Insurance companies would be blocked from charging hospitals a penalty for connecting patients with out-of-network providers under a bill moving through the legislature.
The insurance company Elevance, which is the parent company to Anthem, announced they would institute the administrative fees starting in January of this year.
The penalty on out-of-network services comes as insurance companies say they've been impacted by the federal No Surprises Act, which requires hospitals and insurance companies to negotiate the cost of out-of-network care.
When the two parties can't agree on the cost of care, they go into an arbitration process, called an independent dispute resolution, or IDR. There, an arbitrator will pick what insurers have to pay based on information that both hospitals and insurance companies provide them.
Catherine Gaffigan is the President of Health Solutions at Elevance Health. She said the company has lost nearly 80% of its negotiations with providers over the cost of care.
"The response is 'well, just offer more,'" she said. "My question is: how much more?"
Gaffigan gave several examples of care that Elevance had to pay significantly more for after it went through the dispute process, arguing that this would eventually inflate the market as a whole.
She also underlined that when the No Surprises Act went into effect, it was believed it would be a rare use case.
"When federal agencies modeled the IDR process, they expected to see 18,000 of these issues, these IDR requests, a year nationwide. Instead, we're seeing in 2025 approximately 2 million," Gaffigan said.
According to Gaffigan, the administrative fee is aimed at reducing the number of out-of-network negotiations that need to take place.
But bill author Sen. Scott Baldwin (R-Noblesville) said shifting the cost burden to hospitals is unfair.
"They're using hospitals as the bad guy, and they're just saying, 'listen, if you use an out-of-network provider. We're going to penalize you 10%," Baldwin said. "Well, where do you think that's going to go? It's ultimately going to go to the patient. Clearly, it's going to go to the patient."
Baldwin said that, as many hospitals in Indiana are operating on negative margins, it's important for the state to take a stance on the insurance fees.
Baldwin also worried that the penalty could move hospitals away from using health care providers who don't want to work with Anthem's rates.
"We have a pretty significant imbalance in negotiating power that's causing independent doctors' groups in the State of Indiana who want to stay independent not be able to do so," he said. "One organization of this duopoly has chosen to use extreme market power to force hospitals into making physician groups not be independent."
The bill was heard in committee but didn't move this week.
Contact Government and Health Reporter Benjamin Thorp at bthorp@wfyi.org
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