IU Health Holds Pricing Flat Amid Hospital Price Transparency Push

January 04, 2022 - As state lawmakers aim to advance hospital price transparency in Indiana, the state’s largest hospital system is putting a hold on pricing increases.

At an annual public forum on hospital price transparency in mid-December, IU Health announced that it is looking to reduce fees for services to be more in line with national averages by 2025, according to IndyStar.

The local news source reported that the forum was required by a bill that took effect last year requiring hospitals and payers doing business in Indiana to discuss healthcare pricing in the name of hospital price transparency. The forum took place just weeks before the deadline for hospitals and payers to hold their required hour-long sessions during which they presented their finances and other affordability work.

IU Health notably stated during its presentation on Dec. 16, 2021, that it is implementing a pricing freeze over the next four years for all payers, an effort it started in 2020 and 2021, the report stated.

The pricing freeze is part of IU Health’s goal of making healthcare more affordable for patients, according to health system communications.

“We have put in place a multi-year pricing affordability plan that will essentially hold year-over-year pricing flat. Our plan targets pricing reductions for common and frequently used services that have the biggest financial impact on patients and employers,” Jenni Alvey, senior vice president and chief financial officer, said last year in an official press release.

“Over the next five years, the plan should bring more than $1 billion in savings for healthcare consumers when considering inflation.”

For 2021, outpatient rates for common services rendered at the health system were reduced by $85 million, including a 45 percent decrease for radiology services and 60 percent for laboratory services, according to the press release.

The health system said it is focusing on pricing reductions on infusions, specialty pharmacy, and outpatient surgeries next.

In October 2021, IU Health reported as part of its third quarter financial results that the pricing freeze had reduced prices by over $100 million across the highest volume areas.

The health system also touted its cost estimate tool, which has been in place since 2015. Using the tool, patients can request cost estimates for more than 800 services provided at IU Health before coming in for care. The online cost estimate tool is a key part of IU Health’s strategy to enhance the patient experience and deliver patients with the tools they want and need to get care.

Hospitals have come under fire for their pricing strategies. A 2020 study conducted by RAND Corporation in collaboration with the Employers’ Forum of Indiana found that private health plans pay 247 percent more, on average, than what Medicare would pay for the same services at the same facilities, including both professional and facility fees.

In Indiana specifically, prices reached higher than 313 percent of Medicare for some services, researchers found.

CMS has required hospitals to publish on their public-facing websites their pricing information, including these payer-specific rates. The requirements, which also include a more consumer-friendly list of prices for common services that can be scheduled ahead of time, are meant to empower consumers to shop for healthcare services. But many hospitals have yet to comply with the requirements and now face hefty fines from the federal government.

Hospitals must also comply with new requirements under the No Surprises Act and provide good faith estimates to self-pay or uninsured patients seeking non-emergency care. These requirements went into effect Jan. 1, 2022.

IU Health has provided its charge listings, good faith estimate information, and price estimator tool on its website.