Indiana Senate committee advances several health care bills

In a three-hour committee meeting on Wednesday, senators on the Health and Provider Services Committee revived some long-standing health care debates and tackled issues related to pricing and burdens on physicians.

Legislators voted to move five of the six bills forward in the legislative process, with most heading to the Senate for further consideration—including bills banning non-compete agreements for physicians and placing limits on prior authorization.

One bill would explicitly prohibit doctors from getting any sort of incentive for referring patients to another physician employed by the same health care network. In late 2023, Indianapolis-based Community Health Network paid $345 million to settle decade-old allegations related to such referrals.

Co-authored by Republican Sen. Justin Busch, of Fort Wayne, Senate Bill 147 would also create a public dashboard displaying the average negotiated charge between health care providers and insurers.

The second portion was a sticking point for some of Busch’s colleagues, though the bill advanced on a 11-1 vote. Busch “vowed” to continue work on the dashboard.

Sen. Liz Brown, who voted to move the bill over her reservations, pointed to the recently launched All Payers Claims Database, which has similar but not identical health payment information.

“It took the state about four years to get that up and running to the tune of tens of millions of dollars. And same for the systems that are forced to comply with that now. (It’s) millions of dollars to get that data into the database,” said the Fort Wayne Republican. “And so you want to create a new database that the state also will have to participate in … yet, we haven’t been able to actually use the All Payers Claims Database information.”

Sens. Tyler Johnson, of Leo, and Ed Charbonneau, of Valparaiso, co-authored the proposal with Busch.

Easing burdens on physicians

The trio of Republicans also led a measure that would ban non-compete agreements for all physicians, an expansion from the current law blocking non-compete agreements for primary care physicians.

Busch, who authored the bill banning non-compete agreements for primary care physicians, painted Senate Bill 475 as one answer to the state’s physician shortage. However, several health care providers cautioned that the bill’s effectiveness would be limited if it didn’t include all practitioners, including nurses with advanced degrees and physician assistants.

One senator even wondered why the bill couldn’t be expanded to eliminate non-compete agreements across all industries since there is a labor shortage in many sectors.

“Non-competes are, by their term, anti-competitive, and we need more competition,” said Gloria Sachdev, Secretary of Health and Family Services. “In order for folks to have choice, we need more competition.”

Sachdev spoke on behalf of Gov. Mike Braun’s administration, which supports the bill—a change from the previous administration, which rarely voiced its opinion on pending litigation. However, the bill only applies to new contracts.

Hospitals and the Indiana Chamber of Commerce continued to caution against government interference into private contract negotiations between employers and employees.

“In an ideal world, more time would be given to the current ban on non-competes regarding primary care to see how that plays out. It’s only been on the book a little bit,” said Tim Kennedy, the general counsel for the Indiana Hospital Association. “But, having said that, many hospitals—large and small, even some in rural areas—have opted to … find a different approach other than a non-compete.”

The bill received just two no votes from Republican committee members and now moves to the full Senate chamber.

Johnson also reintroduced legislation restricting the use of prior authorization by insurers. Insurance providers argue that prior authorization keeps overall costs down by ensuring doctors prescribe only necessary tests and care, but physicians say the check is burdensome and takes away from time with patients.

Senate Bill 480, which had bipartisan support, would outright ban prior authorization on drugs under $100, cap all prior authorization rates at 1% and prohibit the use of “step therapy protocols” for certain drugs. Under step therapy, or fail-first policies, insurers and pharmacy benefit managers may refuse to cover a specific drug for a patient until they try a cheaper alternative—even if it goes against a doctor’s orders.

“What I would prefer, is to get rid of all prior (authorizations),” said Johnson, an emergency care doctor. “I have yet to hear somebody justify prior authorization and the delay and the denial of treatment for patients.”

Johnson called the 1% cap “aggressive,” saying it was necessary to disrupt the process. Testimony estimated that roughly 10% of claims are denied in the first round, when insurers screened submissions for other mistakes like incomplete information.

Elizabeth Wright, a physician in Hendricks County, said the process had become “a game of numbers” with ever-changing criteria and barriers to patient care that left doctors “guessing at what treatment will be approved.”

“This game jeopardizes our patients’ well-being and sometimes their lives,” Wright said, testifying on behalf of the Indiana Hospital Association. “When a physician and a patient decide on a treatment plan and provide a path forward, it alleviates that initial stress that a patient feels when they present to the office.

“But when a prior authorization is being required, it brings that stress right back for the patient and interferes with the trust that the patient has built with that physician.”

Joey Fox, a lobbyist speaking on behalf of the Indiana Association of Health Plans, said insurance providers use prior authorization to ensure that “patients are getting the safest, most effective care in the right place, the right time and at the lowest cost.”

Patients in high deductible plans might benefit the most from prior authorization checks, he said. Additionally, savings occurred when doctors learned to check themselves for prescribed treatments that might trigger a denial.

“Then there’s what we call the sentinel effect, which is the idea of—if you know there are cops on the highway that are going to be using the radar gun and checking your speed, you’re less likely to speed,” Fox said.

Additionally, the bill requires a physician within the same specialty to issue a denial, rather than an algorithm or a doctor with a different background—though, because of federal regulations, it won’t impact the majority of Hoosier health plans. The latter was a concern for some business associations that opposed the bill.

Senators voted unanimously to send the bill to the Appropriations Committee because the fiscal note identified concerns about potential increases to state employee health plans.

Pharmacy benefit managers

Lastly, senators considered two bills related to pharmacy benefit managers, or PBMs, which have long been a concern for health care costs at both the state and national level.

The first bill, Senate Bill 140, focused on data collection related to the entities, which coordinate costs across manufacturers, insurers and pharmacies. However, a few of the nation’s largest PBMs are also owned by either pharmacies or insurers, setting up conflicts of interest.

The proposal includes provisions related to “steering” patients and disproportionate reimbursements from a PBM to its related pharmacy — items that got support from independent pharmacists.

An amendment from Johnson to introduce a “firewall” between the insurer and PBM was accepted by his peers and incorporated into the final version, which advanced to the Senate floor on a 10-1 vote.

Fort Wayne Sen. Liz Brown voted against the bill, citing concerns about price setting and subsidizing select pharmacies.

The committee didn’t vote on the final bill in order to file amendments. Author Sen. Andy Zay, R-Huntington, said he drafted the bill in order to foster competition and in response to an audit from the Office of the Attorney General.

In particular, it would require the attorney general’s office to have a pharmacy benefit compliance officer and push the state toward a private-public partnership where Indiana would own a PBM to act on behalf of the state employee health plan and Medicaid.

“The problem we had is you can’t get beyond that private relationship … so the only way to have full transparency was to put ourselves at the table,” Zay said. “I think it’s a difficult thing to wrap our head around because it’s a paradigm shift; it’s a new way of doing business.”

Zay said he would be working with the governor’s office on the updated version.

The Indiana Capital Chronicle is an independent, nonprofit news organization that covers state government, policy and elections.