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Hospitals balk at Indiana lawmakers’ plan to lower health care costs

INDIANAPOLIS (WISH) — Indiana lawmakers on Tuesday said hospitals already had their chance to lower costs, and it’s now the state’s turn.

A Republican-backed bill on health care costs targets several hospital practices.

It would prohibit noncompete clauses that prevent physicians from moving to another practice elsewhere or starting their own.

Hospitals could not limit referrals to other providers within their organization.

Perhaps most crucially, hospitals would face a fine if they charge more than 260% of the federal Medicare reimbursement rate for a particular service.

Professor Michael Hicks, a Ball State University economist, testified in favor of the bill and said its provisions could reduce the average person’s health care costs by 15% within four years. He said hospital chains have created monopolies and allowed them to persist and violate free market principles.

The financial penalty provision drew the most vocal opposition from hospital groups at Tuesday’s hearing on the bill.

Bryan Mills, president and chief executive officer of Community Health Network, said the bill would penalize hospitals for something over which they have little control. He said lawmakers would be better off working with hospitals, pharmaceutical companies and medical equipment manufacturers to strategize ways to bring prices down across the board.

“We’re pretty downstream on some other things that happen by the time we get involved,” Mills said. “If we can get people around this big table, I am confident that we can figure out a way to make this easier, to make it better, to make it cheaper.”

The hospitals’ leaders say the fines would end up bankrupting hospitals and lead to yet more costs for consumers.

Bill sponsor Rep. Donna Schaibley, a Carmel Republican, said she didn’t buy hospital leaders’ arguments. She said none of the state’s major hospital chains other than IU Health ever responded to a letter lawmakers sent a year ago asking them to reduce costs on their own.

“Profits as a whole for the hospitals are quite significant,” Schaibley said. “I think last year was a bad year for several of them because of investments, and their investments have gone down because the stock market has gone down. Many of the hospitals have very large investments and savings.”

The committee to which the bill was assigned did not vote on it Tuesday. Schaibley said changes to the bill are likely though she did not specify what.