Indiana 2025 Regular Session

Indiana House Bill HB1604 Compare Versions

OldNewDifferences
1+*EH1604.1*
2+March 21, 2025
3+ENGROSSED
4+HOUSE BILL No. 1604
5+_____
6+DIGEST OF HB 1604 (Updated March 19, 2025 12:29 pm - DI 154)
7+Citations Affected: IC 27-1.
8+Synopsis: Out-of-pocket expense credit. Requires an insurer, an
9+administrator, and a pharmacy benefit manager to apply the annual
10+limitation on cost sharing set forth in the federal Patient Protection and
11+Affordable Care Act under 42 U.S.C. 18022(c)(1) to prescription drugs
12+that: (1) are covered under a health plan; (2) are life-saving or intended
13+to manage chronic pain; and (3) do not have an approved generic
14+version. Provides that an insurer, an administrator, and a pharmacy
15+benefit manager may not directly or indirectly set, alter, implement, or
16+condition the terms of health insurance coverage based in part or
17+entirely on information about the availability or amount of financial or
18+product assistance available for a prescription drug. Requires, before
19+December 31 of each year, each insurer and administrator to certify to
20+the insurance commissioner that the insurer or administrator has fully
21+and completely complied with the cost sharing requirements during the
22+(Continued next page)
23+Effective: July 1, 2025; January 1, 2026.
24+McGuire, King, Morris,
25+Shackleford
26+(SENATE SPONSORS — CARRASCO, WALKER K, FREEMAN,
27+RANDOLPH LONNIE M, HUNLEY, FORD J.D., QADDOURA)
28+January 21, 2025, read first time and referred to Committee on Insurance.
29+February 11, 2025, amended, reported — Do Pass.
30+February 13, 2025, read second time, ordered engrossed.
31+February 14, 2025, engrossed.
32+February 17, 2025, read third time, passed. Yeas 95, nays 0.
33+SENATE ACTION
34+March 3, 2025, read first time and referred to Committee on Insurance and Financial
35+Institutions.
36+March 20, 2025, amended, reported favorably — Do Pass.
37+EH 1604—LS 7577/DI 154 Digest Continued
38+previous calendar year. Requires a health plan to credit toward a
39+covered individual's deductible and annual maximum out-of-pocket
40+expenses any amount the covered individual pays directly to any health
41+care provider for a medically necessary covered health care service if
42+a claim for the health care service is not submitted to the health plan
43+and the amount paid by the covered individual to the health care
44+provider is less than the average discounted rate for the health care
45+service paid to a health care provider in the health plan's network.
46+Requires a health plan to: (1) establish a procedure by which a covered
47+individual may claim a credit; (2) identify documentation necessary to
48+support a claim for a credit; and (3) publish average discounted rates
49+that the health plan has negotiated to pay health care providers for
50+health care services.
51+EH 1604—LS 7577/DI 154EH 1604—LS 7577/DI 154 March 21, 2025
152 First Regular Session of the 124th General Assembly (2025)
253 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
354 Constitution) is being amended, the text of the existing provision will appear in this style type,
455 additions will appear in this style type, and deletions will appear in this style type.
556 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
657 provision adopted), the text of the new provision will appear in this style type. Also, the
758 word NEW will appear in that style type in the introductory clause of each SECTION that adds
859 a new provision to the Indiana Code or the Indiana Constitution.
960 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
1061 between statutes enacted by the 2024 Regular Session of the General Assembly.
11-HOUSE ENROLLED ACT No. 1604
12-AN ACT to amend the Indiana Code concerning insurance.
62+ENGROSSED
63+HOUSE BILL No. 1604
64+A BILL FOR AN ACT to amend the Indiana Code concerning
65+insurance.
1366 Be it enacted by the General Assembly of the State of Indiana:
14-SECTION 1. IC 27-1-24.5-0.8 IS ADDED TO THE INDIANA
67+1 SECTION 1. IC 27-1-24.5-0.8 IS ADDED TO THE INDIANA
68+2 CODE AS A NEW SECTION TO READ AS FOLLOWS
69+3 [EFFECTIVE JANUARY 1, 2026]: Sec. 0.8. As used in this chapter,
70+4 "cost sharing" means any copayment, coinsurance, deductible, or
71+5 other similar charge that is:
72+6 (1) required of a covered individual for a health care service
73+7 covered by a health plan, including a prescription drug; and
74+8 (2) paid:
75+9 (A) by; or
76+10 (B) on behalf of;
77+11 the covered individual.
78+12 SECTION 2. IC 27-1-24.5-4.5 IS ADDED TO THE INDIANA
79+13 CODE AS A NEW SECTION TO READ AS FOLLOWS
80+14 [EFFECTIVE JANUARY 1, 2026]: Sec. 4.5. As used in this chapter,
81+15 "health care service" means a service or good furnished for the
82+16 purpose of preventing, alleviating, curing, or healing:
83+17 (1) human illness;
84+EH 1604—LS 7577/DI 154 2
85+1 (2) physical disability; or
86+2 (3) injury.
