an agreement for housing from an agreement for
      services.
      (6) Prohibit a housing with services establishment provider from
      offering studio apartments with only a single sink in the unit.
      (7) Preclude the use of a shared bathroom between adjoining or
      shared units if the participants consent to the use of a shared
      bathroom.
      (8) Reduce the scope of services that may be provided by a
      provider of assisted living services under the aged and disabled
      Medicaid waiver in effect on July 1, 2021.
   (g) A Medicaid recipient who has a home and community based
services plan that includes:
      (1) assisted living services; and
      (2) integrated health care coordination;
shall choose whether the provider of assisted living services or the
office provides the integrated health care coordination to the
recipient.
   (h) Integrated health care coordination provided by a provider
of assisted living services under this section is not duplicative of
any services provided by the office.
   (g) (i) The office of the secretary may adopt rules under IC 4-22-2
that establish the right, and an appeals process, for a resident to appeal
a provider's determination that the provider is unable to meet the health
needs of the resident as described in subsection (f)(4). The process:
      (1) must require an objective third party to review the provider's
      determination in a timely manner; and
      (2) may not be required if the provider is licensed by the Indiana
      department of health and the licensure requirements include an
      appellate procedure for such a determination.
   SECTION 6. IC 12-11-2.1-3, AS AMENDED BY P.L.99-2007,
SECTION 78, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
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JULY 1, 2026]: Sec. 3. (a) All services provided to an individual must
be provided under the individual service plan of the individual with a
disability. To the extent that services described in IC 12-11-1.1-1(e) are
available and meet the individual's needs, services provided to an
individual shall be provided in the least restrictive environment
possible.
    (b) Pursuant to the applicable home and community based
services waiver, a request to increase service units on an
individual's approved service plan must be submitted to the bureau
for review and approval or denial not later than forty-five (45)
calendar days from the first day of the qualifying event, as
prescribed by the bureau.
    SECTION 7. IC 12-15-1.3-26 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 26. (a) Not later than September
1, 2026, the office of the secretary shall apply to the United States
Department of Health and Human Services for a Medicaid waiver
to provide assisted living services effective July 1, 2026, in a waiver
separate from the Medicaid home and community based services
waiver that included assisted living services to individuals who:
      (1) are at least sixty (60) years of age; and
      (2) meet nursing facility level of care requirements;
as an available service before July 1, 2026.
    (b) The office of the secretary shall state in the waiver
application a plan to transfer waiver slots from the existing
Medicaid home and community based services waivers that include
assisted living services to individuals described in subsection (a) to
the new assisted living Medicaid waiver application required under
subsection (a) upon approval. If the new assisted living Medicaid
waiver submitted under subsection (a) is approved, the office of the
secretary shall transfer waiver slots currently used for individuals
receiving assisted living services from the existing Medicaid home
and community based services waivers that include assisted living
services to individuals described in subsection (a) to the new
assisted living Medicaid waiver.
    (c) The office of the secretary shall establish a work group of
interested stakeholders to assist in the development and
implementation of the waiver described in subsection (a). The
governor shall appoint the members of the work group and include
providers of assisted living services as members of the work group.
    SECTION 8. IC 12-15-1.3-27 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
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[EFFECTIVE JULY 1, 2026]: Sec. 27. (a) Not later than September
1, 2026, the office of the secretary shall apply to the United States
Department of Health and Human Services for an amendment to
the Medicaid home and community based services waiver
concerning the provision of services to individuals who:
      (1) are at least sixty (60) years of age;
      (2) meet nursing facility level of care requirements; and
      (3) are not transferring to the waiver from another home and
      community based services waiver;
to establish an individual cost limit of not more than the
institutional cost of nursing facility services.
    (b) This section expires July 1, 2028.
    SECTION 9. IC 12-15-5-17.5, AS AMENDED BY P.L.138-2022,
SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 17.5. (a) The office shall report on its progress on
the development of a risk based managed care program or capitated
managed care program for Medicaid recipients who are eligible to
participate in the Medicare program (42 U.S.C. 1395 et seq.) and
receive nursing facility services to the interim study committee on
public health, behavioral health, and human services before November
1, 2021.
