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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowRepublican Indiana House members this week filed a bill that threatens to strip hospitals of their nonprofit status if they overcharge for services.
The bill is part of mounting scrutiny by lawmakers of the prices hospital systems charge patients covered by commercial health insurance, typically provided by their employers.
The measure is authored by Rep. Martin Carbaugh, R-Fort Wayne, and co-authored by Reps. Ben Smaltz, R-Auburn, and Julie McGuire, R-Indianapolis.
“House Bill 1004 is another bill to address health care costs,” Carbaugh said in a written statement. “HB 1004 would ensure nonprofit hospitals act as nonprofit entities focused on delivering health care (by) trying to establish nonprofit status while narrowly defining and focusing on community benefits.”
The legislation would require nonprofit hospitals (though not county hospitals) to file a report each year by Nov. 1 with the Indiana Department of Health of aggregated data on billed services compared with the Medicare reimbursement rate for those same services. If charges at a nonprofit hospital exceed 200% of that rate at the time of the charge, the hospital would face forfeiture of its state nonprofit status.
The bill also would subject nonprofit hospitals to an annual audit by the Indiana secretary of state and would require nonprofit hospitals to provide the entirety of the Schedule H (which includes community benefit) of its federal 990 form, making it available on the General Assembly’s website with redactions only for personal or private information.
In response, the Indiana Hospital Association said the state’s nonprofit hospitals provide $3.9 billion in total benefits every year to the communities they serve, which exceeds the value of their tax exemptions by $2.3 billion. The group added that these hospitals offer financial assistance to reduce patients’ expenses and, in 2023, provided $700 million in free care across the state, a 22% increase from the year before compared with an increase of 8% in national charity care.
“Health care is expensive across the board, and providers of every kind are struggling with workforce shortages, inflationary pressures and reimbursement challenges,” Scott B. Tittle, president of the association, said in a written statement. “Hospitals look forward to working with Rep. Carbaugh, the Braun administration and the entire Indiana General Assembly to find meaningful solutions for Hoosiers.”
Indiana University Health declined to comment on the bill. Ascension St. Vincent did not respond to a request for comment Wednesday afternoon.
Large hospital systems like IU Health, Ascension St. Vincent, Community Health Network and Franciscan Health are receiving increased scrutiny from lawmakers. This month, Sen. Travis Holdman, R-Markle, questioned whether the hospital systems are doing enough to make health care affordable while sitting on billions of dollars of net assets.
According to a press release issued Wednesday by Hoosiers for Affordable Healthcare, which praised HB 1004, several big hospital systems would need to make “massive price cuts to maintain their nonprofit status” under the bill, ranging from 23% to 40.8%. It specifically mentioned Parkview Health, IU Health, Franciscan Health, Deaconess Health System, Community Health Network and Ascension St. Vincent.
A recurring study updated in December by research group Rand Corp. found Indiana had the ninth highest hospital costs in the nation. The study found that in 2022 across all U.S. hospital inpatient and outpatient services, employers and private insurers paid on average 254 percent of the Medicare rate.
Another study, published in September in the Journal of the American Medical Association, analyzed data from Medicare costs reports to find that 2,927 U.S. nonprofit hospitals received $37.4 billion in total tax benefits in 2021. The study found the tax benefit is “highly concentrated among a small number of hospitals.”
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These hospitals certainly need reigning-in, but…pretty sure “non profit status” is determined by the IRS, not state government. Don’t these legislators know that?
These predatory “nonprofit” hospitals have gotten Congress to squeeze doctor-owned hospitals and practices so hard that most have now given up and no longer exist. IBJ should publish the CEO salaries of these alleged nonprofits. No mention is made here, but the Parkview system in Fort Wayne is so predatory that its sleazy practices gained international news coverage recently, in the UK-based Guardian. Shame.
Good on these legislators for shining a light. Keep after these guys – their “charity” numbers are largely fudged.
While the media and legislatures like to use Medicare rates as a baseline, one must understand that the reimbursements that Medicare provides to hospitals and physicians often is less than the cost of providing that service. Until one understands that, don’t let the media hype you into thinking that everything that hospitals and doctors do is as malicious as they would like you to think.
Hospitals are one thing. Doctors are another. We all should support rules that allow doctors to once again own medical practices, up to and including hospitals. Our current health-care system is set up to serve “non-profit” hospitals, insurance companies and pharmaceutical companies. Everyone is doing great – except patients and physicians. It is exactly upside-down.
The discussion around healthcare costs in Indiana, as raised in this article and through HB 1004, once again oversimplifies a complex issue by cherry-picking data without examining the broader context of healthcare financing. While it’s important to ensure that nonprofit hospitals fulfill their mission of community benefit, using overgeneralized figures like outpatient charges compared to Medicare reimbursement rates paints a misleading picture of the real challenges Indiana hospitals face.
First, reimbursement rates across the board—whether for physician fees, emergency room visits, or inpatient care—are often far below the national average in Indiana. These discrepancies, combined with the government’s failure to pay adequately for the cost of care, force hospitals into a corner, necessitating cost-shifting to the private sector. Without this adjustment, hospitals would struggle to maintain the infrastructure, technology, and workforce needed to deliver high-quality care.
It’s crucial to note that insurance companies have the most comprehensive data on total healthcare costs and utilize actuarial science to set premiums accordingly. Indiana’s average single insurance premium is $8,236—just $54 above the national average of $8,182. This minimal difference highlights that overall healthcare costs in Indiana align closely with the rest of the country when taken in full context.
Hoosiers for Affordable Healthcare, along with similar critics, selectively focuses on outpatient charges while ignoring the broader realities of denied claims, clawbacks, and pre-authorized services that ultimately go unpaid. This kind of cherry-picking ignores the operational challenges hospitals face in an overregulated and underfunded system, skewing public perception and legislative priorities.
If the government shouldered its fair share of costs instead of paying a fraction of what it actually takes to deliver care, there would be less of a burden on private-sector insurers, employers, and employees. Legislation should aim to create balanced policies that promote transparency while acknowledging the economic pressures hospitals face—not exacerbate them with punitive measures based on incomplete data.
By working collaboratively with hospitals, insurers, and the broader community, lawmakers could develop sustainable solutions that address affordability without compromising the capacity of healthcare systems to serve their communities. Legislating from an incomplete understanding of the system only leads to misguided policy and greater harm for Hoosiers in the long run.
I agree wholeheartedly with your analysis. Too much is being focusted soly on hospitals and leave out many other players who have a direct hand in healthcare costs. Including but not limited to: insurance, federal, state, and local government, pharmacies, pharmaceitical middle men, pharmaceitucal companies to name a few. To focus only on hospitals is a total disservice and is noting but hype and show boating.