Legislation aimed at reducing health care costs passes, but impact could be weak

Indiana Statehouse

Despite lengthy debates on reducing health care costs this year, Indiana lawmakers completely eliminated the provision that business leaders said was likely to have the most impact.

House Bill 1004, which largely addressed factors in health care expenses such as surprise billing, also at one point tried to manage how hospitals charge for “off-site” care.

Lawmakers considered language that would have required hospitals to determine charges based on the exact location a procedure takes place, then tweaked it so hospitals only had to provide the address of where the service occurred when submitting bills to insurers.

But the final version of the bill, passed by the Senate 46-2 and by the House 59-32 on Wednesday night, removed all of the site-of-service measures.

“I think everybody acknowledges that’s one of the cost drivers in health care expenses,” House Speaker Todd Huston said about hospital charges. “But we didn’t have a really good solution to deal with it.”

Senate President Pro Tem Rodric Bray said lawmakers were worried about unintended consequences.

“We’re going to come back and look at that without a doubt next year,” Bray said. “But I think the main reason is it’s very, very complex.”

The language lawmakers landed on to end surprise billing also is weaker than what was initially proposed at the beginning of the session.

The goal was to prevent a medical provider from charging a patient an out-of-network rate for any services at a facility—such as a hospital or outpatient surgery clinic—in the patient’s insurance network.

It’s not unusual for patients to receive services from an out-of-network provider, such as an anesthesiologist, at an in-network hospital. And that leads to an unexpectedly high bill because the insurance company pays a lower rate to out-of-network providers.

Under the final version of HB 1004, health care providers are required to give patients a “good faith” cost estimate five days in advance of a procedure. That cost estimate is allowed to have out-of-network rates, and the patient would have to agree to it in writing.

If the patient chooses not to agree to it, he or she could shop around for a better price. But if the patient agrees to it, he or she would be responsible for the out-of-network expense.

“You just can’t surprise them,” said state Rep. Ben Smaltz, R-Auburn, who authored the bill.

If the procedure needs to occur in less than five days and the advanced notice and agreement isn’t possible, the insurance company would only be responsible for paying the in-network rate.

The bill does not apply to emergency services.

It also likely will not apply to self-insured plans, in which employers take on the financial risk of providing health care coverage. Those plans are regulated by the federal government under the Employee Retirement Income Security Act.

About 80% of the plans in the Indiana commercial insurance market are self-funded, covering about 43% of Hoosiers.

As for noncompete agreements, which are also covered in HB 1004, legislators again opted for the less strict wording that allows for those types of agreements to continue, but they must include an option for a physician to be released from the non-compete terms if employment has been terminated or if the contract has expired.

Despite the outcome of HB 1004, top lawmakers say they did take big steps forward in addressing health care costs. Earlier this week, the General Assembly passed legislation to create an all-payer claims database.

“At the end of the day, I’m pretty proud of what we’ve gotten done,” Bray said.

But not all lawmakers were pleased with the end result.

State Rep. Ryan Hatfield, D-Evansville, said he thinks lawmakers failed Hoosiers this session.

“We can do transparency, but Hoosiers know what they’re paying,” Hatfield said. “They can’t afford it.”

Hatfield said he wishes the bill would have gone further.

“Hoosiers will not see a reduction in their health care costs,” Hatfield said.