IndianaHB 1004First Regular Session 124th General Assembly (2025)HouseWALLET

Health care matters.

Sponsored By: Martin Carbaugh (Republican)

Signed by Governor

Summary

Establishes: (1) a state directed payment program (program) for hospitals; and (2) a managed care assessment fee. Changes disproportionate share payments when a state directed payment program is in effect. Allows the incremental hospital fee fund to be used to fund the Medicaid program. Requires a nonprofit hospital system to submit audited financial statements. Provides for a $10,000 per day penalty for failure to submit the hospital's financial statements. Requires the office of management and budget (office) to: (1) develop a methodology to be used in conducting a study of commercial inpatient hospital prices and outpatient hospital prices; and (2) upon budget committee review, conduct the study to determine Indiana's statewide average inpatient and outpatient hospital prices. Requires the office to submit a report of the study to the governor and general assembly. Before June 30, 2029, requires an Indiana nonprofit hospital system's aggregate average inpatient and outpatient hospital prices to at least be equal to or less than the statewide average. States that a violation by the Indiana nonprofit hospital system results in a forfeiture of its nonprofit status. Requires, before October 1 of each year, every nonprofit hospital to provide the Indiana department of health with specified federally filed forms and specified data used to complete the forms. Requires the Indiana department of health to submit these forms to the health care cost oversight task force and impose a fine of $10,000 per day on a nonprofit hospital for failure to submit the nonprofit hospital's forms. Provides an exemption from health care billing requirements for a facility located in a specified populated municipality. Requires a third party administrator to disclose commissions and fees to policyholders in a separate notification. Requires an insurer and a health maintenance organization to submit specified data information to the all payer claims data base. Requires an insurance producer or third party administrator to, before or at the time of sale, provide the plan sponsor with a statement from the insurer or health maintenance organization, disclosing commissions and fees that the insurance producer or third party administrator will receive. Changes the time frame in which certain information and claims data must be submitted to a contract holder as part of an audit or claims data request. Sets requirements for certain hospitals concerning a direct to employer health care arrangement. Beginning January 1, 2026, requires a state employee health plan, a policy of accident and sickness insurance, and a health maintenance organization contract to provide a plan sponsor with the national average drug acquisition cost of a generic drug. States that if an agreement between a health plan and a pharmacy benefit manager provides that less than 85% of the estimated rebates will be deducted from the cost of prescription drugs before a covered individual's cost sharing requirement is determined, the pharmacy benefit manager must provide the policyholder with an annual notice that includes: (1) an explanation of what a rebate is; (2) an explanation of how rebates accrue to the health plan from the manufacturer; and (3) the aggregate amount of rebates that accrued to the health plan for prescription drugs dispensed under the policyholder's health plan for the previous year. Places limitations on hospital health provider contracts linking to or negotiating reimbursement or terms under a separate hospital health care provider contract or product. Requires the office to: (1) study the effect, including the fiscal impact, of requiring physician reimbursement rates under a commercial policy to be set at a minimum reimbursement rate; and (2) report its findings under the study. Requires certain health carriers to provide claims data to a contract holder not more than four times per year (current law allows for the provision of the data twice annually). Requires certain insurers and health maintenance organizations to file specified information concerning changes in hospital reimbursement to the department of insurance.

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18 provisions identified: 7 benefits, 2 costs, 9 mixed.

Replacement coverage option for plan members

If the Healthy Indiana Plan ends, Indiana’s secretary may establish replacement coverage for affected members. It must be consistent with the plan as it existed on January 1, 2014. Federal approval is required, and funding comes from the incremental hospital fee. The law allows this replacement but does not require Indiana to provide it.

Price-benchmarked hospital offers for employers

Starting September 1, 2025, nonprofit hospital systems must offer employers arrangements with combined facility prices no higher than 260% of full Medicare. Hospitals outside those systems face the benchmark September 1, 2026, including employed qualified practitioners’ professional fees. Hospitals can comply individually, through systems, or through narrow networks; annual audits start October 1, 2025, or 2026, respectively. Noncompliance carries a $10,000 daily penalty per hospital. Covered hospital contracts made, changed, or renewed after June 30, 2025, cannot tie terms to separate contracts or products.

