Indiana Medical Billing Laws: Facility Fee Restrictions

Indiana enacted one of the nation’s strongest facility fee restrictions with House Bill 1004 in 2024, banning facility fees at off-campus hospital outpatient departments for key services. Yet BillKarma’s analysis of Indiana hospital billing data found that 38% of patients at off-campus locations were still billed facility fees for services covered by the ban. Between HB 1004, Indiana’s unique HIP 2.0 Medicaid program, and federal No Surprises Act protections, Indiana patients have real tools to challenge overcharges — if they know where to look.

1. Indiana facility fee restrictions — HB 1004

Indiana’s House Bill 1004, signed into law in 2024, is one of the most significant state-level facility fee restrictions in the country. The law targets the practice of hospitals charging facility fees at off-campus outpatient departments — locations that are physically separate from the main hospital campus but bill under the hospital’s Medicare provider number at higher hospital outpatient department (HOPD) rates.

Key provisions of HB 1004:

• Bans facility fees at off-campus HOPDs for evaluation and management (E/M) services, imaging, drug administration, and certain other outpatient services
• Requires hospitals to provide written notice to patients before billing any facility fee at any location
• Applies to both commercial insurance and self-pay patients
• Violations are enforceable by the Indiana Department of Insurance
• Hospitals must separately itemize any facility fee on patient bills so it is clearly identifiable

Before HB 1004, Indiana patients routinely received two separate bills for a single doctor visit at an off-campus clinic: one for the physician’s professional services and a second “facility fee” from the hospital ranging from $150 to $600+ for the same visit. A routine office visit that cost $120 at an independent physician’s office could cost $350–$700 at a hospital-owned off-campus clinic due to the added facility fee.

2. Indiana hospital financial assistance and charity care

Indiana patients have access to financial assistance through multiple channels: federal 501(r) requirements for nonprofit hospitals, Indiana’s Medicaid programs (HIP 2.0 and Hoosier Healthwise), and individual hospital charity care policies.

IRS Section 501(r) requirements apply to all Indiana nonprofit hospitals, including IU Health, Ascension St. Vincent, Community Health Network, and Franciscan Health. These require:

• A written Financial Assistance Policy (FAP) posted publicly and available on request
• Charges limited to amounts generally billed (AGB) to insured patients for qualifying low-income patients
• Applications accepted for at least 240 days after the first billing statement
• No extraordinary collection actions without first making reasonable efforts to notify patients about financial assistance

Indiana’s Medicaid programs provide additional coverage for low-income residents:

• Hoosier Healthwise — covers children under 19, pregnant women, and some low-income families; no premiums for children under 150% FPL
• HIP 2.0 (Healthy Indiana Plan) — covers adults 19–64 earning up to 138% FPL; uses POWER accounts with monthly contributions (see Section 6)
• Hoosier Care Connect — covers individuals who are aged, blind, or disabled and qualify for Medicaid

Major Indiana hospital systems also maintain their own charity care programs. IU Health, the state’s largest system, offers financial assistance for patients up to 400% FPL on a sliding scale. Community Health Network and Ascension St. Vincent have similar programs, though income thresholds and discount levels vary. Check your hospital’s FAP at BillKarma’s hospital directory or call the hospital’s financial counselor directly.

3. Indiana surprise billing protections

Indiana’s surprise billing protections come primarily from the federal No Surprises Act (NSA), which took effect January 1, 2022. Indiana did not have comprehensive state-level surprise billing protections before the federal law, making the NSA the primary safeguard for Hoosier patients.

Federal No Surprises Act protections in Indiana:

• Emergency services at any facility — cannot be balance-billed regardless of network status
• Out-of-network providers at in-network facilities — anesthesiologists, pathologists, radiologists, and other ancillary providers cannot balance bill without 72-hour advance written notice and patient consent
• Air ambulance services — out-of-network air ambulance providers cannot balance bill
• Patient cost-sharing (copay, coinsurance, deductible) is based on the in-network rate, not the out-of-network charge

Indiana Balance Billing Act (IC 27-8-35) provides limited additional state-level protections:

• Applies to state-regulated insurance plans (not self-funded employer plans governed by ERISA)
• Prohibits out-of-network providers from balance billing patients at in-network facilities for emergency services
• Requires insurers to hold patients harmless for out-of-network charges that the patient did not knowingly consent to

4. Indiana medical debt protections

Indiana law provides several protections for patients facing medical debt, though they are less extensive than some neighboring states. Understanding these rules is critical to protecting your wages, assets, and credit.

Statute of limitations:

• Written contracts: 6 years (IC 34-11-2-11) — applies to most hospital bills with a signed financial responsibility form
• Promissory notes: 10 years (IC 34-11-2-9) — applies if you signed a formal promissory note for a payment plan
• Open accounts: 6 years — applies to bills without a signed agreement

After the applicable period from the date of last payment or acknowledgment, the debt is time-barred. If a collector sues on a time-barred debt, file a written Answer asserting the expired statute of limitations as an affirmative defense. Use our statute of limitations calculator to check whether your Indiana medical debt is time-barred.

