(INDIANAPOLIS) - Indiana is taking an unusual step to rein in healthcare costs by placing limits on what some of the state's largest nonprofit hospital systems can charge patients covered by employer-sponsored health insurance.
The Indiana Capital Chronicle reports a law enacted last year requires five major nonprofit hospital systems to meet state-established pricing limits by 2029 or risk losing their tax-exempt status.
The hospital systems affected are Ascension St. Vincent, Community Health Network, Franciscan Health, Indiana University Health and Parkview Health.
The law also requires hospitals to offer direct contracts to employers for certain medical procedures at prices capped at 260 percent of Medicare reimbursement rates. Hospitals that fail to comply with those requirements can face penalties of up to $10,000 per day.
Governor Mike Braun, who supported the legislation, said government intervention is necessary because healthcare costs continue to rise for employers and workers.
The state is expected to release a report by June 30 showing average hospital prices across Indiana and how individual hospitals compare.
Supporters say the measure will help employers gain leverage in controlling healthcare costs. Critics, including hospital industry leaders, argue price caps fail to address underlying costs such as labor, medications and technology and could eventually lead to service reductions.
The Indiana Capital Chronicle reports Indiana's approach is drawing attention nationally as states search for ways to control rising healthcare costs.