Indiana’s hospital price cap law is moving ahead, with a report expected to be released that will show the average hospital cost and where each facility falls on the spectrum, KFF Health News reported June 22.
The law caps the prices that five of Indiana’s largest nonprofit hospital systems can charge patients covered by job-based health plans. The price cap is based on statewide average for inpatient and outpatient hospital prices, and Indiana is using Medicare as the scale to index commercial prices.
By June 30, Indiana is expected to issue a report showing average hospital prices and where hospitals fall on the cost spectrum. The previous state report on hospital prices was released in November and found three of the five systems exceeded voluntary benchmarks when excluding practitioner services, such as physician fees. However, all five systems were below the voluntary benchmark when physician servicers were included in the overall score.
Here is what to know.
1. The law, signed in 2025, affects health systems with $2 billion or more in net patient service revenue, which includes Ascension St. Vincent (Indianapolis), Community Health Network (Indianapolis), Franciscan Health (Mishawaka), Indiana University Health (Indianapolis) and Parkview Health (Fort Wayne). These systems control nearly half of the state’s hospital market, KFF reported. Hospitals that fail to keep prices below the threshold by 2029 risk losing their tax-exempt status.
2. In September, other Indiana hospitals must comply with the same provision.
3. Indiana is one of a handful of states implementing price caps. Vermont, Oregon and Washington have similar laws, and legislation has been proposed in Colorado and New York.
4. Indiana’s law has drawn criticism from healthcare pricing experts, who argue that the policy may not actually address the underlying drivers of high healthcare costs.
5. The law was introduced following RAND studies that showed Indiana employers pay more for hospital services compared to the national average. In 2022, the national average was 254% of the Medicare rate, while Indiana’s average was 297%.
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