Legislature’s efforts to control health care costs a good start

Indianapolis Business Journal

We’re pleased that the Indiana General Assembly kicked off its 2023 session this month by making good on its promise to try to find ways to lower Indiana’s health care costs.

Out of the gate, Republican leaders in the Indiana House and Senate proposed several measures aimed at cutting costs they have described as “out of control.” They base their assessment largely on a 2020 study by the Los Angeles-based Rand Corp. that shows expenses charged by Indiana hospitals to cover their overhead and keep the doors open are the fifth-highest in the country.

Bringing these costs under control is key to keeping Indiana an attractive place for employers to do business. And hospitals, insurance companies and drugmakers across the state should work in good faith to help the legislature make it happen.

We’re particularly pleased lawmakers are pursuing legislation to help control drug prices by putting the squeeze on pharmacy benefit managers. These powerful middlemen negotiate drug prices among pharmacies, drugmakers and health insurance plans but are often less than forthcoming about how big of a slice of pay they keep for themselves.

IBJ’s editorial board in July called for tighter controls on these price-setters. The legislature’s solution is contained in Senate Bill 8. It would require the middlemen to pass along all of the rebates they receive from vendors to patients or to insurance plan members.

Failure to do so could result in a fine of up to $10,000 per violation. One problem is the requirements would have to be enforced by the Indiana Department of Insurance, an agency that many already consider to be overburdened.

We’re also happy the legislature is considering several other approaches to control costs. We reserve judgment on those measures, largely because we don’t claim to be experts on the highly complex issue of health care reform but also because we want to learn more as the legislature debates each proposal.

Among those measures are:

—  Senate Bill 7, which aims to promote competition in health care by prohibiting a physician from receiving compensation for referring a patient to a health care entity or another physician.

—  Senate Bill 6, which seeks to increase transparency on where a medical procedure is performed for billing purposes. Now, medical providers can charge more for a procedure if it is performed in a hospital-owned clinic rather than an independently owned one.

—  House Bill 1004 would fine hospitals that charge more than 260% of what Medicare reimburses for services.

In the case of the last bill, the Department of Insurance again would be called upon to process price disclosure forms submitted by the hospitals and determine which ones should be fined.

We welcome a full debate of all of these measures. And in the end, we hope the legislature will see to it that the Department of Insurance is properly funded and staffed to enforce whatever approaches are ultimately approved.