Indiana’s largest hospital system announces plan to hold line on fees

IU Health, the largest hospital system in Indiana, has announced that it will strive to reduce fees to be in line with the national average by 2025.

Indiana’s hospitals have been criticized for their pricing and charging more than what peers in other states charge. A study by the Rand Corporation found that Indiana hospitals charge on average three times what Medicare does.

“We have taken that study very seriously,” said Jennifer Alvey, IU Health senior vice president and chief financial officer. “We are trying to do it as fast as we can.”

The state legislature addressed this concern by enacting a law that requires hospitals and health insurers doing business in the state to hold annual public forums to discuss pricing in the interest of transparency. IU Health used its public meeting this month to announce that it will be working over the coming years to make health care more affordable. To help accomplish this goal, the system will keep prices flat for the next four years for all payers, having already done that from 2020 to 2021. Prices increased 2.4% in 2021. IU Health reduced rates for many common outpatient services by $100 million. Over time. the price-reduction plan will save the state’s health care consumers more than $1 billion, IU Health officials said.

Because of Indiana’s highly competitive health care environment, IU Health’s decision to lower its prices may have ramifications outside of its own walls and lead to lower health care prices across the board. “We actually feel like what we’re doing will drive the prices down in Indiana,” Alvey said. “That’s why we think the program’s really elegant.”

Hoosiers for Affordable Healthcare, a group of local business leaders who advocate for consumers, had questioned why IU Health’s prices and those of other hospitals in the state are out of line with hospitals elsewhere. The group, which had pushed for the legislation requiring hospitals to hold the presentations, had hoped they would lead to decreases in the cost of health care.

“There is really support for market-based reform approaches, and we thought `what’s a better way to start than transparency?’” said Brian Blase, an advisor for the group. “We heard that an annual meeting would be a good mechanism for the board of the hospital to understand what the impact is of prices on that community.”