House committee approves GOP’s ‘comprehensive’ plan to address health costs
![Representative Brad Barrett speaks into a microphone. He's a White man with thinning white hair and a goatee wearing a suit and tie.](https://indianapublicradio.org/wp-content/uploads/2025/02/brad-barrett3-ar-1560x900.jpg)
Part of this year’s House GOP legislative priorities focuses on bringing down health care costs. A House committee approved legislation with a “comprehensive plan” that tackles health costs from more than just one angle.
House Bill 1003’s author, Rep. Brad Barrett (R-Richmond), said the bill has a lot of moving parts, but the goal is to address problems within Indiana’s health care industry. The bill is built on six key pillars: lower costs; fight waste, fraud and abuse; enhance transparency; expand access; promote wellness and increase competition.
Site neutrality
The bill extends site neutrality language present in Medicare to Medicaid and commercial insurance. This means that people receiving services at an outpatient facility can’t be charged more than they would be at a hospital for the same service.
David Kelleher, with the Indiana Employers’ Forum of Indiana, said hospital systems sometimes purchase physician practices and recategorize them as outpatient departments so they can add on facility fees.
“The trend creates an incentive for hospital systems to acquire independent physician practices, thereby perpetuating the problem,” Kelleher said.
He said the bill creates a solution to that problem. However, some hospital administrators have raised concerns that this could have a negative effect on rural hospitals.
Rob McLin, the president and CEO of Good Samaritan in Knox County, said it would directly impact outpatient settings which are typically lower costs and more convenient options for patients and employers.
“Dictating reimbursement at outpatient settings does not take into account the regulatory requirements that outpatient settings are required to comply with and the additional staff and equipment it takes to operate an outpatient setting which provides additional and often more complex services than physician offices,” McLin said. “There’s also a question about how services that are provided in an outpatient setting, but not a physician’s office, would be reimbursed. The policy has so many unintended consequences.”
McLin said there are several policies that put too much pressure on rural hospitals.
“Please don’t place our hospital in a position where we’re forced to add additional bodies strictly to attempt to adhere to further administrative tasks which already overwhelm our facilities,” McLin said.
Indiana Medicaid Fraud Control Unit
When Barrett laid out the purpose of HB 1003, he raised concerns about the number of people still enrolled in the Healthy Indiana Plan, or HIP, following the end of the COVID-19 public health emergency.
“We also can get benefit within one of our fiscal programs by ensuring on the front end that, that people that are in this program truly deserve to be in this program,” Barrett said.
Because of this concern, HB 1003 gives the Medicaid Fraud Control Unit law enforcement power. It also gives them access to other state agency databases to check information such as income level.
Medicaid Fraud Control Unit Director Matthew Whitmire said the goal of that unit is to address Medicaid fraud by providers. Additionally, the unit addresses neglect of Medicaid recipients by providers in long-term care facilities and residential settings.
Recently, two former state officials filed a “whistleblower” lawsuit that alleged several Indiana hospital systems and managed care entities committed “tens, likely hundreds” of millions of dollars of Medicaid fraud.
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That suit alleged a senior executive at Indiana Medicaid “improperly directed the Program Integrity team to significantly curtail its efforts to utilize IBM Watson’s analysis and findings to recoup improper Medicaid overpayments” by the defendants. The lawsuit pointed to political pressure from lobbyists for the health insurers and the hospitals.
Whitmire said out of the 53 Medicaid fraud control units in the U.S. Indiana’s is one of 10 without law enforcement power.
340B drug program
The bill also introduces strict guidelines to a federal drug program known as the 340B program. Barrett said this is to create transparency around the program.
It would prevent hospitals from charging more than the discounted cost of the drug through the program, with an exception for the cost of running the program.
The 340B drug pricing program was created in partnership with pharmaceutical companies — which agreed to provide “significant” discounts to eligible health care providers in order to participate in the Medicaid program.
Those providers, typically clinics or hospitals, can utilize those discounts in a variety of ways. Or they can take the amount between the discounted amount and the amount that an insurance company reimburses them and use that money to increase access in other ways.
For example, if a hospital gets a typical reimbursement on a discounted drug, the 340B savings can be used to support public health initiatives or provide charity care.
“It would cost significant resources to implement chipping away at our 340B savings that are intended to help stretch scarce government resources from Medicare and Medicaid underpayments,” McLin said.
McLin with Good Samaritan said his hospital only started qualifying for the program two years ago.
“We’ve already done some incredible things with these savings when we created a patient benevolence fund to ensure access to needed meds for those most in need, the uninsured and the underinsured,” McLin said.
McLin said the point of the design of the program is to charge more than the cost of the discounted drug. In his hospital, that mark up is usually only 10 percent to 15 percent.
An amendment to the bill did exclude certain clinics and grant awardees. Almost all hospitals would be affected by the language in the legislation. McLin said it would likely make being a part of the program unfeasible for his hospital.
Recently, Gov. Mike Braun also signed an executive order related to the 340B drug pricing program. It requires the Indiana Department of Health to work with the federal government to ensure all hospitals participating in the program are eligible and are not receiving duplicate discounts from Medicaid.
Abigail is our health reporter. Contact them at [email protected].