LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6517 NOTE PREPARED: Dec 21, 2021
BILL NUMBER: HB 1046 BILL AMENDED:
SUBJECT: Health Insurance Matters.
FIRST AUTHOR: Rep. Heine BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Discontinuance: The bill requires the Commissioner of the Department of
Insurance (DOI) to provide an order directing the discontinuance of an illegal, unauthorized, or unsafe
practice of an insurance company.
Prior Authorization: The bill also provides that a health plan may not require a participating provider to seek
prior authorization for a particular health service if the health plan approved at least 90% of the prior
authorization requests for the particular health service in the previous six-month period.
Internet Issues: It requires a health plan to post notice of a technical issue with its claims submission system
on the health plan's Internet web site.
Prior Authorization Procedures: It also requires a health plan to post on its Internet web site not later than
February 1 of each year: (1) the 30 most frequently submitted CPT codes in the previous calendar year; and
(2) the percentage of the 30 most frequently submitted CPT codes that were approved in the previous
calendar year.
Financial Statements: The bill requires a health plan to provide annual and quarterly financial statements
to the DOI.
Approval Process: The bill establishes an approval process for a health plan's proposed premium rate
increase of 5% or greater as compared to the previous calendar year.
HB 1046 1 Reimbursement Rate Schedule: It requires an insurer and a health maintenance organization to provide a
contracted provider with a current reimbursement rate schedule: (1) every two years; and (2) when three or
more CPT code rates change in a 12-month period.
Provider Contract: The bill requires an insurer and a health maintenance organization to provide a contracted
provider with notice of a proposed material change to the agreement between the insurer or health
maintenance organization and the contracted provider at least 90 days prior to the proposed effective date.
Material Change Notice: It establishes requirements for the contents of a notice of a proposed material
change. It requires an insurer or health maintenance organization to provide a contracted provider with notice
at least 15 days prior to a change to an existing prior authorization, precertification, notification, referral
program, edit program, or specific edits.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Summary - The bill will impact the workload for the providers and
administrators of the state employees’ health plan and Medicaid. The DOI will have an increased workload
that may require additional resources.
Prior Authorization: It is unknown whether providing six-month exemptions from prior authorization to
providers by service will reduce administrative workload and/or costs. The potential additional workload
from the six-month exemptions will depend on the number of administrative appeals for rescissions or errors
in applying exemptions. The impact of the six-month exemptions on health care utilization is indeterminate
as well.
[An increase in premiums cost for the state employees’ health plan may be mitigated with adjustments to
other benefits or to employee compensation packages, or through the division of premium costs between the
state and its employees. Medicaid is jointly funded between the state and federal governments. The standard
state share of costs for most Medicaid medical services for FFY 2022 is 34%. The state share of most
administrative costs is 50%.]
Department of Insurance (DOI): If the DOI mails more written orders to insurance companies to stop certain
practices without resolution, the DOI may bring more actions to a court. [This note will be updated when the
DOI provides additional information on current practices.] Also, the DOI will review and approve health
plans’ premium increases of 5% or more, including revised plans. To the extent that the DOI has oversight
of the provider and insured contracts of insurers and HMOs, the DOI’s workload may increase to evaluate
and resolve complaints of noncompliance with the provisions of the bill. Additionally, depending on the
sensitivity of the disaggregated administrative fees received from health plan administrators, added
workload/cost may be required to securely post the information on the DOI website. The bill’s requirements
represent an additional workload [and/or expenditure] on the DOI outside of the agency’s routine
administrative functions, and existing staffing and resource levels, if currently being used to capacity, may
be insufficient for full implementation. The additional funds and resources required could be supplied
through existing staff and resources currently being used in another program or with new appropriations.
Ultimately, the source of funds and resources required to satisfy the requirements of this bill will depend on
legislative and administrative actions. [The DOI is funded through a dedicated agency fund.]
Explanation of State Revenues: Penalties: The penalties for violations of the provisions of the bill are
described as follows. Civil penalties are deposited in the state General Fund, unless otherwise noted.
HB 1046 2 • Prior authorization requirements are subject to the unfair and deceptive acts in the business of
insurance penalties. The penalty for engaging in an unfair and deceptive act is a civil penalty
between $25,000 and $50,000 for each act or violation. The revocation of a insurers license or
certificate of authority for knowingly engaging in an unfair or deceptive act would result in a
reduction in fee revenue to the DOI agency fund.
• Violation concerning clean claims may be assessed fines ranging from $10,000 to $200,000,
depending on the percentage of clean claims affected.
• The DOI agency fund may receive less revenue from the $1,000 per violation civil penalty for
violation of the good faith notice requirements.
Court Fees: For disputes concerning contractual requirements, parties to the contract may file civil actions.
A civil costs fee of $100 would be assessed when a civil case is filed. If additional civil actions occur and
court fees are collected, revenue to the state General Fund may increase. A portion of the fee revenue is
deposited into the State User Fee Fund. Additional fees may be collected at the discretion of the judge and
depending upon the particular type of case.
Premiums: The extent to which requirements of the bill may increase premiums is indeterminate. Any
increase in insurance company premiums will increase General Fund revenue from either insurance premium
tax collections or Adjusted Gross Income (AGI) tax collections. Any impact to revenue as a result of this bill
would likely be small.
Explanation of Local Expenditures: The prior authorization provisions impact on local units providing
group health plans or HMO contracts to provide health care is indeterminate. The impact will depend on
utilization changes in administrative costs and medical services as the result of the six-month exemptions
from PAs. An increase in premiums cost may be mitigated with adjustments to other benefits or to employee
compensation packages, or through the division of premium costs between a local unit and its employees.
Explanation of Local Revenues: Court Fees: If additional civil actions occur and court fees are collected,
local governments would receive additional revenue from both a portion of the civil costs fee and other fees
that would be collected.
State Agencies Affected: Family and Social Services Administration, Medicaid; State Personnel
Department; Department of Insurance.
Local Agencies Affected: Trial courts, city and town courts.
Information Sources:
Fiscal Analyst: Karen Rossen, 317-234-2106.
HB 1046 3