Indiana House passes bill revoking hospitals' nonprofit status if they charge high prices

The Indiana House passed a priority bill that marks the closest lawmakers have gotten to price-controlling the state's largest nonprofit hospitals, amid a years-long effort to curb high health care costs in Indiana.

House Bill 1004, one of the meatiest bills this session seeking to bring down Hoosiers' health care bills, passed the House by a 68-26 vote and now heads to the Senate.

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The bill holds the state's largest nonprofit hospitals to the fire in two ways.

First, if a nonprofit hospital charges even one service more expensive than 300% of the Medicare rate, then it could lose its nonprofit status in the eyes of the state. This provision excludes county hospitals.

The second lever in the bill is a new tax on hospitals that charge facility fees above a certain threshold. The revenue from this excise tax ― levied as a proportion of the facility fees ― would go toward Medicaid funding and rural health care initiatives. Critical access hospitals, like small rural hospitals, are excluded from this.

The bill started out more punishing: threatening to strip nonprofit status for any charges over 200% of Medicare.

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According to the latest employer claims data from think tank Rand, 300% of Medicare was the average price charged to commercial payers across all Indiana facilities and physicians in 2022, but the prices were reportedly higher for inpatient and outpatient care at hospitals, specifically.

"The most expensive hospitals we have in this state have a nonprofit status," Carbaugh said.

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