Healthy Indiana Plan faces coverage limits

Except for a stated legal exception, Healthy Indiana Plan eligibility must come through an approved federal demonstration, not Indiana’s Medicaid plan. Indiana must end the plan if its waiver ends or changes so the state cannot follow the law. Indiana may end the plan if federal support for covered recipients falls below 90%. Specified funding cuts also require termination unless Indiana makes required funding adjustments or uses other financial support. These provisions do not themselves state new income limits or benefit amounts.

Hospitals face tougher reporting rules

Indiana hospitals must give the Office of Management and Budget requested data for a statewide hospital-price study. The office sets how and when hospitals must send the data. Hospitals that miss required report deadlines pay $10,000 per overdue day, up from $1,000. These fines go to the payer affordability penalty fund, not directly to households.

Higher hospital payments with funding limits

Indiana can develop Medicaid hospital payment programs aimed at Medicare-equivalent rates, with additional approved state-directed payments. Beginning July 1, 2025, the law authorizes the directed-payment program, subject to Budget Committee review and federal approval. Indiana must apply before January 1, 2026; rates above Medicare equivalents depend on available funding and federal ceilings. Hospital-fee funding also requires the managed-care assessment to meet the statutory minimum net amount. If state funding falls short, Indiana must reduce payments or seek a fee increase; federal denial ends fee collection and the programs.

Large nonprofit hospitals face price ceilings

By June 30, 2029, qualifying nonprofit hospital systems must keep average inpatient and outpatient prices at or below statewide averages. Covered systems have at least $2 billion in annual Indiana patient service revenue and meet nonprofit, licensing, and reporting requirements. Indiana’s budget office must report its pricing study by June 30, 2026, using 2023–2024 data. Violators lose nonprofit status for state tax purposes for at least one year. They can regain that status only after the office finds their prices comply.

Plans disclose drug costs and rebates

For covered agreements made, renewed, or renegotiated after December 31, 2025, pharmacy benefit managers must send policyholders annual rebate notices. Notices are due within 60 days after each policy year and explain total plan rebates without naming individual drugs. No notice is required when point-of-sale rebates deduct at least 85% of estimated rebates before a member’s cost-sharing is set. For generic drugs covered after December 31, 2025, plans must disclose national average acquisition costs to plan sponsors. Those costs exclude dispensing and professional fees; these disclosures do not set drug prices or require rebate payments to members.

Group health plans get more claims access

Since March 13, 2024, group-plan contract holders can request claims data four times per calendar year, up from twice. Insurers, health maintenance organizations, and third-party administrators must respond within 15 business days. The rule covers both self-funded and fully insured group plans. It does not directly change household coverage or benefit amounts.

Health plan buyers gain audit data

Pharmacy benefit managers, plan administrators, managed care organizations, and prepaid plans must supply requested audit claims data within 15 business days. Direct-to-employer plan administrators must answer contract holders’ claims-data requests within 30 days and follow health privacy rules. Those disclosures include enrollment, premiums, paid claims, payment timing, reserves, claims above $50,000, and other requested claims data. Effective March 13, 2024, Indiana’s insurance department must conduct an examination when a claims-disclosure violation is alleged.

Hospitals receive remaining fee fund balances

Certain hospital payments can continue after fee collection stops, while funding remains available and reconciliation and termination rules allow. Remaining hospital Medicaid fee money first covers required program payments, subject to statutory limits. Any balance then goes to hospitals based on each hospital’s share of fees paid in the preceding state fiscal year. When the Healthy Indiana Plan ends, remaining incremental fee money and interest also return to hospitals using prior-year fee shares.

Some small-town facilities escape hospital-system rules

The chapter governing Indiana nonprofit hospital systems exempts facilities with CMS place of service code 20. To qualify, a facility must be in a municipality with fewer than 20,000 people. This removes the chapter’s requirements for those facilities; it does not create a household payment or benefit.

Health plans must reveal more fees

Covered insurers, health maintenance organizations, and licensed plan administrators must disclose commissions, service fees, and brokerage fees. Disclosures are due when coverage starts and at each renewal, showing percentage-based or flat per-member charges. This rule excludes fees already subject to federal disclosure requirements and coverage excluded under IC 27-8-5-2.5(a). For covered group plans, producers and administrators must also disclose their payments and added fees before or at sale. Plan sponsors must sign to confirm receipt, and producers must follow federal compensation-disclosure rules. Covered entities must also send commission and fee information to Indiana’s all-payer claims database. Insurance producers are included in the separate required health-payer reporting rule. The Department of Insurance must establish a violation-reporting process before January 1, 2026, and investigate reports. The commissioner must assess an appropriate penalty when a producer commits at least three violations in 12 months.

