Angered by allegedly inflated health care costs in Indiana, House Republicans want to fine hospitals that charge more than 260% of what Medicare reimburses for services.
House Bill 1004 would impose fines for overcharging, which could be equivalent to 10% of a hospital’s patient revenue.
The bill was introduced Thursday by Rep. Donna Schaibley, R-Carmel, and Rep. Matt Lehman, R-Berne. It was referred to the House Public Health Committee, of which Schaibley is vice-chair.
Under the bill, all nonprofit hospitals would report annually to the Indiana Department of Insurance the average price they charge for each healthcare service and all patient service revenue for the previous year.
The department would then assess the extent to which the hospital’s average price for a service exceeded 260% of the Medicare reimbursement rate for that service.
If the hospital exceeded this rate, the department would assess a penalty using a formula that could equal 10% of the hospital’s total patient service revenue, or a lower figure, depending on the number of procedures involved and other factors.
“If you’re over a certain price, there would be penalties,” House Speaker Todd Huston told R-Fishers. “You know again, we are a cheap state in almost every respect. In this area we are out of line.”
Proceeds from the fines would go into the state general fund and could be used to pay the state’s share of the cost of Medicaid services.
The Indiana Hospital Association, the trade group that represents about 160 hospitals statewide, called the bill’s price cap “arbitrary” and “dangerous.”
“This level of government control is an extreme departure from Indiana’s free market principles,” Brian Tabor, President of the Hospitals Association, said in an email to IBJ. “Hoosiers don’t want any more government interference in healthcare, and we haven’t seen government pick winners and losers on this scale since Obamacare. If lawmakers are looking for real solutions, they should start raising state Medicaid rates — which only cover 53% of hospital care costs — to relieve businesses and consumers of cost shifting.”
The bill comes a year after Indiana’s top lawmakers warned hospitals and health insurers to cut what they call the “runaway cost” of healthcare, saying Indiana’s rates are well above the national average and need to be cut will.
They pointed out that Indiana hospital facility fees — or the expenses hospitals charge to cover their overheads and keep doors open — according to a study by Rand Corp. from 2020 are the fifth highest in the country.
Rand’s latest study found that Indiana ranks seventh nationwide for hospital prices — ahead of New York, California, Massachusetts and other larger states with higher costs of living — when it comes to what privately insured versus Medicare pays for care for the same have paid for performance.
However, the study also found that Indiana has the fourth lowest payments to physicians relative to Medicare.
The bill exempts county-owned hospitals and non-profit hospitals with critical access.