The body of Easton Ho, 25, was found April 15 in an Indiana creek. Troy police said his thumb had been cut off so Higgins could access his cellphone.
Ho had been reported missing the previous day by his roommates, including Higgins.
The not guilty by reason of insanity plea was heard by Judge Stacy Wall. She ordered an evaluation of Higgins, who had been in a psychiatric center following his arrest.
The evaluation will be done at the Forensic Psychiatry Center for Western Ohio in Dayton. It will look at his competency to stand trial and his mental condition at the time of the offenses charged.
His bail was continued at $1.5 million.
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