STATEHOUSE (Feb. 20, 2025) – State Rep. Ben Smaltz (R-Auburn) co-authored a House Republican priority bill to combat the rise in health care costs by ensuring nonprofit hospitals act as nonprofit entities focused on delivering affordable health care to Hoosiers. It passed the full House of Representatives this week.
Statistics show that among the "big six" nonprofit hospital networks in Indiana, profit margins since 2017 ranged from 9-17 percent while the national average was 3 percent. Specifically, Parkview Health averaged 11 percent between 2017 and 2021. Smaltz said his bill addresses excessive pricing by nonprofit hospitals and adds greater transparency measures to help reduce costs for Hoosiers.
House Bill 1004 would impose a penalty on nonprofit hospitals if they charge a facility fee that exceeds 265 percent of the Medicare facility fee. It would also require that nonprofit hospitals charge no more than 300 percent of the Medicare reimbursement rate for services in order to maintain their nonprofit status, with the intention that these hospitals remain focused on the community's benefit rather than their bottom line.
"Nonprofit hospitals should be putting patient care above profit, but too often, that is not the case, and the problem begins at the top," Smaltz said. "That's why I co-authored legislation to take a stand against hospital price gouging and fight for all Hoosiers to have access to affordable health care. Our frontline workers including doctors, nurses and medical technicians are the backbone of our health care system, and I thank them for all that they do for local communities."
Smaltz said the excise tax for overcharging patients will be phased in over three years.
The proposed legislation also states that nonprofit hospitals, excluding county hospitals, would be required to submit a report to the Indiana Department of Health annually that includes aggregate data on all billed items and services, along with a comparison of the charges to Medicare reimbursement rates to ensure their compliance. Any hospitals that are found charging more than 300 percent of the Medicare reimbursement rate for a service or item would lose their nonprofit status.
If a hospital forfeits its nonprofit status, the status can be reinstated if the hospital can meet the stated requirements for at least 90 consecutive days.
Smaltz said another issue is access to care. In the fall of 2023, labor and delivery services were phased out of Parkview DeKalb and Parkview LaGrange.
"The health of Hoosiers is not a profit line. When you take away birthing centers and local clinics you are forcing mothers to rely on increased travel times and reducing access to care," Smaltz said. "Nonprofit health networks should be acting in the best interest of the patient."
House Bill 1004 also creates a state-directed payment program for hospitals, which consists of an arrangement allowing for specific payments to be made to a hospital. Under this legislation, managed care assessment fees are established and may only be used to pay for the state's share of Medicaid services provided. This fee is assessed on a tiered basis among hospitals and based off net patient revenue or inpatient days.
Under the legislation, nonprofit hospitals would also be subject to annual audits by the Indiana Department of Insurance. Smaltz said by Nov. 1 of each year, nonprofit hospitals would be required to provide the Health Care Cost Oversight Task Force necessary tax documents from the previous fiscal year.
House Bill 1004 will now go to the Senate for further consideration. For more information, visit iga.in.gov.
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State Rep. Ben Smaltz (R-Auburn) represents House District 52,
which includes all of DeKalb County, and portions of Noble and Steuben counties.
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