    (b) Not later than February 1, 2022, the office shall report the
following information and analysis to the legislative council and budget
committee (in an electronic format under IC 5-14-6) regarding the
implementation of a risk based managed care program or capitated
managed care program for Medicaid recipients who are eligible to
participate in the Medicare program (42 U.S.C. 1395 et seq.) and
receive nursing facility services, as follows:
      (1) The projected utilization of home and community based
      services and institutional services for the four (4) years following
      implementation, and including, but not limited to, information on:
          (A) provider network adequacy;
          (B) family caregiver programming; and
          (C) costs and funding sources associated with creating and
          maintaining adequate provider networks and family caregiving
          programming.
      (2) How administrative processes, including service approval and
      billing processes, between managed care entities and providers of
      services will be addressed or streamlined in a risk based managed
      care program or capitated managed care program, with specific
      discussion of uniform provider credentialing, the potential of a
      single claims processing portal, and prior authorization processes.
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      (3) Projected total spending for a risk based managed care
      program or capitated managed care program for the four (4) years
      following implementation. Such information shall include the
      identification of and impact on each source of state matching
      funds and overall impact on the state general fund.
      (4) The expected financial impacts of a risk based managed care
      program or capitated managed care program on the available
      amounts and use of the nursing facility quality assessment fee and
      supplemental payments to nursing facilities that are owned and
      operated by a governmental entity. Such information shall include
      an analysis on whether either of these funding streams will be
      diverted for uses other than the uses prior to implementation of a
      risk based managed care program or capitated managed care
      program and the effects on access to acute and post-acute care
      services due to the expected financial impacts.
   (c) A request for proposal for the procurement of a Medicaid
program to enroll a Medicaid recipient who is eligible to participate in
the Medicare program (42 U.S.C. 1395 et seq.) and receives nursing
facility services in a risk based managed care program or capitated
managed care program:
      (1) must comply with IC 12-15-13-1.8(e) and any other
      applicable statute; and
      (2) may not be issued until the request for proposal has been
      reviewed by the budget committee.
   (d) After the review of a request for proposal by the budget
committee under subsection (c), the office may not enter into a final
contract that would implement a program described in subsection (c)
before January 31, 2023.
   SECTION 10. IC 12-15-11-11 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 11. A provider of services under
a home and community based services waiver (as defined in
IC 12-8-1.6-2) shall do the following:
      (1) Upon request by an individual receiving services under the
      waiver or the individual's legal guardian, but not more than
      once per calendar quarter, provide to the individual or the
      individual's legal guardian the provider's accounting records
      of service delivery for the recipient.
      (2) Upon request, but not more than twice per calendar year,
      provide to an individual receiving services under the waiver
      an itemized statement of the services billed by the provider
      for the recipient. The statement must be in plain language.
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    SECTION 11. IC 12-15-13-1.8, AS AMENDED BY P.L.213-2025,
SECTION 112, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 1.8. (a) As used in this section,
"covered population" means all Medicaid recipients who meet the
criteria set forth in subsection (b).
    (b) Except as provided in subsection (e), an individual is a
member of the covered population if the individual:
      (1) is eligible to participate in the federal Medicare program (42
      U.S.C. 1395 et seq.) and receives nursing facility services; or
      (2) is:
          (A) at least sixty (60) years of age;
          (B) blind, aged, or disabled; and
          (C) receiving services through one (1) of the following:
            (i) The aged and disabled Medicaid waiver.
            (ii) A risk based managed care program for aged, blind, or
            disabled individuals who are not eligible to participate in the
            federal Medicare program.
            (iii) The state Medicaid plan.
    (c) The office of the secretary may implement a risk based managed
care program for the covered population.
    (d) Any managed care organization that participates in the risk
based managed care program under subsection (c) that fails to pay a
claim submitted by a nursing facility provider for payment under the
program later than:
      (1) twenty-one (21) days, if the claim was electronically filed; or
      (2) thirty (30) days, if the claim was filed on paper;
from receipt by the managed care organization shall pay a penalty of
five hundred dollars ($500) per calendar day per claim.
    (e) Beginning July 1, 2027, upon an individual receiving nursing
facility services for a consecutive period of one hundred (100) days,
the individual is no longer a member of the covered population. An
individual who was part of the covered population is no longer part
of the covered population on the one hundredth day and shall
receive Medicaid services under a fee for service program.
    SECTION 12. IC 12-15-14-8, AS AMENDED BY P.L.241-2023,
SECTION 15, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 8. (a) The office may implement an end of
therapy reclassification methodology in the RUG-IV, 48-Group model
or its successor for payment of nursing facility services.