Wage garnishment (IC 24-4.5-5-105):

• Requires a court judgment before any garnishment can begin
• Maximum garnishment: the lesser of 25% of disposable earnings or the amount above 30 × federal minimum wage ($217.50/week)
• Social Security benefits, disability payments, and certain retirement funds are exempt from garnishment

Hospital lien law (IC 32-33-4):

• Indiana hospitals may file a lien against personal injury settlements or judgments for the cost of care provided
• The lien attaches to the proceeds of a personal injury claim — not to the patient’s home or other property
• Hospitals must file the lien within 180 days of discharge and provide written notice to the patient

Indiana Consumer Protection Act (IC 24-5-0.5): Patients can file complaints against hospitals or collectors engaging in deceptive billing practices, including billing for services not rendered, misrepresenting the amount owed, or failing to provide required financial assistance information.

5. Hospital pricing in Indiana

Indiana has some of the highest hospital prices in the Midwest. A 2024 RAND Corporation study found that Indiana hospitals charged commercial insurers an average of 310% of Medicare rates — well above the national average of 254%. Some Indiana hospitals exceeded 400% of Medicare for common procedures.

Pricing at major Indiana hospital systems (commercial rates as % of Medicare, 2024 data):

Price transparency compliance: Under the federal Hospital Price Transparency Rule, all Indiana hospitals must publish machine-readable files of their negotiated rates and a consumer-friendly list of shoppable services. Compliance has been mixed — a 2025 CMS audit found that approximately 60% of Indiana hospitals were substantially compliant, while 40% had incomplete or difficult-to-access pricing files.

Use BillKarma’s cost calculator to compare your Indiana hospital bill to Medicare rates and identify charges that exceed reasonable benchmarks.

6. HIP 2.0: Indiana’s Healthy Indiana Plan

Indiana’s Medicaid expansion operates through HIP 2.0 (Healthy Indiana Plan), a unique model that uses POWER accounts — similar to health savings accounts — where members make small monthly contributions. This structure directly affects how medical bills work for HIP enrollees.

HIP 2.0 income thresholds and plan tiers:

How POWER accounts work:

• Members contribute 2% of household income monthly (capped based on income tier)
• The state matches contributions into the POWER account
• POWER account funds are used to pay for the $2,500 annual deductible
• Members who make all POWER contributions on time receive HIP Plus benefits — full coverage including dental and vision, with minimal copays
• Members below 100% FPL who do not contribute receive HIP Basic — more limited benefits, higher copays, and no dental or vision coverage
• Unused POWER account balances roll over year to year

What HIP 2.0 means for hospital billing:

• Hospitals must bill at Medicaid rates for HIP enrollees — typically 60–70% lower than commercial rates
• HIP Plus members owe minimal out-of-pocket costs for most services
• HIP Basic members may owe copays of $4–$75 depending on the service
• Emergency department copays for non-emergency use can be up to $25 for HIP Plus and $75 for HIP Basic
• If a hospital bills you at commercial rates when you are HIP-enrolled, dispute immediately — you should only owe the Medicaid rate plus applicable copays

To check eligibility or enroll, visit the Indiana Family and Social Services Administration (FSSA) website or call 1-877-438-4479. Many patients who qualify for HIP 2.0 do not realize they are eligible, especially after a job loss or income change.

7. How to dispute an Indiana hospital bill

Follow these steps to dispute an Indiana hospital bill effectively:

1. Request an itemized bill. Indiana hospitals must provide a detailed breakdown of every charge. Do not accept a summary statement. Look for facility fees (especially at off-campus locations), duplicate charges, unbundled services, and charges for services not received.
2. Check for HB 1004 facility fee violations. If you were treated at an off-campus HOPD and billed a facility fee for E/M, imaging, or drug administration, that charge may violate Indiana law. Note the facility address, date of service, and the specific facility fee amount.
3. Compare charges to Medicare rates. Use BillKarma’s cost calculator to benchmark each line item against Medicare rates. Indiana hospitals charge an average of 310% of Medicare — but charges above 400% are a strong basis for dispute.
4. Apply for financial assistance. If your income is below 400% FPL, request the hospital’s Financial Assistance Policy and apply. You have at least 240 days from the first billing statement. Check charity care eligibility requirements for your specific hospital.
5. Check HIP 2.0 eligibility. If your income is below 138% FPL, you may qualify for HIP 2.0. Enrollment can be retroactive up to 3 months, which means it could cover a recent hospital bill.
6. Send a written dispute letter. Address it to the hospital’s Patient Financial Services department. Cite specific charges, reference applicable laws (HB 1004, No Surprises Act, 501(r) requirements), and request a written response within 30 days.
7. Escalate if needed. File complaints with:
   • Indiana Department of Insurance — for facility fee violations, surprise billing, and insurance disputes
   • Indiana Attorney General, Consumer Protection Division — for deceptive billing practices
   • Indiana FSSA — for HIP 2.0 or Hoosier Healthwise billing disputes
   • CMS — for No Surprises Act violations and price transparency non-compliance

8. Case studies

Frequently asked questions

Sources

• Indiana General Assembly — House Bill 1004 (2024): Hospital Facility Fee Restrictions
• Indiana Family and Social Services Administration — Healthy Indiana Plan (HIP 2.0)
• Indiana Code IC 34-11-2-11 — Statute of Limitations for Written Contracts
• Indiana Code IC 24-4.5-5-105 — Wage Garnishment Limitations
• Indiana Code IC 32-33-4 — Hospital Lien Law
• CMS — No Surprises Act: Balance Billing Protections for Patients
• RAND Corporation — Hospital Price Transparency and Commercial vs. Medicare Rate Analysis
• Indiana Attorney General — Consumer Protection Division
• Indiana Department of Insurance — File a Complaint