Indiana’s House Bill 1004 addresses healthcare costs that are becoming impossible for patients and insurers to pay. Melanie Musson, a health insurance expert with USInsuranceAgents.com, reminds providers, “Watch out for padded charges and prepare for higher hospital bills.”

The Indiana state legislature recently passed House Bill 1004 by the narrowest of margins. This bill was written to address the unsustainable costs of medical services. Among many changes to the law concerning hospitals and their charges, the bill demands that hospitals eliminate facility charges.

Essentially, a physician may charge the same rate at a clinic as at the hospital, but the added hospital facility fees cost the patient with independent health insurance more. Often, insurance providers will not cover hospital fees, so the charge comes directly out of the patient’s pocket.

Hospital Budget Problems

Some Indiana hospitals have reported budgets in the red at the end of 2022. They’re not excited about the elimination of fees. One way to increase their income is to charge insurance providers higher service rates. But that action is also thwarted by House Bill 1004.

The legislature is demanding that hospitals that charge over 285% of what Medicare covers for services must receive additional oversight and potentially pay fees. Even the best Medicare and Medicare Supplement Programs don’t pay nearly what private health insurance does. 

Insurance Providers Must Be Alert

Health insurers must watch for overcharging. Hospitals may seek ways to pad their treatments to make a profit. They may provide tests that aren’t necessary or charge for items that weren’t used. Insurance providers should look for red flags like changes in types of treatments and average charges.

If an insurance provider suspects illegitimate charges, they should perform an audit. When insurers face higher costs, they charge policyholders more. The more they charge, the less competitive they will be and the greater the chances that policyholders will move to a different provider.

Lower Cost Healthcare Options

With the risk of higher bills coming from hospitals, Insurance companies should utilize methods of cutting their costs without worsening customer service or reducing their coverage. Virtual healthcare is a promising option. It has already proven to be lower cost than in-person visits. 

The government extended COVID allowances for virtual healthcare through 2025. Insurance providers should devise a plan to continue virtual healthcare seamlessly even after the extension expires.

While the Indiana law only directly affects insurers in that state, insurers should prepare for more states to start legislating for healthcare reform.

Article written by Melanie Musson