Page 1
June 20, 2023 HB 23-1201
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Final Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0773
Rep. Daugherty; Soper
Sen. Mullica; Smallwood
Date:
Bill Status:
Fiscal Analyst:
June 20, 2023
Signed into Law
Kristine McLaughlin | 303-866-4776
kristine.mclaughlin@coleg.gov
Bill Topic: RX DRUG BENEFITS CONTRACT TERM REQUIREMENTS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☒ State Diversion
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill limits the amount that carriers or pharmacy benefit managers (PBMs) may
charge beneficiaries of employer-sponsored plans for prescription drugs to no more
than the amount paid by the plan to contracted pharmacies, and specifies enforcement
mechanisms. The bill increases state expenditures and may increase state revenue
on an ongoing basis.
Appropriation
Summary:
For FY 2023-24, the bill requires and includes an appropriation of $10,000 to the
Department of Regulatory Agencies.
Fiscal Note
Status:
The fiscal note reflects the enacted bill.
Table 1
State Fiscal Impacts Under HB 23-1201
Budget Year
FY 2023-24
Out Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2026-27
Revenue
- - - -
Expenditures Cash Funds $10,000 - - $250,000
Total Expenditures $10,000 - - $250,000
Diversion General Fund ($10,000) - - ($250,000)
Cash Funds $10,000 - - $250,000
Net Diversion $0 - - $0
Other Budget - - - -
Page 2
June 20, 2023 HB 23-1201
Summary of Legislation
The bill limits the amount that health insurance carriers or pharmacy benefit managers (PBMs) may
charge beneficiaries of select employer-sponsored plans for prescription drugs to no more than the
amount paid by the plan or PBM to a contracted pharmacy. The bill applies to select contracts issued
or renewed on or after January 1, 2025. The bill grants audit authority to the Department of Health
Care Policy and Financing (HCPF) for Medicaid contractors and the Department of Regulatory
Agencies (DORA) for all other contracts. Failure to comply a deceptive trade practice in the business
of insurance.
State Revenue
Civil penalties. A person committing a deceptive trade practice in the business of insurance may be
subject to a civil penalty of up to $3,000 for each act, with potentially higher penalties for willful or
repeat violations, up to a maximum annual penalty specified in statute. Given that insurers are
assumed to comply with the requirements of the bill, and the wide range in potential penalty amounts
in any cases that are pursued by the commissioner, the fiscal note cannot estimate the potential impact
of these civil penalties. Penalty revenue is deposited into the General Fund and subject to TABOR.
Filing fees. The bill may increase revenue to the Judicial Department from an increase in civil case
filings to appeal deceptive trade practice actions taken by the Division of Insurance in DORA.
Revenue from filing fees is subject to TABOR.
State Diversions
This bill diverts $10,000 from the General Fund in FY 2023-24 and $250,000 in FY 2026-27. This revenue
diversion occurs because the bill increases costs in the Department of Regulatory Agencies, Division
of Insurance, which is funded with premium tax revenue that would otherwise be credited to the
General Fund.
State Expenditures
The bill increases costs in DORA by $10,000 in FY 2023-24 and $250,000 in FY 2026-27 and ongoing.
These expenditures are shown in Table 2 and detailed below. The bill also increases workload for
HCPF and the Judicial Department. These impacts are discussed below.
Table 2
Expenditures Under HB 23-1201
FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27
Contractor (DORA) $10,000 - - $250,000
Total Costs $10,000 - - $250,000
Page 3
June 20, 2023 HB 23-1201
Department of Regulatory Agencies. DORA will hire a contractor to perform the data collection,
storage, and analysis process necessary to conduct the audits required by the bill. This contractor will
perform work required for both HCPF and DORA. The contractor will send results to the appropriate
department. It is assumed that DORA will require 40 contractor hours in FY 2023-24 for technical
assistance relating to rule promulgation and 1,000 hours in FY 2026-27 and ongoing to assist in audits.
Department of Health Care Policy and Financing. HCPF will have an increase in workload to
promulgate rules, perform outreach with Managed Care Organizations (MCOs) that contract with a
PBM, and to receive and respond to consumer complaints and audit findings. Since only two MCOs
are affected by the bill, it is assumed that workload for enforcement actions regarding deceptive trade
practices can be accomplished within existing resources.
Judicial Department. The trial courts in the Judicial Department may have an increase in cases filed
from the addition of a new deceptive trade practice. It is assumed that health insurers will have a
high level of compliance with the law and that any violation of the legislation will result in minimal
number of new cases reviewed by the courts. Thus, no change in appropriations is required.
Effective Date
The bill was signed into law by the Governor on May 10, 2023, and takes effect on August 7, 2023,
assuming no referendum petition is filed.
State Appropriations
For FY 2023-24, the bill requires and includes an appropriation of $10,000 from the Division of
Insurance Cash Fund to the Department of Regulatory Agencies.
State and Local Government Contacts
District Attorneys Health Care Policy and Financing Information Technology
Judicial 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.