    (b) Before the office changes a health facility service reimbursement
that results in a reduction in reimbursement, the office shall provide
public notice of at least one (1) year. six (6) months. The public notice
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under this subsection:
      (1) is not a rulemaking action or part of the administrative
      rulemaking process under IC 4-22; and
      (2) must include the fiscal impact of the proposed reimbursement
      change.
    SECTION 13. IC 12-15-34-14.5, AS ADDED BY P.L.217-2017,
SECTION 79, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 14.5. (a) This section is effective beginning July
1, 2017.
    (b) The office of the secretary may not reduce reimbursement for
home health services.
    (c) 405 IAC 1-4.2-4(l) and any successor rule concerning reducing
home health services reimbursement are void and may not be renewed
or otherwise implemented.
    (d) This section expires June 30, 2027.
    SECTION 14. IC 12-15-34-14.6 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE UPON PASSAGE]: Sec. 14.6. (a) The office of the
secretary shall, in partnership and collaboration with a home
health services association and providers of home health services,
develop a new reimbursement methodology for home health
services and, not later than November 30, 2026, submit the new
reimbursement methodology for home health services to the
legislative council in an electronic format under IC 5-14-6.
    (b) This section expires December 31, 2027.
    SECTION 15. IC 16-42-22.5-1, AS ADDED BY SEA 282-2026,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) As used in this chapter, "bulk drug
substance" means a substance that is intended:
      (1) for incorporation into a finished drug product; and
      (2) to furnish pharmacological activity or other direct effect;
in the diagnosis, cure, mitigation, treatment, or prevention of disease,
or to affect the structure or any function of the body.
    (b) The term includes an amino acid.
    (c) (b) The term does not include the following:
      (1) A vitamin, mineral, herb, essential oil, extract, or other
      non-pharmaceutical ingredient not described in subsection (a).
      (2) Intermediates used in the synthesis of a substance.
    SECTION 16. IC 29-1-14-1, AS AMENDED BY P.L.99-2024,
SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) Except as provided in IC 29-1-7-7, all
claims against a decedent's estate, other than expenses of
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administration and claims of the United States, the state, or a
subdivision of the state, whether due or to become due, absolute or
contingent, liquidated or unliquidated, founded on contract or
otherwise, shall be forever barred against the estate, the personal
representative, the heirs, devisees, and legatees of the decedent, unless
filed with the court in which such estate is being administered within:
       (1) three (3) months after the date of the first published notice to
       creditors; or
       (2) three (3) months after the court has revoked probate of a will,
       in accordance with IC 29-1-7-21, if the claimant was named as a
       beneficiary in that revoked will;
whichever is later.
    (b) No claim shall be allowed which was barred by any statute of
limitations at the time of decedent's death.
    (c) No claim shall be barred by the statute of limitations which was
not barred at the time of the decedent's death, if the claim shall be filed
within:
       (1) three (3) months after the date of the first published notice to
       creditors; or
       (2) three (3) months after the court has revoked probate of a will,
       in accordance with IC 29-1-7-21, if the claimant was named as a
       beneficiary in that revoked will;
whichever is later.
    (d) All claims barrable under subsection (a) shall be barred if not
filed within nine (9) months after the death of the decedent.
    (e) Nothing in this section shall affect or prevent any action or
proceeding to enforce any mortgage, pledge, or other lien upon
property of the estate.
    (f) Nothing in this section shall affect or prevent the enforcement of
a claim for injury to person or damage to property arising out of
negligence against the estate of a deceased tort feasor within the period
of the statute of limitations provided for the tort action. A tort claim
against the estate of the tort feasor may be opened or reopened and suit
filed against the special representative of the estate within the period
of the statute of limitations of the tort. Any recovery against the tort
feasor's estate shall not affect any interest in the assets of the estate
unless the suit was filed within the time allowed for filing claims
against the estate. The rules of pleading and procedure in such cases
shall be the same as apply in ordinary civil actions.
    (g) A claim by the unit against a decedent's estate is forever barred
unless:
       (1) the unit files a claim in the court in which the decedent's estate
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      is being administered; or
      (2) the unit opens an estate for the decedent and files a claim
      against the decedent in the estate;
not later than one hundred twenty (120) days nine (9) months after the
date of death of the decedent.
   SECTION 17. An emergency is declared for this act.
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Speaker of the House of Representatives
President of the Senate
President Pro Tempore
Governor of the State of Indiana
Date:  Time:
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