Priority health care bills divide Republicans, but three watered down measure pass and sent to Gov. Eric Holcomb

Bills targeting the state’s high health care costs divided Republicans as negotiations continued throughout the day Thursday before ultimately passing.

From pharmacy rebate managers to hospital price caps to public health, legislators struggled to reach consensus about how to push down prices and save Hoosiers money.

Regardless of that confusion, each of the three bills managed to cross the finish line — some in watered down form — and await Gov. Eric Holcomb’s final signature to become law.

Pharmacy Rebate Managers

Senate Bill 8 requires pharmacy benefit managers (PBMs) pass on rebate savings from drug manufacturers to patients, specifically that 100% of those rebates go to lowering premiums or 85% is passed onto consumers. The House added language requiring the pass-through entities to submit a report to the Indiana Department of Insurance every six months.

But not every senator agreed with its author, Sen. Ed Charbonneau, on what it would achieve.

“This isn’t the PBM bill we need right now and this isn’t going to do what we think it’s going to do,” Sen. Liz Brown, R-Fort Wayne said.

Brown said the definitions in the bill bled insurers and PBMs together, had an overly broad definition of rebates and required estimates upfront – when calculations didn’t support that.

“We’ve done a lot to move the needle in the health care space but this is just a little bit too much and adds too much confusion so I can’t support it,” Brown said.

Charbonneau, R-Valparaiso, admitted the bill didn’t capture the majority of Hoosiers under ERISA plans, or those protected under the Employee Retirement Income Security Act of 1974. But he rebuffed the criticism saying it was only a “narrow segment” of Hoosiers who would be impacted.

“That ‘narrow segment’ is thousands and thousands and thousands of people. Just because it isn’t two million or something doesn’t mean we should do something for that individual,” Charbonneau said. “West Virginia, two years ago, passed this same legislation… they have had no problems whatsoever.”

Nine Republicans voted against the measure in the Senate, but it still advanced to the governor’s desk on a 40-9 vote.

House Republicans also split over the measure, which passed the chamber on a 72-21 vote – with all of the no votes coming from the majority.

Hospital costs

A House priority to tackle hospital prices emerged significantly weaker in its final form, though it still contained several major provisions.

The original version of House Bill 1004 would have penalized hospitals for exceeding 260% of Medicare prices, a number hospitals derided for being arbitrary. There is no penalty for going over a new measure — 285% — but it requires additional hospital reporting and fines hospitals that delay.

The final version still includes a handful of tax credits for physician-owned practices and employers utilizing health reimbursement arrangements, but also mandates the state study of Medicaid reimbursement rates for hospitals.

Hospitals pointed to low reimbursement rates as a reason for high prices for commercial insurers, saying it was needed to offset losses when providing care to Medicaid recipients.

But hospitals decried language requiring the Department of Insurance to use a third-party contractor to calculate prices at non-profit hospital systems whose annual patient revenue exceeded $2 billion in the 2021 audited financial statements.

“Lawmakers acknowledged that appropriately funding hospitals’ Medicaid rates would reduce the cost shifting burden on Hoosier consumers and businesses but unfortunately they have chosen to provide no direct relief and allow over $500 million in unspent Medicaid dollars to revert to the General Fund at a time of great financial strain on hospitals,” said Brian Tabor, the president of the Indiana Hospital Association.

“Even though some health systems are arbitrarily singled out, all hospitals and their patients will suffer because the General Assembly handed a major win to massive insurance companies who will continue to reap record profits and raise costs for Hoosiers.”

Tabor similarly denounced the continued focus on the “big five” hospital systems – which bill author, Rep. Donna Schaibley, R-Carmel, admitted were the systems subject to the enhanced hospital reporting.

The bill also included language urging insurers reduce their reliance on prior authorization, a process that physicians have said adds administrative burdens to their jobs and takes away from their time with patients. However, it doesn’t include more than encouragement.

However, in a loss for the Senate, language reducing the use of “site of service” fees were weakened to include several more exemptions. The Senate still approved the bill on a 45-5 vote, with bipartisan opposition.

The vote divide was similar in the House, with bipartisan opposition from eight lawmakers. The bill prevailed on a 89-8 vote.

Public Health

Local public health departments will have access to more funding but will need to take on additional duties following the passage of Senate Bill 4, which moves to the governor’s desk. 

The funding for the measure – $75 million in the first year followed by $150 million the next – was finalized in the budget.

Indiana’s public health funding lags significantly behind its peers and varies from county to county – from over $80 per capita for Marion County residents to less than $2 for each resident in the smallest counties. 

But while senators and House lawmakers agreed on funding, senators rejected a House chamber amendment and sent the bill to a conference committee. 

Fishers Republican Rep. Chris Jeter authored an amendment to review the legal authority local and state government used during the COVID-19 pandemic and determine if it was used excessively. It prevailed on a voice vote. 

That provision no longer exists in the final version of Senate Bill 4, which passed the House 73-21 and passed the Senate 39-10.