LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7577 NOTE PREPARED: Mar 20, 2025
BILL NUMBER: HB 1604 BILL AMENDED: Mar 20, 2025
SUBJECT: Out-of-Pocket Expense Credit.
FIRST AUTHOR: Rep. McGuire BILL STATUS: CR Adopted - 2
nd
House
FIRST SPONSOR: Sen. Carrasco
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: (Amended) Prescription Drugs: This bill requires an insurer, an administrator,
and a pharmacy benefit manager to apply the annual limitation on cost sharing set forth in the federal Patient
Protection and Affordable Care Act under 42 U.S.C. 18022(c)(1) to prescription drugs that:
(1) are covered under a health plan;
(2) are life-saving or intended to manage chronic pain; and
(3) do not have an approved generic version.
This bill provides that an insurer, an administrator, and a pharmacy benefit manager may not directly or
indirectly set, alter, implement, or condition the terms of health insurance coverage based in part or entirely
on information about the availability or amount of financial or product assistance available for a prescription
drug. It also requires, before December 31 of each year, each insurer and administrator to certify to the
Insurance Commissioner that the insurer or administrator has fully and completely complied with the cost
sharing requirements during the previous calendar year.
Expense Credit: This bill requires a health plan to credit toward a covered individual's deductible and annual
maximum out-of-pocket expenses any amount the covered individual pays directly to any health care
provider for a medically necessary covered health care service if a claim for the health care service is not
submitted to the health plan and the amount paid by the covered individual to the health care provider is less
than the average discounted rate for the health care service paid to a health care provider in the health plan's
network. This bill also requires a health plan to:
(1) establish a procedure by which a covered individual may claim a credit;
(2) identify documentation necessary to support a claim for a credit; and
(3) publish average discounted rates that the health plan has negotiated to pay health care providers
for health care services.
Effective Date: (Amended) July 1, 2025; January 1, 2026.
Explanation of State Expenditures: Expense Credit: The bill could increase paid claims by the SEHP, if
members reach their deductible and out-of-pocket expense limits sooner due to the provisions in the bill. The
impact is indeterminate and will depend on the number and types of claims approved for this out-of-pocket-
HB 1604 1 expense credit. The bill could also shift utilization among out of network and lower-cost providers. Any
change or increase in SEHP costs may be mitigated with adjustments to other benefits or to employee
compensation packages.
The State Personnel Department (SPD) is the SEHP plan administrator and could experience increased
workload to establish a procedure for an individual to claim a credit, to publish average discounted rates, and
to display information and required documentation to the plan’s website. It is anticipated this can be
accomplished with existing staffing and resource levels.
The bill will impact workload for the Indiana Department of Insurance (DOI) to adopt rules and to ensure
compliance with the bill's requirements but should be able to be implemented using existing staffing and
resources. [The DOI is funded through a dedicated agency fund.]
(Revised) Prescription Drugs: Any impact on state expenditures for the SEHP and the state Medicaid
program resulting from the bill's prescription drug cost sharing requirement is indeterminate and will depend
on the terms of future PBM contracts entered into by the state. [SPD’s current PBM contract is effective
through 12-31-2026 and the state Medicaid program's PBM contract is effective through 12-31-2025.]
Explanation of State Revenues: Violations: An unfair or deceptive act or practice in the business of
insurance carries a civil penalty between $25,000 and $50,000 for each act or violation, which is deposited
in the state General Fund.
Explanation of Local Expenditures: Expense Credit: Local entities providing health insurance may have
increased claim costs when calculating a covered individual's overall contribution to their deductible or an
out-of-pocket maximum. Additionally, all plans will have administrative costs to establish a procedure for
an individual to claim a credit, to publish average discounted rates, and to display information to the plan’s
website.
(Revised) Prescription Drugs: Any impact on local unit expenditures resulting from the bill's prescription
drug cost sharing requirement is indeterminate and will depend on the terms of future PBM contracts entered
into by the respective local unit.
Explanation of Local Revenues:
State Agencies Affected: All.
Local Agencies Affected: Local entities providing health care insurance.
Information Sources: Indiana Transparency portal, https://www.in.gov/itp/contracts.
Fiscal Analyst: Dhiann Kinsworthy-Blye, 317-234-1360; Allison Leeuw, 317-234-9465.
HB 1604 2