States push to limit hospital prices amid public discontent

Several state legislatures this year have advanced bills to restrict hospital prices or charges, amid rising public upset with healthcare cost increases.

Legislation from five states take widely varying approaches to restrict hospital prices or charges.

The initiatives came as the public’s views on the primary motivation of hospitals — earning money or providing care — flipped during the COVID-19 pandemic and have continued to worsen, according to the latest in an ongoing public survey by Jarrard, a healthcare communications consulting firm. By 2025, 76% of respondents said hospitals are primarily focused on revenue, and only 24% said they were primarily focused on patient care.

Indiana

One of the highest-profile bills on hospital pricing is advancing in the Indiana legislature. A Senate committee recently advanced a bill, which previously passed the House, that would establish price caps for commercially insured residents based on Medicare rates. Specifically, the bill would penalize private, not-for-profit hospitals with an excise tax if they charge commercial insurers more than 265% of Medicare rates. Additionally, such hospitals would lose their not-for-profit tax status and face state taxation.

“As Indiana grapples with some of the highest health care prices in the country, pushing Hoosiers to the brink of financial ruin, now is the time for lawmakers to enact legislation to slow health industry consolidation and lower prices for Indiana residents,” Sophia Tripoli, senior director of health policy for Families USA, a liberal advocacy group, said at the March 19 Senate committee hearing.

Opponents of the bill, primarily Democrats, warned adding price caps tied to Medicare would hurt hospitals, especially rural or critical access facilities. Successive versions of the bill have increased the percentage of Medicare rates at which it would limit hospitals charges to commercial payers.

“Indiana hospitals are always striving to make care more affordable,” Scott Tittle, president of the Indiana Hospital Association, said in a written statement. “While we can all agree that health care is expensive across the board, a recent report by the Indiana General Assembly showed that hospital system prices in 2023 as a percentage of Medicare were well below the state benchmark and are moving in the right direction. While there’s more work to be done, hospitals remain committed to this effort.”

 “Throughout the legislative session, we’ve had constructive conversations with Gov. Braun’s administration and members of the Indiana General Assembly on these critical issues,” Tittle said. “We look forward to continuing our work together to find meaningful solutions that will bring down the cost of care without sacrificing the quality and access that Hoosiers depend on.”

North Carolina

A bill starting to advance in the North Carolina legislature would bar hospitals from charging outpatient facility fees, except at “a hospital’s main campus, at a remote location of a hospital, or at a facility that includes an emergency department.”

Regardless of location, the bill would bar — subject to penalties — facility fees for outpatient evaluation and management services, or any other outpatient, diagnostic, or imaging services identified by the state’s Department of Health and Human Services.

It also would require extensive reporting on any continued use of facility fees.

Hospitals in the state, through the North Carolina Healthcare Association (NCHA), identified the need to defend facility fees among its 2025 legislative priorities.

“Patients can count on North Carolina hospitals to provide 24/7 specialty, critical, and emergency care,” said an issues statement by NCHA. “Our hospitals are on standby to treat anyone who walks through their doors, at any time. Facility fees finance this level of care that only hospitals provide. NCHA strongly supports facility fees, better described as care-team fees, as they are fundamental to patient care and serving the healthcare needs of the community.”

Vermont

A 32-page Senate bill would direct the Vermont’s Green Mountain Care Board, which oversees healthcare regulations, to implement reference-based pricing for hospitals. The bill would require the establishment of reference-based pricing, potentially also for care provided outside of hospitals, by FY27.

The reference-based prices may differ by hospitals, based on “the composition of the communities served by the hospital, including the health of the population, demographic characteristics, acuity, payer mix, labor costs, social risk factors, and other factors that may affect the costs of providing care in the hospital service area,” according to the bill.

The extent of the financial impact on hospitals was shown by a 2024 report that estimated $400 million less in spending on hospitals from 2018 to 2023 if payments were lowered from 289% of Medicare rates to 200% of Medicare rates.

Colorado

A similar legislative initiative in Colorado would bar hospitals from charging more than 165% of Medicare reimbursement rates. However, it was narrower in scope and only would apply to about 6% of the state’s insured population: 60,000 people covered by the state employees’ health plan and the 200,000 insured in the small-group market.

The Colorado Hospital Association (CHA) has raised concerns on the use of Medicare as a benchmark for setting hospital payment rates since Medicare payments fall far short from covering the cost of care. Additionally, they noted that the Medicare Payment Advisory Commission has found few hospitals can generate a margin on Medicare, which would lead many to close if all rates were based on Medicare rates.