Understanding Value-Based Payments (VBP) in 

Indiana's Medicaid Waiver

If you have been following Indiana’s Medicaid Waiver updates, you’ve likely heard the term “Value-Based Payment” (VBP). It’s a phrase that sounds great in a boardroom but can feel confusing, or even a little intimidating, when it lands in your living room or your therapist’s office.

As Indiana moves toward integrating VBP into Case Management (planned for August 2026), and potentially other services, MTAC is here to break down what this actually is, why the shift is happening, and what it means for our community.

What is Value-Based Payment (VBP)?

To understand VBP, you first have to understand the payment model the waiver has used for decades: Fee-for-Service (FFS).

• Fee-for-Service (Quantity): In this model, providers are paid for every individual task they do. Think of it like a checklist. If a provider completes 10 tasks, they get paid for 10 tasks. While simple, this doesn't always reward the quality of the work—only the volume of it.

• Value-Based Payment (Quality): In VBP, the focus shifts. Payments are tied to outcomes. Instead of just checking a box that a service happened, the system looks at whether the service actually helped the person. Did their health improve? Are they more independent? Is the family satisfied?

Why the Change? The Pros and Cons

Value Based Care is actually becoming more common practice (CMS explains it here). While no system is perfect, and VBP is a major shift in how healthcare "business" is done. Here is a look at the two sides of the coin:

The Pros (The "Why" behind the policy)

• Better Outcomes for Families: Because providers are rewarded for results, there is a natural incentive to provide the most effective care possible. It moves the needle from "just getting by" to "thriving."

• Coordinated Care: VBP encourages different providers (like your case manager, music therapist, and doctor) to talk to each other more. When everyone is working toward the same "value" goal, the person receiving services wins.

• Sustainability: By reducing unnecessary services and focusing on what works, the state can keep the waiver system financially healthy for the long term.

The Cons (The "Work" behind the shift)

• Administrative Burden: For providers, VBP requires a lot more data. Proving an "outcome" takes more documentation than just proving a "visit." This can be a heavy lift for smaller agencies.

• One-Size-Doesn't-Fit-All: "Value" can be hard to define for individuals with complex disabilities. A goal that is easy for one person might take years for another. If the state doesn't define "value" correctly, some families might feel pressured by "metrics" that don't fit their reality.

• Lag Time: Transitioning to these systems often requires upfront technology and training costs for businesses before they see the financial rewards.

How is MTAC Involved?

At MTAC, we recognize that while we aren't the ones writing these state policies, we are positioned well to understand how they translate into actual business operations and how they may impact family support.

We are advocating in this space by:

1. Tracking Implementation: We are watching how the state defines "quality" and will advocate for realistic ways to integrate this if VBP are proposed for music therapy services.

2. Educating Decision-Makers: We share the lived experience of our providers to help policymakers understand how VBP would impact the daily operations of a therapy practice.

3. Supporting Families: We want to make sure that as the state moves toward "Value," families don't lose the person-centered care that makes the waiver system so vital.

Value-Based Payment isn't just a new way to bill; it's a new way to think about care. It has the potential to make Indiana's services more effective and connected than ever before. However, it requires a watchful eye to ensure that the "business" of VBP doesn't overshadow the "support" that families rely on. You can keep tabs on Indiana's Medicaid Waiver Redesign here.

Learn more about VBP Efficacy here.

For an alternate standpoint on the pitfalls of VBP, read more here.

Have questions about how these changes might affect your services? Follow us and Sign Up For Our Newsletter for regular updates as we continue to bridge the gap between policy and practice.