Indiana lawmakers propose large fines for expensive hospital care

Indiana lawmakers are looking to impose a cap on the price of care provided by the state's hospitals.

In a bill introduced by state Republicans in January, all nonprofit hospitals and health systems in Indiana would be required to report the average price of every healthcare service they provide to the state's insurance department, along with all patient service revenues from the year prior.

If the department determines a hospital's average price for a service is more than 260 percent higher than Medicare's price for the service, the state would impose a fine that is equal to up to 10 percent of the hospital's total patient-service revenue, depending on certain factors.

Generated revenues from fines would then be used to pay state Medicaid bills.

The Indiana legislation follows other states around the country, including Pennsylvania, North Carolina and Colorado, that have become increasingly accusatory against hospitals over who is ultimately responsible for high care costs.

"[The bill] does focus on the large not-for-profit hospitals," state Rep. Donna Schaibley, who introduced the cost cap bill, told the Indiana Capital Chronicle. "I would say most of them have extremely large reserves and I think they’re capable of absorbing them." 

The bill also proposes giving a $1,000 tax credit for a defined amount of years to physicians who aren't affiliated with a hospital to incentivize independent practices. Critical access hospitals would also be allowed to include non-compete clauses in physician contracts as well.

County-owned hospitals and nonprofit critical access facilities would be exempt from the legislation's cost cap provision. 

The Indiana Hospital Association, which represents about 160 hospitals in the state, told the Indianapolis Business Journal it believes the cost cap is "arbitrary" and "dangerous."

"This level of government control is an extreme departure from Indiana's free market principles," Brian Tabor, hospital association president, told the IBJ. "Hoosiers do not want more government interference in health care, and we have not seen the government picking winners and losers to this extent since Obamacare. If legislative leaders are looking for real solutions, they should start by raising state Medicaid rates – which only cover 53 percent of hospitals’ cost of providing care – to relieve the cost shifting burden on businesses and consumers."

In late January, Indiana health system leaders testified in front of lawmakers, arguing that the state's high cost of care isn't being set by providers, but by the population's poor health, high labor costs and the high costs of drugs and medical devices, according to the Indiana Capital Chronicle.

"We end up providing bills to people on things that we buy elsewhere and just pass them along – pharmaceuticals, devices, various therapies – we don't set those prices," Bryan Mills, president and CEO of Indianapolis-based Community Health Network, said. "We have limited leverage as well so I'm not here for sympathy. I'm just saying it's not quite that simple."

Another bill at the Indiana Statehouse is also looking to institute site-neutral payment policies by banning "facility fees" in hospitals.

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