Help the helpers: HB 1271 seeks to protect mental health providers

Indiana mental health providers experienced unprecedented challenges in 2025, highlighting a need for the State to protect providers from insurance policies that jeopardize client’s access to essential care. As insurance premiums skyrocket, individuals and families face the grim choice between paying for basic needs or utilizing their health benefits for vital services, including mental health therapy and psychiatric medication management. Tight budgets mean people often cannot afford to pay out-of-pocket for services. Simultaneously, providers are forced to shoulder undo financial uncertainty as insurance companies suddenly withdraw payments. The current climate of high costs and complex insurance models threatens the stability of local health systems and underscores the urgent need for reform and accountability to ensure quality, affordable care for all Hoosiers.

Four specific financial issues are being addressed this session by Indiana’s General Assembly. House Bill 1271: Notification of financial assistance programs, prohibition of automatic down-coding, elimination of retroactive rate adjustments, and reciprocal recoupment timelines.

1.)   HB 1271 requires that hospitals display information about any financial assistance programs and charity care upon arrival and discharge and prior to any patient being referred to collections.

2.)   The rise of automatic down-coding has become a pressing concern for healthcare providers nationwide. This practice involves insurers unilaterally changing a submitted claim’s service code to a lower-paying, less complex code – often without an initial review of the patient’s medical records. This “deny-first and prove innocence later” approach means that a provider might bill for a higher-complexity, hour-long therapy session, only for the insurer to reimburse them at a lower, 38-minute rate instead. This leads to significant revenue erosion and an enormous administrative burden as practices are forced into unnecessary, often unsuccessful appeals of legitimate claims.

3.)   Imagine a business transaction where the price is constantly changing, even after the service is rendered. Retroactive rate adjustments are a unique and deeply disruptive problem faced by healthcare providers. While most industries operate on a simple principle – agree on a price, perform the service, complete the transaction – health insurers defy this standard. Insurers have begun issuing rate changes up to two years after the service was rendered. They simply recoup these unexpected decreases from the money they currently owe the provider, a process that is entirely unsustainable for small businesses.

4.)   Indiana’s insurance rules create a stark imbalance: Insurers require providers to submit a claim within 90 days, but insurers can demand repayments for 2 years! The lopsided system of recoupment timelines often leads to arbitrary payment grabs in which providers are left without meaningful recourse. HB 1271 proposes a fair 180-day reciprocal limit for insurers to recoup funds, stating the timeline to recoup is the lesser of 180 days or the number of days providers have to submit a claim, bringing more balance and financial predictability and allowing transactions to all occur within the same tax year. Insurers oppose this legislation, stating the effect would be a 90-day recoupment period, demonstrating a lack of accountability for the rules they create.

The House Committee on Insurance is scheduled to take a vote on this legislation on Tuesday, January 20, 2025. To express support of this legislation, please reach out to the Insurance Committee members and to your State Representative and urge them to vote yes on House Bill 1271.

Bill Author: Rep Julie McGuire (R)

Co Author: Rep Lori Goss-Reaves (R)

Co Author: Rep Victoria Garcia Wilburn (D)

Co: Author: Rep Chris Campbell (D)

Please email support to remaining committee members:

Rep Martin Carbaugh (R), Chair – h81@iga.in.gov

Rep Brad Barrett (R) – h56@iga.in.gov

Rep Cindy Ledbetter (R) – h75@iga.in.gov

Rep Bruce Borders (R) – h45@iga.in.gov

Rep Matt Lehman (R) – h79@iga.in.gov

Rep Peggy Mayfield (R) – h60@iga.in.gov

Rep Craig Snow (R) – h22@iga.in.gov

Rep Wendy Dant Chesser (D) – h71@iga.in.gov

Rep Gregory Porter (D) – h96@iga.in.gov

Rep Robin Shackleford (D) – h98@iga.in.gov