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May 3, 2022 HB 22-1370
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 19, 2022)
Drafting Number:
Prime Sponsors:
LLS 22-0251
Rep. Jodeh; Sirota
Sen. Winter; Buckner
Date:
Bill Status:
Fiscal Analyst:
May 3, 2022
Senate HHS
Erin Reynolds | 303-866-4146
Erin.Reynolds@state.co.us
Bill Topic: COVERAGE REQUIREMENTS FOR HEALTH -CARE PRODUCTS
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☒ State Diversion
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill modifies prescription drug coverages, prohibits changes in a carrier’s
prescription drug coverage formulary during the plan year, and requires reporting and
analysis on prescription drug rebates. It increases state expenditures and diversions
on an ongoing basis beginning in FY 2022-23.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $252,667 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
The revised fiscal note reflects the reengrossed bill.
Table 1
State Fiscal Impacts Under HB 22-1370
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue
- -
Expenditures Cash Funds $252,667 $183,782
Centrally Appropriated $55,213 $53,748
Total Expenditures $307,880 $237,530
Total FTE 1.7 FTE 2.0 FTE
Diversions General Fund ($307,880) ($237,530)
Cash Funds $307,880 $237,530
Net Diversion $0 $0
Other Budget Impacts
- -
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May 3, 2022 HB 22-1370
Summary of Legislation
Beginning January 1, 2023, the bill requires that health insurance carriers that offer an individual or
small group health benefit plan to Coloradans to offer at least 25 percent of its plans on the Colorado
Health Benefit Exchange and at least 25 percent of its plans not on the exchange in each bronze, silver,
gold, and platinum benefit levels in each service area as copayment-only payment structures for all
prescription drug cost tiers. The Commissioner of Insurance in the Department of Regulatory
Agencies (DORA) may promulgate rules to implement and enforce this policy.
Also beginning in 2023, the bill requires the Department of Health Care Policy and Financing (HCPF),
in collaboration with the administrator of the All-Payer Claims Database, to conduct an annual
analysis of the prescription drug rebates received in the previous calendar year, by carrier and
prescription drug tier, and make the analysis available to the public.
By June 1, 2023, the Division of Insurance must conduct or contract with a third party to conduct a
study to evaluate how rebates may be applied in the individual market to reduce a covered person's
out-of-pocket costs at the point of sale or to reduce out-of-pocket costs in prescription drug tiers.
Starting January 1, 2024, health insurers are required to ensure that:
100 percent of discounts received from a manufacturer in connection with dispensing or
administering prescription drugs in the insurer’s formulary for that plan year are used to reduce
costs;
100 percent of the estimated rebates received in connection with dispensing or administering
prescription drugs in the insurer’s formulary for that plan year are used to reduce policyholder
costs.
Each health insurer shall annually report data demonstrating that all discounts and rebates received
by health insurers are used to reduce costs for policyholders in compliance with this section. The
commissioner must promulgate rules to implement and enforce this section.
Beginning in 2024, a carrier offering a health benefit plan on the individual market or its pharmacy
benefit manager is prohibited from modifying or applying a modification to the current prescription
drug formulary during the current plan year, such as eliminating a prescription drug from the
formulary or moving a prescription drug to a higher cost-sharing tier.
Finally, the bill requires carriers, private utilization review organizations, and pharmacy benefits
managers to perform expedited reviews of a step therapy exception request following procedures
outlined in the bill.
State Diversions
This bill diverts about $310,000 from the General Fund in FY 2022-23 and about $240,000 in FY 2023-24
and ongoing. This revenue diversion occurs because the bill increases costs in DORA, Division of
Insurance, which is funded with premium tax revenue that would otherwise be credited to the General
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May 3, 2022 HB 22-1370
State Expenditures
The bill increases state cash fund expenditures in DORA by about $310,000 in FY 2022-23 and about
$240,000 in FY 2023-24 and ongoing from the Division of Insurance Cash Fund. Expenditures are
shown in Table 2 and detailed below.
Table 2
Expenditures Under HB 22-1370
FY 2022-23 FY 2023-24
Department of Regulatory Agencies
Personal Services $157,972 $181,082
Operating Expenses $2,295 $2,700
Capital Outlay Costs $12,400 -
Contractor Costs $80,000 -
Centrally Appropriated Costs
1
$55,213 $53,748
Total Cost $307,880 $237,530
Total FTE 1.7 FTE 2.0 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Regulatory Agencies. The Division of Insurance in DORA will have new staffing and
contractor costs to monitor and enforce provisions against carriers and to collect and audit compliance
data. First-year staffing costs are prorated for a September 1 start date. Standard operating and capital
outlay costs are included.
Staff. The division requires 1.0 FTE rate and financial analyst to create a template for formulary
review and to review changes in prescription drug formularies for roughly 100 drugs lists for the
individual and small group market and roughly 200 drugs lists for the large group market. The
position will also provide support to carriers in correcting errors to their submissions. In addition,
the bill’s rebate provision requires the division to collect data from carriers and perform an
analysis to determine the feasibility of applying rebates to reduce a person's cost sharing at the
point of sale, which necessitates 1.0 FTE actuary to review data submissions from carriers, perform
research to verify carrier attestations regarding rebates, and to review filings submitted by carriers
indicating they are in compliance and using rebates to reduce consumers' costs. Finally, the
division requires 0.1 FTE rate and financial analyst for rulemaking related to regulations
regarding carriers offering copayment-only plans, changes in step therapy protocol, and to create
a step therapy protocols exception request form.
Contractor costs. The division requires 200 hours of a contractor at $400 per hour to assist in
evaluating how rebates may be applied to reduce a covered persons defined cost sharing for each
prescription drug at the point of sale and determine how rebates may be applied to reduce defined
cost sharing and the impact on premiums.
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May 3, 2022 HB 22-1370
Legal services. Preliminarily, legal services costs for rulemaking are assumed to be accomplished
within the division’s existing legal services budget.
Health Care Policy and Financing. HCPF will have an increase in workload to provide reporting and
analysis on prescription drug rebates in connection with its administrator of the All-Payer Claims
Database. This work can be accomplished within existing contracts.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
Statutory Public Entity
Because the bill codifies into statute existing regulations on the plan types and designs the Health
Benefit Exchange must offer, there is no fiscal impact to Connect for Health Colorado.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed. Section 1 of the bill applies to health benefit plans issued or renewed on
or after January 1, 2023. Sections 2 through 6 of this act apply to health benefit plans issued or renewed
on or after January 1, 2024.
State Appropriations
For FY 2022-23, the bill requires an appropriation of $252,667 to the Department of Regulatory
Agencies from the Division of Insurance Cash Fund and 1.7 FTE.
State and Local Government Contacts
Connect for Health Colorado Health Care Policy and Financing
Information Technology Law
Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.