Indiana hospital prices remain among highest in nation, report says

Indiana’s hospital prices remain among the highest in the nation, according to the latest study conducted by research group Rand Corp., released Monday morning.

Indiana employers and employees are paying nearly three times, or 297%, what Medicare pays for the same services at the same hospital, the study concluded. That’s higher than the national average (254%), and higher than neighboring states Michigan (192%), Kentucky (231%), Illinois (247%) and Ohio (277%).

Overall, Indiana’s total commercial hospital prices are eighth highest in the U.S., a slight improvement from the last study, when Indiana was seventh, the study found.

The study results were presented Monday at the National Healthcare Price Transparency conference in Indianapolis, hosted by the Employers’ Forum of Indiana, a coalition of companies that push for more transparency and value in health care.

“While hospital prices make up the largest slice of the pie for employee-sponsored insurance plans, prescription prices are the fastest growing,” Gloria Sachdev, president and CEO of Employers’ Forum said in written remarks. “With this latest round of the study, employers gain a brand-new layer of transparency into the opaque world of drug pricing. What they find is incredibly high drug prices relative to Medicare and to a national benchmark.

The public can examine the data on a searchable online dashboard called Sage Transparency, which compares hospital prices between 2020 and 2022.

Indiana appears to have two problems: high hospital facility prices (ranked sixth highest in the nation) and low physician prices (ranked eighth lowest).

In response, the Indiana Hospital Association said its members had to subsidize physicians at a high level, which makes Indiana hospital prices “look artificially higher than other states.”

“The Rand 5.0 report continues to paint a distorted view of health care in our state,” Brian Tabor, the hospital association’s president, said in an email to IBJ. “Using data as old as 2020, it ignores recent market negotiations and does not consider the massive financial losses that Indiana hospitals incur subsidizing insurance companies’ low payment to Hoosier doctors.”

He added that Indiana hospitals have been experiencing historic financial losses and rapidly growing costs resulting in recent years.

“Rand reports also do not take into account Indiana’s low Medicaid rates, which haven’t been raised in over 30 years and rank far below the national average at 12th lowest in the nation,” Tabor said. “Medicaid covers only 57 cents on the dollar of an Indiana hospital’s cost to treat patients, and these losses total $2.7 billion each year that must be shifted to those with private insurance. Indiana hospitals remain committed to reducing health care costs, and we look forward to partnering with policyakers on comprehensive solutions that address all of the key factors.”

The Rand study provided relative prices for what employers and employees pay at more than 4,000 hospitals and 2,000 ambulatory surgery centers across the nation.

It also includes relative prices for physician-administered medications, such as chemotherapy, provided in a hospital outpatient setting. The study found Indiana has the fifth-highest medication prices in the country, at 298% of the average sales prices, compared with 106% paid by Medicare, and above the national median of 208%.

Rand independently collected data claims, conducted analyses and published the final report, Employers’ Forum said.

“Employers, policymakers, and every Hoosier must have price and quality transparency to make informed purchasing and policy decisions,” Sachdev said. “We are thrilled to launch Sage Transparency 2.0, an easy-to-use transparency tool for all.”