Indiana – The Senate Health and Provider Services Committee recently advanced House Bill 1004, a proposal aimed at addressing high healthcare costs and hospital pricing concerns in Indiana. Authored by Rep. Martin Carbaugh (R-Fort Wayne), the bill introduces measures to limit excessive facility fees and regulate nonprofit hospital pricing. The legislation is designed to provide financial relief for patients while ensuring hospitals operate within reasonable pricing structures.
HB 1004 proposes the implementation of a hospital facility fee excise tax, which would be triggered when hospital facility fees exceed 265% of Medicare reimbursement rates. This excise tax would start at 33% in 2026 and gradually increase to 100% by 2028. However, critical access hospitals—small, rural hospitals that provide essential healthcare services—would be exempt from this tax. The revenue generated from the excise tax is earmarked for Medicaid programs and initiatives to develop Indiana’s rural healthcare workforce.
Another significant provision in the bill states that nonprofit hospitals charging over 300% of Medicare reimbursement rates for any service or item would lose their nonprofit status. Hospitals at risk of losing this status could regain it if they demonstrate compliance within 90 days. However, this provision has raised concerns among healthcare providers, who argue that it could destabilize hospital operations and limit access to necessary care.
During the committee hearing, the Indiana Chamber of Commerce expressed mixed reactions to the bill. While the Chamber supports restructuring the hospital assessment fee, it opposes both the excise tax and the nonprofit status provisions. The Chamber warned of potential unintended consequences, such as margin shifting—a practice in which hospitals increase the price of one service to offset reductions elsewhere. This could inadvertently lead to higher costs in other areas of healthcare.
Healthcare organizations, including the Indiana Hospital Association and rural healthcare representatives, voiced concerns about financial strain and the risk of service cuts if the bill is enacted. Some warned that hospitals already facing financial struggles might be forced to reduce critical services, including obstetrics and emergency care, particularly in rural areas.
Despite these concerns, supporters of the bill argue that hospital consolidation and market control have driven up healthcare costs. They view HB 1004 as a necessary reform to curb excessive pricing and ensure hospitals operate more transparently and fairly. Proponents believe the bill will lead to lower costs for patients while holding healthcare providers accountable.
As HB 1004 continues through the legislative process, debate is expected to persist regarding the potential impact on Indiana’s healthcare landscape. Lawmakers, healthcare professionals, and advocacy groups will closely watch how any amendments shape the final version of the bill before it is potentially signed into law.
