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 6888 NOTE PREPARED: Jan 8, 2024
BILL NUMBER: HB 1327 BILL AMENDED:
SUBJECT: Health and Insurance Matters.
FIRST AUTHOR: Rep. Schaibley BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Ownership Report: This bill requires a hospital, physician group practice, insurer,
third party administrator, and pharmacy benefit manager to file with the Indiana Department of Health
(IDOH) a report that includes information regarding each person or entity that has an ownership interest, in
whole or in part, or a controlling interest in the hospital, physician group practice, insurer, third party
administrator, or pharmacy benefit manager. It requires the IDOH to publicly post a searchable consolidated
document on the IDOH’s website that contains the information. It sets forth penalties for a violation of the
reporting requirements. It requires the IDOH to submit an annual report of violations of the reporting
requirements to certain members of the General Assembly.
Audits: This bill allows a contract holder to request an audit of a pharmacy benefit manager up to one time
each quarter. It prohibits a third party administrator, health plan, or pharmacy benefit manager from charging
a fee if the plan sponsor opts out of an additional offered service. It allows a plan sponsor that contracts with
a third party administrator, the Office of the Secretary of Family and Social Services that contracts with a
managed care organization to provide services to a Medicaid recipient, or the State Personnel Department
that contracts with a prepaid health care delivery plan to provide group health coverage for state employees
to request an audit up to one time each quarter. It also provides that a violation of the requirements
concerning audits of a third party administrator, managed care organization, or prepaid health care delivery
plan is an unfair or deceptive act or practice in the business of insurance and allows the Department of
Insurance to adopt rules to set forth fines for a violation.
Claims Data Ownership: This bill requires a contract with a third party administrator, pharmacy benefit
manager, or prepaid health care delivery plan to provide that the plan sponsor has ownership of the claims
data.
HB 1327 1 Effective Date: Upon passage; July 1, 2024.
Explanation of State Expenditures: Audits: Expenditures for the state’s employee health plans, state
Medicaid plan, and Children’s Health Insurance (CHIP) plan may be reduced to the extent that they may no
longer be charged fees for audits. However, the bill’s requirements on allowing for more frequent audits and
prohibiting audit fees may result in additional costs for Pharmacy benefit managers (PBMs), managed care
organizations, third party administrators, and prepaid health care delivery plans, which may be passed along
to the state employee, Medicaid, and CHIP plans in the form of increased premiums and future capitation
payments. Any change in total costs to the state employee, Medicaid, and CHIP plans as a result of this bill
is indeterminable.
A violation of the audit requirements in the bill is considered an unfair or deceptive act or practice in the
business of insurance. The Department of Insurance (DOI) could experience increased workload to
investigate complaints and provide adjudicative proceedings. The DOI may adopt rules regarding violations
of the audit requirements. These requirements are within the DOI’s routine administrative functions and
should be able to be implemented with no additional appropriations, assuming near customary agency
staffing and resource levels. [Administrative funding for the DOI is appropriated through a dedicated agency
fund.]
Ownership Report: The Indiana Department of Health (IDOH) must consolidate annual reports from
hospitals, physician group practices, insurers, third party administrators, and PBMs and post the consolidated
report on their website. The IDOH may assess fines for violations of this reporting requirement and must
refer entities that repeatedly violate this reporting requirement to either the Medical Licensing Board or the
DOI. Also, state-owned hospitals must file an annual report to the IDOH regarding ownership interest and
controlling interest in the hospital. These requirements are within the routine administrative functions of the
IDOH, state-owned hospitals, Medical Licensing Board, and the DOI and should be able to be implemented
with no additional appropriations, assuming near customary staffing and resource levels. [The IDOH’s
administrative expenditures are currently paid from the Tobacco Master Settlement Fund, a dedicated fund.]
Additional Information: Medicaid and CHIP are jointly funded between the state and federal governments.
The state share of costs for most Medicaid medical services for FFY 2024 is 34%, 10% for the age 19 to 64
expansion population within the Healthy Indiana Plan (HIP), and 24% for CHIP. The state share of
administrative costs is 50%. The state share of most Medicaid and CHIP expenditures is paid from General
Fund appropriations, and state dedicated funds primarily cover HIP costs.
Explanation of State Revenues: Audits: If premium collections in the state increase as the result of this bill,
revenue to the state General Fund from the corporate Adjusted Gross Income Tax and the Insurance Premium
Tax would increase.
A violation of the audit requirements in the bill is considered an unfair or deceptive act or practice in the
business of insurance. If this bill increases the number of unfair and deceptive acts discovered by the DOI,
revenue to the state General Fund will increase from civil penalties paid by violators. The penalty for
engaging in an unfair and deceptive act is one or both of the following: (1) a civil penalty between $25,000
and $50,000 for each act or violation and (2) revocation of a person's license or certificate of authority if they
knowingly engaged in an unfair or deceptive act.
Ownership Report: The IDOH may assess fines of $1,000 per day on hospitals, physician group practices,
insurers, third party administrators, and PBMs that violate the bill’s reporting requirement. Fines must be
HB 1327 2 deposited into the Payer Affordability Penalty Fund.
Explanation of Local Expenditures: Audits: Any change in total costs to local units offering health
insurance coverage as a result of this bill is indeterminable.
Ownership Report: Locally-owned hospitals must file an annual report to the IDOH regarding ownership
interest and controlling interest in the hospital. This is within a hospital’s routine administrative functions.
Explanation of Local Revenues:
State Agencies Affected: Family and Social Services Administration; State Personnel Department;
Department of Insurance; state-owned hospitals; Medical Licensing Board.
Local Agencies Affected: Local units offering health insurance coverage; locally-owned hospitals.
Information Sources:
Fiscal Analyst: Jason Barrett, 317-232-9809.
HB 1327 3