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: Feb 5, 2024
BILL NUMBER: HB 1327 BILL AMENDED: Jan 30, 2024
SUBJECT: Health and Insurance Matters.
FIRST AUTHOR: Rep. Schaibley BILL STATUS: As Passed House
FIRST SPONSOR: Sen. Charbonneau
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Ownership Report: This bill requires reporting of certain ownership information
by: (1) a hospital to the Indiana Department of Health (IDOH); (2) a physician group practice to the
Professional Licensing Agency (PLA); and (3) an insurer, a third party administrator, and a pharmacy benefit
manager (PBM) to the Department of Insurance (DOI). It requires the PLA and the DOI to provide the
ownership information to the IDOH. It requires the IDOH to post the ownership information on the IDOH
website. It also sets forth penalties for a violation of the ownership reporting requirements.
Audits: This bill allows a contract holder to request an audit of a PBM at least two times in a calendar year.
It allows a plan sponsor that contracts with a third party administrator, the Office of the Secretary of Family
and Social Services (FSSA) 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 at least two times in a calendar year.
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 DOI to adopt rules to set forth fines for a violation.
Claims Data Ownership: This bill also requires a contract with a third party administrator, PBM, or prepaid
health care delivery plan to provide that the plan sponsor has ownership of the claims data.
Effective Date: Upon passage; July 1, 2024.
Explanation of State Expenditures: Audits: PBMs, third party administrators, managed care organizations,
and prepaid health care delivery plans may be audited at least twice per year and may not charge a fee for
HB 1327 1 an audit being requested; however, the cost for conducting the audit is still required to be paid by the
requestor. Any change in expenses paid by the FSSA or the SPD will depend on actions of the agencies,
including the number of audits requested and the auditors selected to conduct the audits.
A violation of the audit requirements in the bill is considered an unfair or deceptive act or practice in the
business of insurance. The 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: This bill requires each hospital, physician group practice, insurer, third party
administrator, and PBM that does business in Indiana to file an annual ownership report with either the
IDOH, PLA, or DOI, as prescribed in the bill. The bill requires the IDOH, PLA, and DOI to issue notices or
bulletins at least twice per year to notify the appropriate entities of the ownership reporting requirements and
to file an annual report with the Legislative Council regarding violations and fines associated with the
ownership reporting requirements. It also requires the IDOH to annually post the ownership information on
their website (including the ownership information provided by the PLA and the DOI).
The bill allows the IDOH, PLA, and DOI to assess fines for noncompliance with the ownership reporting
requirements and to take disciplinary actions against entities for repeated violations. Also, state-owned
hospitals will be required to file an annual ownership report to the IDOH.
These requirements are within the routine administrative functions of the IDOH, PLA, DOI, and state-owned
hospitals, 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: 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 bill allows the IDOH, PLA, and DOI to assess fines of $1,000 per day on hospitals,
physician group practices with more than five physicians, insurers, third party administrators, and PBMs that
violate the bill’s ownership reporting requirement. Physician group practices with five or fewer physicians
may be assessed a fine of $100 per day. Fines on physician group practices may not exceed $10,000 in a
calendar year. Fines will be deposited into the Payer Affordability Penalty Fund.
Explanation of Local Expenditures: Audits: Any change in total costs to local units offering health
HB 1327 2 insurance coverage will depend on local action, including the number of audits requested and the auditor
selected to conduct the audits.
Ownership Report: The bill requires locally-owned hospitals to 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 Health; Professional Licensing Agency; Department of Insurance; state-owned hospitals.
Local Agencies Affected: Local units offering health insurance coverage; locally-owned hospitals.
Information Sources:
Fiscal Analyst: Jason Barrett, 317-232-9809.
HB 1327 3