Indiana Senate nears vote on bill scrutinizing nonprofit hospital prices

The Indiana Senate on Monday night further amended legislation that threatens to strip the state’s largest hospitals of nonprofit status if their prices surpass a certain threshold, with a vote on the bill expected Tuesday.

With a vote of 34-12, the Senate amended House Bill 1004 to eliminate financial penalties for exceeding price thresholds and changed the details of how those price targets are determined.

The Senate must still vote to pass the bill out of its chamber by Tuesday. The House will then decide whether it agrees with the Senate’s changes.

The heart of the amendment applies to hospital systems with $2 billion or more in net patient service revenue. Lawmakers referred to those systems as the “Big Five” in the state: Indiana University Health, Ascension St. Vincent, Community Health Network, Franciscan Health and Parkview Health.

HB 1004 centers on the prices hospital systems charge patients covered by commercial health insurance, typically provided by their employers. A recurring study updated in December by research group RAND Corp. found Indiana had the ninth highest hospital costs in the nation.

With the bill’s new version, the Indiana Office of Management and Budget before June 30, 2026, will conduct a study of inpatient and outpatient hospital prices from 2023-2024 to determine statewide average prices, to be reported as a percentage of Medicare reimbursement.

Then, each year starting June 30, 2027, the office will adjust the average price based on the medical Consumer Price Index.

Starting in 2029, a hospital system would lose its state nonprofit status if its aggregate average prices were not equal to or less than the state average, although it could re-establish nonprofit status by returning to compliance.

Sen. Liz Brown, R-Fort Wayne, said she worried about the unknown effect of having huge hospital systems—among the largest employers in their region—potentially suddenly shifting from nonprofit to for-profit status.

“I don’t even know what that looks like when you have thousands of employees,” she said. “How do you unwind that?”

Brown also criticized the amendment for its “Blue State” approach to setting price caps, citing states including Delaware, Maryland and Massachusetts as examples.

“We’re a conservative Republican state,” she said. “Those states I just mentioned to you, they’re not. That’s where you get price caps.”

Senate Majority Floor Leader Chris Garten, R-Charlestown, a bill sponsor, responded by saying that the amendment does not set a price cap because the hospital systems can legally charge whatever they want.

“This bill has no ceiling on what hospital can charge,” he said. “It just says, If you want state nonprofit status, then you should act like a nonprofit.”

Garten said he agreed that the state’s large hospital systems provide great community benefit, but then he pointed out that one hospital system CEO had a salary of $5 million and that one system had 13 executives making at least $1 million in salary a year.

“There is nothing in this bill that’s going to bankrupt the hospital or cause any one of your systems to close,” Gartner said.

Previous versions of HB 1004, authored by Rep. Martin Carbaugh, R-Fort Wayne, would have imposed financial penalties on hospitals for exceeding price thresholds on even a single charge.