Health care pricing bill moves before third reading deadline

Senate Republicans and Democrats alike split on a vote for House Bill 1004 Tuesday ahead of a key deadline, torn between whether its language instituted “price caps” or simply brought nonprofit hospital prices inline with state standards. 

Under the proposal, large nonprofit hospitals exceeding a benchmark price for services could be penalized, even potentially losing their state tax-exempt status by 2029. 

Two other health care bills — one in each chamber — passed with near-unanimous support before the third reading deadline on Tuesday. All three bills return to their originating chamber for further consideration.

Under House Bill 1004, Sen. Chris Garten said the Office of Management and Budget will conduct a price study to identify a statewide average that, calculated as a percentage of Medicare, will be incorporated into the final average price for a particular service. 

“It’s not a price cap. You can charge whatever you want, but being a nonprofit in Indiana is a privilege,” said Garten, R-Charlestown. “… if you can’t be competitive with your pricing as a nonprofit with the systems that are for profit, then why should you enjoy the privileges of being a nonprofit in Indiana?”

Garten pointed to increasing hospital prices, though hospitals and employers have frequently sparred over studies analyzing that growth. By using a state agency, Garten said he hoped to create a pricing study that everyone could use. 

OMB will also analyze the potential pitfalls of requiring a higher physician reimbursement of “at least” 168% of the Medicare rate under newly adopted language.

Additionally, Garten pointed to wins for hospitals, including a reformed Hospital Assessment Fee that leverages larger reimbursements from the federal government — a long-sought win for hospitals — as well as prohibiting insurers from coupling commericial contract negotiations from Medicare Advantage plans.

“I’ve been told by almost every hospital I talk to … that, alone, it would be the biggest thing we could do for rural health care,” Garten said.

A bipartisan coalition of 29 senators moved the bill while another 19 senators, including Republicans and Democrats, opposed the measure.

Pushback to HB 1004

After a relatively smooth path through the House, the wide-ranging health care bill has encountered more trouble in the Senate, where committee members begrudgingly advanced the bill after one senator called it “the worst bill” she’d ever seen.

Sen. Liz Brown — who twice opposed the bill in two different committees — praised the community support from her local nonprofit hospital, Parkview Health, which would be included as one of the “big five” nonprofit hospital systems targeted under this bill. 

“This is a Sophie’s Choice,” said Brown, referring to a movie in which a mother faced an impossible decision. “This is a price cap. Now, you can say they don’t have to hit the cap — which is true. They can become for profit. But we all know that our hospitals and their expansions are heavily dependent on the tax-exempt bonds that they use.”

Such bonds were used by Parkview to purchase a struggling hospital in Logansport that was losing $9,000 a day, Brown said, keeping their doors open for crucial health care services.

“Now people in Logansport, on the other side of the state, are going to be able to stay there for their cancer chemotherapy. Why? Because my not-for-profit hospital is reaching out and wants to save the care in that community.”

Sen. Tyler Johnson, an emergency physician with Parkview, criticized the for-profit hospitals in his area for backing away from health care services for underprivileged Hoosiers relying on Medicaid.

“So now all of the prisoners and the overdoses and the gunshot wounds and the psychiatric patients land in my emergency department … because they don’t get to make money off of those people,” said Johnson, R-Leo. 

If the criticism was solely linked to high pay for nonprofit hospital CEOs and assets on Wall Street, Johnson asked whether other employers with high-paid leaders and out-of-state investments should also be penalized. Companies affiliated with the Employers’ Forum of Indiana, whose former leader is now the state’s health services secretary, have been some of the most ardent supporters of House Bill 1004. 

“I really don’t understand why (employers) would want to bring a bill that starts price controls … I’ve got a nice pickup truck, but I’d love for it to be cheaper. Let’s put some price controls on that,” Johnson said. “… all we’re going to do is provide chaos to the (health care) system.”

But Sen. Ed Charbonneau defended the move to potentially penalize hospitals in 2029, noting that the deadline was four sessions — and two budget cycles — away.

“I’m not concerned at this point about what will happen in 2029. I am concerned about what happens today,” said the Valparaiso Republican. “If we don’t like what’s happening today, we have to pass House Bill 1004.”

In a statement to the Indiana Capital Chronicle, the Indiana Hospital Association said its members strove to make health care more affordable “without sacrificing … quality and access.” It praised the inclusion of certain provisions, such as direct contracting with employers and the Hospital Assessment Fee, but expressed a concern about a hard price cap.

“IHA is neutral on the bill in its current form, but as conversations continue in the coming weeks and beyond, we will remain concerned by inflexible solutions that do not take into consideration the uncertainty of rising cost pressures such as inflation, tariffs, and other economic factors that will further threaten the financial stability of Indiana’s health care ecosystem,” said IHA President Scott Tittle. “We look forward to continuing our work with legislators to strike the right balance of lowering costs while maintaining access for Hoosier patients.”

Other health care measures move

Two other key health care bills met the third reading deadline, but will need to get the stamp of approval from their originating chamber before going to Gov. Mike Braun for his signature.

Amendments to the wide-ranging House Bill 1003 on Monday struck various portions that have been contentious in previous hearings, including site-of-service language and clarifying pricing transparency requirements for diagnostic imaging services.

Staff with the Indiana Attorney General’s Medicaid Fraud Control Unit will also no longer be allowed to act as law enforcement officers — which was a request from the office to expand their investigative powers. 

The bill got the support of nearly every senator, with the exception of Sen. Andy Zay. The Huntington Republican opposed the measure because of the stripped-out portions that regulated pharmacy benefit managers, or PBMs.

“I think it’s time to shine the magnifying glass on areas where we can reform and find savings,” said Zay about PBMs. “I implore those in positions of leadership and authority to take one more look at this.”

Across the Statehouse, the House unanimously approved another PBM measure tackling drug costs and the “unchecked power” of the drug middlemen.

Senate Bill 140 would require PBMs and insurers to have accessible networks and fair reimbursements. Complaints against the two would be filed with the Department of Insurance. 

House sponsor Rep. Julie McGuire, R-Indianapolis, described the proposal as one “to ensure that patients are placed at the center of our health care system.”