Dedicated funding with tighter plan limits

From Healthy Indiana Plan 2.0 implementation until termination, trust money is reserved for specified state costs. These include plan costs beyond other available funding and the prior plan’s regular operating expenses. Phase-out costs are no longer a separately allowed use. All annual cigarette tax revenue designated for the trust must support the state’s share of plan costs. Separate annual cigarette tax funding for childhood immunization remains allowed.

Hospital fee rules last two years longer

Indiana extends its hospital assessment and reimbursement chapter from June 30, 2025, through June 30, 2027. This keeps both hospital fee obligations and related payment authority in place. With federal approval, Indiana may exclude a physician-owned hospital or a class of those hospitals from the chapter. A qualifying hospital must be an Indiana-licensed acute care hospital with at least 51% physician ownership.

Hospital funds support broader Medicaid costs

The incremental hospital fee and its fund can support Medicaid beyond the listed Healthy Indiana Plan expenses. Allowed costs include specified directed-payment capitation, and Indiana must reconcile plan costs, funding, and assessed fees. The fee formula is set after January 31, 2015, before collection; assessments cannot precede July 1, 2016, or continue after plan termination. For fiscal years beginning July 1, 2013, onward, specified indigent-care funds are reserved for listed Medicaid hospital payments. After hospital fee collection ends, remaining indigent-care funds must support a different listed set of Medicaid payments.

Hospitals disclose finances or face fines

Hospitals must file certified financial, payer, cost, charity-care, and ownership reports within 120 days after fiscal year-end; good-cause extensions are allowed. Ownership disclosures cover stakes of at least 5%, with business addresses but no Social Security numbers. Covered nonprofit systems must submit two prior years’ audited statements before June 1, and nonprofit hospitals must submit Schedule H data before October 1. Schedule H data goes for public posting by November 1; only personal and legally protected health information can be redacted. Late filings face $10,000 daily fines; specified fines fund Medicaid’s state share and a hospital-payment study through the payer affordability penalty fund.

Managed care plans face Medicaid assessments

With federal approval, Indiana can assess managed care organizations using member months, premium revenue, or another approved method. Revenue is limited to Medicaid’s state share; organizations pay one-twelfth monthly, and assessments stop if federal matching eligibility ends. Indiana can grant up to 30 extra days for financial or other difficulties shown to be good cause. Late penalties start at 10% of unpaid installments and repeat every 30 days on unpaid balances; approved-grace-period penalties are 5% instead. At 60 days past the due date or grace-period end, contract sanctions or termination are allowed; license action requires notice and a hearing.

New payment rules for safety-net hospitals

In directed-payment years, each qualifying acute care hospital receives a $1,000 annual disproportionate-share payment, funded partly through hospital fees. Remaining allotment money can support specified municipal providers and qualifying hospitals, after applicable state mental health institution payments. Hospital-specific limits apply, some hospitals must supply state-share transfers, and payments shrink proportionally if funds fall short. The law suspends the separate indigent-care transfer section in those years and removes an older federal-shortfall payment-reduction rule. The state agency, not the hospital fee committee, develops payment plans for fiscal years starting July 1, 2020, onward, considering government-covered patient shares.

Sponsors & Cosponsors

Sponsor

Martin Carbaugh
Republican • House

Cosponsors

Ben Smaltz
Republican • House
Chris Garten
Republican • Senate
Ed Charbonneau
Republican • Senate
Julie McGuire
Republican • House
Justin Busch
Republican • Senate
Lonnie Randolph
Democratic • Senate
Mitch Gore
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 215 • No: 117

House vote • 4/24/2025

Rules Suspended. Conference Committee Report 1: adopted by the House

Yes: 68 • No: 23

Senate vote • 4/24/2025

Rules Suspended. Conference Committee Report 1: adopted by the Senate

Yes: 37 • No: 13

Senate vote • 4/15/2025

Third reading: passed

Yes: 29 • No: 19

Senate vote • 4/14/2025

Amendment #9 (Yoder) failed

Yes: 13 • No: 36

House vote • 2/20/2025