Hospital ‘price caps' passes out of House, Senate for the last time
Rep. Martin Carbaugh, R-Fort Wayne, listens to bills in the House Chamber on April 24, 2025. (Whitney Downard/Indiana Capital Chronicle)
Much of the compromise reached for House Enrolled Act 1004 mirrors what left the Senate earlier this month. Penalties for five nonprofit health systems exceeding 'price caps' have now been pushed off into 2029 — after the Office of Management and Budget identifies the 'average hospital rate' for certain inpatient and outpatient services.
The final version retained a provision to strip nonprofit hospitals of their tax-exempt status under Indiana code as well as enhanced reporting metrics.
'Even with those changes, we are making meaningful, incremental changes to provide relief to our constituents,' said author Rep. Martin Carbaugh, R-Fort Wayne.
Most House Democrats opposed the bill, citing concerns about what losing a nonprofit status could mean for a community.
'(The) loss of nonprofit state versus a penalty will impact what benefits are provided to the community to keep Hoosiers healthier and prevent the unnecessary use of hospital services,' said Rep. Robin Shackleford, D-Indianapolis.
A provision allowing the state to phase out the Healthy Indiana Plan, which covers low- and moderate-income Hoosiers, if federal funds are not allocated also gave her pause.
'There is nothing in this bill that ensures that patients will pay less for quality health care, but there is a lot of red tape,' she continued. 'And there is an increase in administration and labor fees, so we will be voting no.'
Shackleford and 22 other lawmakers — including one Republican — voted against the bill in the House.
For the first time, the state will also institute a Managed Care Assessment Fee, similar to the provider tax known as the Hospital Assessment Fee, which could reap a maximum $1.4 billion annually — though the rate would need to be negotiated with the federal government.
Additionally, insurer negotiations with hospitals will be separated from Medicare Advantage deals — even if the insurer offers both. Combined with a reconfigured Hospital Assessment Fee that will leverage a larger federal reimbursement to health systems, Republicans said rural hospitals notched some wins.
'Two-thirds of Indiana nonprofit hospitals benefited more from the federal, state and local tax breaks than they invested back into their communities,' said Sen. Chris Garten, R-Charlestown. '… this bill is going to put more dollars into our rural systems all across the state.'
But reliable opposing Sens. Liz Brown and Tyler Johnson — Republicans from Fort Wayne and Leo, respectively — shared their discontent with setting pricing standards for any industry. Both have ties to Parkview Health, one of the five systems named in the bill, which recently announced a deal to purchase a struggling hospital in Cass County that would have otherwise closed.
'If they lose their not-for-profit status, they lose their license. Which means they can't operate at all … they have to close their doors,' Brown said.
She worried that, under such a situation, a for-profit chain would only buy certain facilities, leaving out the rural hospitals that depend on their nonprofit status.
A bipartisan group of 13 senators opposed the bill compared with 37 supporting votes.
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