As Indiana lawmakers wrestle with various ideas to reduce health care costs, one proposal that business groups say would have an immediate impact has drawn opposition from hospitals.
The Senate Health and Provider Services Committee spent hours on Wednesday debating language that would regulate how a hospital system bills for services that take place at off-site facilities.
The proposal would require hospitals to bill for a procedure based on the exact location the procedure took place. That would prevent hospitals from billing as if a procedure occurred at a main campus even though it occurred at a smaller off-site office that might have lower overhead costs.
Gloria Sachdev, CEO of the Employers’ Forum of Indiana, said hospitals have overhead costs that are “naturally higher and they should be compensated for that,” but medical offices in a strip mall are not the same, even if they are owned by the hospital system.
“That’s not a hospital,” Sachdev said. “That’s a clinic, if you will.”
Andrew Berger, senior vice president of governmental affairs for the Indiana Manufacturers Association, said out of all the health care cost-saving ideas considered during this legislative session, this is the one that would have an immediate and direct impact on employers.
That’s because a majority of Indiana businesses — and IMA members — use self-funded health insurance plans, meaning the employers take on the financial risk of providing health care coverage. Those plans account for about 80% of the commercial insurance market and cover about 43% of Hoosiers.
In those plans, businesses pay the insurance company a fee to negotiate rates with health care providers. So, when a procedure costs less for an employee, the employer also saves money.
But hospital representatives expressed concerns about the process of determining whether an office is off site or part of the main hospital campus. For example, some hospitals have oncology centers that aren’t directly attached to the main hospital building but are on the same property. It’s unclear how those types of facilities would be defined.
“I do not understand what the definition of campus is yet,” said Steve Long, CEO and president of Hancock Regional Hospital.
He said the billing change could reduce revenue for the hospital system anywhere from $2 million to $16 million annually, which could lead to job cuts and closing some offices.
“This is a big deal for us,” Long said.
Brian Tabor, president of the Indiana Hospital Association, said “it’s a bit insulting” that some people are suggesting hospital systems are inappropriately billing patients and insurers.
“We are disappointed in the site-of-service language,” Tabor said.
Instead, Tabor suggested that lawmakers use language that would require hospitals to be transparent with insurers about where the service occurred. Then, the parties could negotiate what the fair price would be.
“It gives the payers all the information to be able to make negotiating decisions,” Tabor said.
The concept of site-of-service billing was actually part of a Senate bill authored by Sen. Liz Brown, R-Fort Wayne, that passed the chamber without any opposition earlier this month.
In addition to the concerns from the hospital industry, several lawmakers expressed concern about the unintended consequences the language could have, especially on rural hospital systems.
Sen. Vaneta Becker, R-Evansville, said she did not fully comprehend what was in the bill before the Senate voted for it and she had an issue with the way it regulates hospital billing.
The amendment made to HB 1004 on Wednesday also added language to ban health care systems and practitioners from entering into noncompete agreements, which also had been included in legislation authored by Brown.
Brown said the noncompete agreements cause problems because doctors are unable to leave hospital systems for other jobs in the same community. She said some of these contracts cover large distances and extend for years.
“That drives up costs and reduces access to care,” Brown said.
Hospital officials oppose banning the agreements because they often provide incentives to physicians to attract them to accept jobs. If they could turn around and quickly leave without consequence, that would cause problems, they said.
The committee voted 8-4 to send HB 1004 to the full Senate for consideration.
Even though the legislation advanced, lawmakers agreed the language still needed to be tweaked before final passage. The deadline for amending bills in the Senate is Monday.
“This is a national issue, a state issue,” Sen. John Ruckelshaus, R-Indianapolis, said. “This is a work in progress.”
Also on Wednesday, the House Public Health Committee also moved forward transparency legislation that would create an all-payer claims database. The committee reading deadline in both the House and the Senate is Thursday.