Key Takeaways
- • Indiana's five largest nonprofit hospital systems (Ascension, Community Health Network, Franciscan Health, IU Health, and Parkview Health) all cleared the state's direct-to-employer pricing benchmark in 2024, with prices ranging from 236% to 271% of Medicare rates against a 285% statutory ceiling.
- • The average pricing across all five systems reached 252% of Medicare—33 percentage points below the legislative benchmark—according to the latest annual report from actuarial consultant Milliman commissioned by the Indiana Department of Insurance.
- • House Enrolled Act 1004, signed into law in early 2025, requires Indiana's largest nonprofit hospital systems to offer direct-to-employer contracts at or below 260% of full Medicare rates, with a $10,000-per-day penalty for non-compliance effective September 1, 2025.
- • The Employers' Forum of Indiana disputed the methodology, arguing that the inclusion of hospital-owned medical group professional fees artificially reduced reported facility prices by 30 to 50 percentage points, creating misleading comparisons between facility and physician costs.
- • Indiana's direct-to-employer mandate is positioning the state as a model for healthcare cost containment; Colorado and New York are already drafting similar legislation, signaling potential national expansion of direct hospital contracting requirements.
Summary
Indiana's five largest nonprofit hospital systems have successfully demonstrated compliance with state-mandated direct-to-employer pricing benchmarks, according to a November 2024 analysis released publicly in early 2025 by the Indiana Department of Insurance. The report, prepared by Milliman, examined pricing for Ascension Health, Community Health Network, Franciscan Health, Indiana University Health, and Parkview Health—excluding critical access hospitals—and compared their commercially insured market rates against a 285% Medicare multiple established under House Enrolled Act 1004.
All five systems achieved prices below the statutory ceiling, with individual results as follows: Community Health Network at 236%, IU Health at 237%, Ascension at 254%, Parkview Health at 262%, and Franciscan Health at 271%. The collective average of 252% across all systems represented a 33-percentage-point discount relative to the legislative benchmark. The Indiana Hospital Association characterized these results as evidence that "Indiana hospitals are lowering prices while navigating some of the most difficult financial conditions in recent history," according to president Scott B. Tittle, and called on insurers to pass savings along to employers and consumers.
However, the employer-led Employers' Forum of Indiana raised material objections to the analysis methodology. The coalition contended that the inclusion of hospital-owned medical group professional fees—physician services billed under hospital entities—artificially suppressed reported facility pricing by 30 to 50 percentage points. According to the forum, averaging physician professional fees with hospital facility fees produces "misleading information" on pricing for each service category and conflates distinct cost structures that should be evaluated independently.
The direct-to-employer contracting mandate, which took effect September 1, 2025, represents the first state-level requirement of its kind nationally. Non-compliant hospitals face penalties of $10,000 per day. The legislative framework allows employers to contract directly with hospital systems at capped rates, bypassing traditional health insurance intermediaries. Indiana's approach is gaining attention; Colorado and New York are reportedly drafting comparable legislation, suggesting the direct-to-employer model may emerge as a template for other states seeking to moderate healthcare cost growth.
All five systems achieved prices below the statutory ceiling, with individual results as follows: Community Health Network at 236%, IU Health at 237%, Ascension at 254%, Parkview Health at 262%, and Franciscan Health at 271%. The collective average of 252% across all systems represented a 33-percentage-point discount relative to the legislative benchmark. The Indiana Hospital Association characterized these results as evidence that "Indiana hospitals are lowering prices while navigating some of the most difficult financial conditions in recent history," according to president Scott B. Tittle, and called on insurers to pass savings along to employers and consumers.
However, the employer-led Employers' Forum of Indiana raised material objections to the analysis methodology. The coalition contended that the inclusion of hospital-owned medical group professional fees—physician services billed under hospital entities—artificially suppressed reported facility pricing by 30 to 50 percentage points. According to the forum, averaging physician professional fees with hospital facility fees produces "misleading information" on pricing for each service category and conflates distinct cost structures that should be evaluated independently.
The direct-to-employer contracting mandate, which took effect September 1, 2025, represents the first state-level requirement of its kind nationally. Non-compliant hospitals face penalties of $10,000 per day. The legislative framework allows employers to contract directly with hospital systems at capped rates, bypassing traditional health insurance intermediaries. Indiana's approach is gaining attention; Colorado and New York are reportedly drafting comparable legislation, suggesting the direct-to-employer model may emerge as a template for other states seeking to moderate healthcare cost growth.
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