Several bills that aim to lower health care costs in Indiana cleared the Senate and House
Lawmakers said increased hospital consolidation and vertical integration have led to little competition and little incentive for hospitals to lower prices in Indiana.
Indiana lawmakers have proposed numerous bills over the years aimed at lowering health care costs, with little success. This legislative session, however, a number of similar bills have sailed through the Senate and House chambers.
Right now, there are at least five bills that lawmakers say would tackle health care costs head on by targeting different players in the health care market.
Bills taking aim at hospitals
Lawmakers said that increased hospital consolidation and vertical integration –– major hospital systems buying up the health care supply chain –– have led to little competition and little incentive for hospitals to lower prices in Indiana.
Some of the Senate and House bills that cleared the chambers this week aim to cap the amounts hospitals can charge and try to incentivize independent physicians to open up their own practices –– and have the ability to leave their hospital employers when they need to.
The latest bill to be approved is Senate Bill 6. It would stop hospitals from charging what’s known as a “facility fee” for services provided outside of the hospital’s main campus. The measure excludes rural and critical access hospitals.
This debate harkens back to 2020, said Matt Bell with Hoosiers for Affordable Health Care.
“When the legislature first began to grapple with the idea that it was a widespread practice among the hospital industry to purchase independent physician practices, other medical facilities, including MRI, labs, physical therapy labs, [then] change the name on the door and begin billing for services as though they were offered within the four walls of a hospital,” he said.
When services are offered on campus, hospitals can attach a facility fee to the bill because hospitals have to operate around the clock with an emergency room and other crucial specialized amenities that result in bloated overhead expenses. But lawmakers say it’s problematic when hospitals add a facility fee to bills for services rendered at off-site locations.
“Senate Bill 6 provides real savings for Hoosiers… and moves us in the right direction to realign health care prices in Indiana,” said Sen. Ed Charbonneau, a Republican from Valparaiso, during a hearing earlier this week.
But hospital leaders, as well as many senators on both sides of the aisle, strongly opposed the bill.
Some said the measure will cut off an important revenue stream for some of the hospitals that are already financially struggling. Sen. Vaneta Becker, a Republican from Evansville, said the bill will cripple Deaconess hospital, which serves her community.
“In fact, the possibility is that they will be bought out by Ascension if this bill passes the way that it is,” Becker said. “It will also reduce access to services by patients.”
She said this bill could threaten the sustainability and lead to the closure of the hospital’s oncology center, which would leave patients without accessible cancer care. Hospital leaders have said that many of Indiana’s hospitals are operating in the red and they worry that this bill is punitive and could drive them deeper into financial distress.
SB 6 passed 31 to 18 and heads to the House for further readings.
Another bill, House Bill 1004, would establish a health care costs oversight board. The bill also bundles several different provisions. One provision aims to cap how much nonprofit hospitals charge compared to a nationally recognized metric, like what Medicare pays for the same services. Starting in 2026, the measure would give the Indiana Department of Insurance the ability to penalize nonprofit hospitals if they charge more than a specified percentage of the national average as calculated by the agency.
Another provision would give tax breaks to physicians who own independent practices. Lawmakers say the goal is to increase competition to drive prices down.
Senate Bill 7 also encourages physician autonomy by banning hospitals from using noncompete agreements in labor contracts with physicians. If approved by the House, physician noncompete agreements will be barred effective July 1. But the bill would not apply to agreements “originally entered into” prior to that date.
“Eliminating non-compete clauses would help increase competition among health care providers, which will lead to lower prices and more options for Hoosiers,” Busch said during a Senate session early February.
“Furthermore, the elimination of noncompetes would allow physicians to move more easily between practices without fear of litigation,” he said, “leading to higher job satisfaction, lower turnover and increased number of physicians in Indiana where the gap in the market has appeared.”
Noncompete agreements are widespread in many industries including health care. Hospitals use them to ensure, among other things, that a physician does not leave to work for a competitor. The agreements could have a time, geography or industry limit, or a combination thereof. Hospital leaders say noncompete agreements help protect the investment they put into the hiring and professional development of physicians.
Three amendments were filed, but only one by the bill’s author was heard and voted on. It stripped out a separate provision in the bill pertaining to doctor referrals, leaving only the noncompete ban.
Insurance and drug prices
A couple of bills that passed the House and Senate directly address drug costs and insurance practices.
Senate Bill 8 would require pharmacy benefit managers and insurers to pass on the discounts they receive from drugmakers to consumers or health plan members. The measure would allow the Department of Insurance to enforce the provisions and impose a civil penalty.
Another measure, House Bill 1003, aims to reduce or eliminate the process through which health insurers try to control costs by requiring health care providers get advance approval for certain services to qualify for coverage –– a process known as “prior authorization.” Many health care providers say that this process is riddled with inefficiencies and could delay crucial care for patients.
In its current form, HB 1003 could reduce or eliminate prior authorization for health care providers who enter into an electronic medical record access agreement and a value-based health care reimbursement agreement with a health insurer where payment is tied to the effectiveness and efficiency of the care provided.
According to the American Medical Association, value-based care arrangements are on the rise. Such arrangements incentivize quality care but also complicate payor contracts, which legal experts say could be cumbersome for some independent physicians to navigate.
On another note, HB 1003 would give employers with fewer than 50 employees tax breaks for offering employees health reimbursements instead of traditional health insurance, which could reduce costs for small businesses.
All these bills must still be approved by the opposite chamber before they can head to the governor’s desk. Lawmakers in both chambers are expected to convene next week.
Indiana Public Broadcasting reporter Adam Yahya Rayes contributed reporting.