INDIANAPOLIS – High health care costs in Indiana have caught the eye of Republican legislative leaders, who plan to tackle the issue during the 2020 session.
Senate President Pro Tem Rodric Bray called the issue an economic development problem because employers are paying a large part of those costs. He wants to act before it become a competitive disadvantage.
“We are going to take a hard look at that – with beginning concepts,” he said at a recent Indiana Chamber of Commerce session preview. But he cautioned “we are not going to solve it” with the first swing at the problem.
Several interim study committees have forwarded recommendations on the topic after working on it this past summer.
House Speaker Brian Bosma said his team is pursuing two primary takes on the issue – a transparency portal for consumers, insurers and medical professionals and further protections against so-called surprise billing.
He said Hoosiers are paying wildly divergent costs on procedures such as a knee replacement and his team hopes to mitigate the problem.
Earlier this year, Rand Corp. produced a 60-page study that compared prices private health insurance plans paid to almost 1,600 hospitals in 25 states from 2015 to 2017. The study ranks Indiana highest for charging the most.
Pricing information was gathered from participating insurance companies, self-insured employers and state-based all-payer claims databases. Indiana doesn't have any of the latter. Rankings were determined by comparing prices with Medicare reimbursement rates.
Last month, the Trump administration announced a transparency rule that requires hospitals to publish their standard prices online, including negotiated rates for insurers and cash-discount rates. Hospitals are gearing up to fight the rule in court.
Traditionally, insurance companies and health care providers don't want competitors to know the size of discounts they've negotiated.
But it appears Indiana won't go that far.
It instead could join a growing number of states – more than 20 – that have what is called an All Payers Claims Database. Those are state databases that include hospital, physician, pharmacy, and dental claims along with insurer data, including public payers like Medicare and Medicaid, and private insurance. States can rely on the data to provide comprehensive, accurate data on price, usage, and quality across the board to see the full picture of health care costs.
The Interim Committee on Public Health, Behavioral Health, and Human Services included a recommendation that the state consider establishing an All Payers Claims Database. Members said before Indiana can tackle more significant health policy considerations, all stakeholders need to be working from an agreed upon data set to inform their decisions on how they deliver and pay for health care.
Brian Tabor, president of the Indiana Hospital Association, supports this move and has been working with lawmakers on the concept.
He said a key feature is that it focuses on more than just hospitals – including drug costs, physician prices, screening tools, etc.
“It appears to have momentum,” Tabor said. “At a minimum a person could get a benchmark – for instance, for what a typical knee replacement would cost them in northeast Indiana.”
But it's not the actual cost or charge of a procedure – it's what individuals ultimately pay after insurance.
Tabor said the new federal rule goes too far and isn't what consumers are looking for – they want to know what their out-of-pocket costs will be, which an all payers claims database would provide.
Another bill Indiana will consider is one giving more protection on surprise billing.
Tabor said this is when a person does all the right things – such as going to an in-network hospital for a surgery. But then the patient receives a bill from a lab tech or anesthesiologist who isn't in-network and therefore has no negotiated discount.
Tabor said there is universal agreement that the consumer shouldn't have to pay the extra costs after following proper procedure. Instead, the issue should be settled between the insurance company and the out-of-network doctor.
That is where the disagreement comes in – should there be a flat fee set for certain skills or procedures, or should there be more of an arbitration process with an independent third party making the decision?
Nonprofit hospitals also might get a look during the session after a report by Professor Michael Hicks, a Ball State University economist, said Indiana has a not-for-profit hospital monopoly problem.
“It turns out the not-for-profit hospital industry and their network of clinics is the single most profitable industry in Indiana,” Hicks said. “These profits are so large that when accumulated, they account for roughly 9% of the state's total economy. As of 2017, this industry had accrued more than $27 billion, yes billion. Yet, the not-for-profit industry in Indiana pays virtually no taxes and invests almost none of those profits locally.”
The Indiana Hospital Association paid for an analysis by National Economic Research Associates to dispute Hicks. Using census and hospital data, it concluded Indiana hospitals don't have a monopoly problem.
“Indiana appears comparable to the rest of the United States, and where Indiana hospitals are more concentrated, our findings suggest that these few instances should not raise new concerns related to competition,” the analysis said.
Bosma said he is sure some lawmakers will make the nonprofit status of hospitals part of the discussion.
“It's possibly worthy of that as well,” he said. “We want to make sure nonprofits are truly nonprofit. But we also don't want to interfere with those folks that are doing the right thing. So I don't have a pat answer for that one at this point.”