States are coming after rising hospital prices

Several states, including California and Indiana, recently began targeting what they consider to be high hospital prices. 

In Indiana, legislators warned healthcare organizations in the state in a December 2021 letter that they would "pursue legislation to statutorily reduce prices" if they did not share a plan to  bring Indiana's healthcare costs down to the national average. 

In the letter, the legislators acknowledge that the healthcare industry is complex but pointed out that Indiana ranks fifth in the country in hospital facility fee costs. It called on the major hospitals to share a plan to curb costs. One hospital system, Indianapolis-based Indiana University Health, shared its plan with the state, saying it is taking a fiscally responsible approach to addressing patient care cost through three elements: affordability, value-based care and public health investment. Read more about IU Health's plan here

In Massachusetts, a health policy commission in January ordered Boston-based Mass General Brigham to develop a performance improvement plan to reduce costs after the watchdog determined that the health system has pushed healthcare spending above acceptable levels throughout the last few years. The commission found that Mass General Brigham had substantially higher than average commercial spending from 2014 to 2019. In total, the health system spent $293 million during those years, more than any other provider. It was the first time a health system was required to submit a plan to lower costs since the commission started reviewing market transactions six years ago. 

After asking for and being granted a deadline extension, Mass General Brigham must produce a plan to lower prices and spending by May 16. The plan must include cost-cutting steps, savings goals, process and outcome metrics and a timeline. 

To tackle rising healthcare costs in California, Gov. Gavin Newsom proposed creating the Office of Health Care Affordability. The goal of the office would be to regulate costs set by hospitals, physicians' offices and payers. The state would also have the power to impose fines for companies that charge too much. The governor and California General Assembly would appoint eight people to a board to govern and set cost targets for the state. 

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