Lawmakers advance hospital fee cap despite misgivings

By GARRETT BERGQUIST
WISH-TV | wishtv.com

A member of a State Senate panel called a hospital fee cap bill inadequate even as it cleared the committee on a bipartisan vote, Wednesday.

The bill would impose an excise tax on any nonprofit hospital that charges facility fees of more than 265 percent of the Medicare reimbursement rate. The tax would begin at 33 percent next year, rising to 100 percent beginning in 2028. If a hospital’s total fees exceed 300 percent, it would lose nonprofit status.

The measure has already passed the House and is a priority for Republicans in that chamber.

The legislation is part of an effort by lawmakers this session to bring down hospital costs in Indiana. Bill author Rep. Martin Carbaugh, R-Fort Wayne, said in all the hearings lawmakers have held on the matter, hospital fees have consistently stood out as a major cost driver. He said in some cases, nonprofit hospitals charge fees of 400 percent or more of the Medicare reimbursement rate. Indiana’s largest hospital systems, including IU Health, Community, Franciscan, and Ascension St. Vincent, are nonprofit.

Matt Bell, of Hoosiers for Affordable Health Care, said Carbaugh’s bill will lower prices without being overly coercive because hospitals can still charge beyond the limits in the bill if they’re willing to pay a penalty.

“It doesn’t force a behavior, it presents a choice,” Bell said. “We think hospitals will make the choice under this law to lower prices for your constituents and we think that can be accommodated through great management decisions without sacrificing quality.”

Several members of the Senate Health and Provider Services Committee said they had serious concerns about the bill.

Sens. Jean Leising and Mike Bohacek, both Republicans, said they believe Carbaugh’s bill, and pricing conversations more broadly, focus too heavily on hospitals without looking at the role insurers play. Fellow Republican Sen. Tyler Johnson, who is an ER physician, said the bill amounts to price controls that could cut into health systems’ ability to offer competitive pay.

“You’re helping out other companies but you’re also going to cut the pay of nurses across the state of Indiana,” Johnson said. “Physicians are paid heavily through health systems and nurses are dependent on health systems for pay.”

Democrats on the committee said they have concerns as well. Senate Minority Leader Shelli Yoder, D-Bloomington, said she fears the bill could force nonprofit hospitals to adopt for-profit business models and drive rural hospitals out of business.

Some of the heaviest questioning was directed at Mike Schroyer, the president of Baptist Health Floyd in southeast Indiana. He said his hospital loses about $20 million a year. Those costs prompted the hospital, formerly Flody County Memorial Hospital, to join Louisville-based Baptist Health a few years ago. When committee members asked him how the bill would affect his bottom line, Schroyer said he could lose as much as $50 million per year.

The bill ultimately passed the committee by a 10-1 vote, with only Sen. Liz Brown, R-Fort Wayne, voting against it. Leising and Yoder, along with several other members of the committee, said they voted for it to advance the bill but are willing to vote against it on the Senate floor if they believe their concerns are not addressed.

This story was originally published by WISH-TV at wishtv.com/news/politics/indiana-hospital-fee-cap-bill.