Senators begrudgingly move hospital ‘price caps' bill

Yahoo

20-03-2025

Hospital administrators like Baptist Health Floyd's Michael Schroyer, left, and Goshen Health's Randy Christophel, urged senators to reconsider a bill establishing "price caps" on their services. (Whitney Downard/Indiana Capital Chronicle)
Nearly every lawmaker on the Senate Health and Provider Services Committee voted in favor of a house priority bill on Wednesday, but few seemed happy about it.
'This is probably the worst bill — collectively, as a total — that I have seen in many years,' said Sen. Jean Leising, R-Oldenburg. 'I have to support this bill because of the (hospital assessment fee) language … assuming (it) might help the HAF continue through the legislative process.'
This bill needs surgery.
– Sen. Mike Crider, R-Greenfield
House Bill 1004 would implement 'price caps' on nonprofit hospital charges and restructure a provider tax to increase federal reimbursements for health care entities. While the latter was universally praised, eight of the ten senators who voted to advance the bill flagged the attempt to control pricing.
Leising went on to express her dismay after repeatedly hearing about the need for an amendment but seeing no such language introduced before the committee. Due to its financial impact, the bill must also move through the Senate Appropriations Committee.
'The other part of this bill, I think, is really not workable at all. And it's just very disappointing to me,' Leising continued. 'But I hope that the people in appropriations take this seriously.'
Like other legislators, Leising had concerns about whether adding price caps tied to Medicare would hurt hospitals, especially rural or critical access facilities like those in her southeastern Indiana district.
Others questioned why insurers weren't getting the same scrutiny while acknowledging that the majority of the state's residents are covered by an insurance type that can't be regulated by the state.
Rep. Martin Carbaugh, R-Fort Wayne, understands the struggles to regulate insurers as the chair of the House insurance committee.
'For the past several years, we've been looking for ways to lower the cost of health care in the state and save taxpayers money in the process,' said Carbaugh. '(But)I don't believe that this bill is exactly in a form that's going to pass into law.'
Michael Schroyer, the president of Baptist Health Floyd in New Albany, committed to working with legislators on the bill, even offering to review the hospital's finances one-on-one. He reported losing $4 million alone in February, despite high patient volume, as costs for pharmaceuticals, supplies and salaries were up a collective 30%.
'We want health care costs to come down as well … we're at the mercy of so many others because we can't control what we're charged for the things we need to care for patients,' Schroyer told the Indiana Capital Chronicle. '(Insurance companies) have a big part in this that affects our costs because we spend millions of dollars a year negotiating, doing pre-authorization (and) dealing with denials.'
The sole dissenting vote came from Fort Wayne Republican Sen. Liz Brown, who detailed the years of effort and millions of dollars spent to try to reduce health care costs.
'There is a lot of work to do; this bill didn't do it,' Brown said. 'I'm hearing car prices are going up and everything in between, but somehow it's only the hospitals' responsibility to bring down costs.'
Senators balked at the notion of establishing price caps, which would be based on Medicare rates. A nonprofit hospital charging a private insurer more than 265% of that rate, which is established on the federal level but varies from facility to facility, would be penalized with an excise tax.
Those entities would also lose their nonprofit status, meaning they'd have to pay state taxes.
In his introduction, Carbaugh pointed to a Rand Corp. study that identified Indiana hospitals are the eighth-highest cost nationwide, regardless of nonprofit status. That analysis found that, nationwide, commercial payers were charged 2.5 times what hospitals charged Medicare for the same service. In Indiana, the rate was even higher at 3.4 times the cost of Medicare.
Hospitals take heat during dueling health care hearings​
But Rand's report was repeatedly criticized in committee for not truly mirroring the money received by hospitals since the analysis is based on what employers pay, which adds in insurer charges and overhead.
'If you set a cap on how we get paid, that money saves the insurance company. It's up to them whether they pass it on or not,' said Randy Christophel, the CEO and president of Goshen Health. 'We have been reducing our costs significantly over the last four or five years and we have not seen those dollars passed along to our regional employers.'
Schroyer said his hospital charged 207% of Medicare, according to RAND, but specialities like open heart procedures or neurosurgeries cost more. With even one charge above the 265% threshold, Schroyer would lose his nonprofit status under House Bill 1004.
But Schroyer and other hospital systems praised the inclusion of changes to the hospital assessment fee, which would leverage additional dollars in federal reimbursements to hospitals.
'If we didn't pass the HAF changes, my hospitals would be losing $35-50 million a year. And that's unsustainable,' said Schroyer.
Sen. Tyler Johnson, an emergency care physician, expressed a concern about 'increased bureaucracy that will require increased administrative costs,' something he said would 'probably (go) back to the patients at a time when we're trying to figure out how to lower costs.'
The bill, he worried, wouldn't lower costs or improve accessibility, but would rather 'make it worse for our rural communities.'
He, and other lawmakers, asked those testifying in support of the bill if they would support price caps in other industries. Such supporters included Gov. Mike Braun's administration, mainstay employer-focused organizations and Families USA, a national organization representing consumers.
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'This bill is a major step forward for the state to curb the growth of unchecked health care consolidation, particularly on hospitals and its impact on rising and unaffordable health care across the state,' said Sophia Tripoli, the group's strategic and innovative health policy thought leader. 'Local institutions … have now become large corporate entities focused on maximizing revenue rather than improving health.'
Despite the hours of testimony, senators seemed unconvinced by the arguments of those supporting price caps. It was a stark contrast to the House, where the bill advanced easily and with the support of nearly every Republican lawmaker.
'My concern … is we're arbitrarily taking this cookie-cutter approach to how we're going to do health care in Indiana with a hope and a prayer that it's going to reduce costs and increase access,' said Sen. Shelli Yoder, D-Bloomington. 'I have not heard one argument that that is going to be the case.'
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