HB 1004 / Chamber Opposes
House Bill 1004 was recently heard in the Senate Health and Provider Services Committee, addressing healthcare costs and hospital pricing. Authored by Rep. Martin Carbaugh (R-Fort Wayne), HB 1004 proposes creating a hospital facility fee excise tax, imposed when a hospital charges facility fees exceeding 265% of Medicare reimbursement rates. Critical access hospitals would be exempt. This excise tax rate would phase in from 33% in 2026 to 100% by 2028. Revenues from the excise tax are designated for Medicaid programs and healthcare workforce development in rural Indiana.
Additionally, HB 1004 stipulates that nonprofit hospitals charging over 300% of Medicare reimbursement rates for any service or item would forfeit their nonprofit status. This provision raises concerns about the potential impact on the healthcare system. Hospitals could regain nonprofit status by subsequently demonstrating compliance within 90 days, but the risk of losing it in the first place is a cause for concern.
The Chamber expressed support for restructuring the hospital assessment fee but opposed the excise tax and nonprofit status provisions. The Chamber raised concerns regarding potential unintended consequences and margin shifting. Margin shifting is a practice where hospitals increase the cost of one service to compensate for a reduction in another, potentially leading to cost increases elsewhere. The Chamber also advocated evaluating the impact of previously enacted healthcare legislation before implementing significant changes.
Several healthcare stakeholders, including the Indiana Hospital Association and rural healthcare representatives, echoed concerns regarding unintended consequences. They highlighted financial losses already experienced by hospitals and warned of potential service cuts, including critical areas such as obstetrics. Conversely, proponents argued the bill addresses excessive healthcare costs driven by hospital consolidation and market control, framing HB 1004 as necessary economic reform.
While senators expressed reservations about several elements of HB 1004, the bill passed the committee by a 10-1 vote. It has been recommitted to the Senate Appropriations Committee, where amendments are anticipated. Public testimony is typically not permitted for recommitted bills, making this hearing likely the final opportunity for public comment on HB 1004.
