Hospital Price Caps Among State Ideas to Lower Health-Care Costs

States looking to cut health-care costs are weighing ideas such as capping hospital rates based on Medicare payments, which are generally lower than rates employer-sponsored plans pay.

Legislation being considered in Indiana (House Bill 1004) includes a provision that would penalize nonprofit hospitals that charge more than 260% of Medicare rates. Most of the state’s hospitals are nonprofits.

The legislation “will actually help lower prices effectively immediately for Hoosiers—for workers and their employers,” Gloria Sachdev, president and CEO of the Employers’ Forum of Indiana, said in an interview. Rand Corp. studies have shown Indiana’s hospitals charge among the ...