87+3 SECTION 3. IC 27-1-24.5-5, AS AMENDED BY P.L.207-2021,
88+4 SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
89+5 JANUARY 1, 2026]: Sec. 5. As used in this chapter, "health plan"
90+6 means a plan through which coverage is provided for health care
91+7 services through insurance, prepayment, reimbursement, or
92+8 otherwise. The term includes the following:
93+9 (1) A state employee health plan (as defined in IC 5-10-8-6.7).
94+10 (2) A policy of accident and sickness insurance (as defined in
95+11 IC 27-8-5-1). However, the term does not include the coverages
96+12 described in IC 27-8-5-2.5(a).
97+13 (3) An individual contract (as defined in IC 27-13-1-21) or a
98+14 group contract (as defined in IC 27-13-1-16) that provides
99+15 coverage for basic health care services (as defined in
100+16 IC 27-13-1-4).
101+17 (4) Any other plan or program that provides payment,
102+18 reimbursement, or indemnification to a covered individual for the
103+19 cost of prescription drugs.
104+20 SECTION 4. IC 27-1-24.5-6.5 IS ADDED TO THE INDIANA
105+21 CODE AS A NEW SECTION TO READ AS FOLLOWS
106+22 [EFFECTIVE JANUARY 1, 2026]: Sec. 6.5. As used in this chapter,
107+23 "insurer" means an insurer subject to state law and rules
108+24 regulating insurance or subject to the jurisdiction of the
109+25 department that contracts, or offers to contract, to:
110+26 (1) provide;
111+27 (2) deliver;
112+28 (3) arrange for;
113+29 (4) pay for; or
114+30 (5) reimburse;
115+31 any of the costs of health care services to a covered individual
116+32 under a health plan.
117+33 SECTION 5. IC 27-1-24.5-11.5 IS ADDED TO THE INDIANA
118+34 CODE AS A NEW SECTION TO READ AS FOLLOWS
119+35 [EFFECTIVE JANUARY 1, 2026]: Sec. 11.5. As used in this chapter,
120+36 "pharmacy benefit management services" means:
121+37 (1) negotiating the price of prescription drugs, including
122+38 negotiating and contracting for direct or indirect rebates,
123+39 discounts, or other price concessions;
124+40 (2) managing any aspect of a prescription drug benefit,
125+41 including:
126+42 (A) the processing and payment of claims for prescription
127+EH 1604—LS 7577/DI 154 3
128+1 drugs;
129+2 (B) arranging alternative access to or funding for
130+3 prescription drugs;
131+4 (C) the performance of drug utilization review;
132+5 (D) the processing of drug prior authorization requests;
133+6 (E) the adjudication of appeals or grievances related to the
134+7 prescription drug benefit;
135+8 (F) contracting with network pharmacies;
136+9 (G) controlling the cost of covered prescription drugs;
137+10 (H) managing or providing data relating to the
138+11 prescription drug benefit;
139+12 (I) the provision of services related to the prescription drug
140+13 benefit; or
141+14 (J) creating or updating prescription drug formularies;
142+15 (3) the performance of any administrative, managerial,
143+16 clinical, pricing, financial, reimbursement, data
144+17 administration or reporting, or billing service; and
145+18 (4) any other services specified in a rule adopted by the
146+19 department.
147+20 SECTION 6. IC 27-1-24.5-12, AS AMENDED BY P.L.32-2021,
148+21 SECTION 77, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
149+22 JANUARY 1, 2026]: Sec. 12. (a) As used in this chapter, "pharmacy
150+23 benefit manager" means: an entity that, on behalf of a health plan, state
151+24 agency, insurer, managed care organization, or other third party payor:
152+25 (1) a person who, under a written agreement with an insurer,
153+26 health plan, state agency, managed care organization, or other
154+27 third party payor, directly or indirectly provides one (1) or
155+28 more pharmacy benefit management services on behalf of the
156+29 insurer, health plan, state agency, managed care organization,
157+30 or other third party payor; and
158+31 (2) an agent, a contractor, an intermediary, an affiliate, a
159+32 subsidiary, or a related entity of a person described in
160+33 subdivision (1) who facilitates, provides, directs, or oversees
161+34 the provision of the pharmacy benefit management services.
162+35 (1) contracts directly or indirectly with pharmacies to provide
163+36 prescription drugs to individuals;
164+37 (2) administers a prescription drug benefit;
165+38 (3) processes or pays pharmacy claims;
166+39 (4) creates or updates prescription drug formularies;
167+40 (5) makes or assists in making prior authorization determinations
168+41 on prescription drugs;
169+42 (6) administers rebates on prescription drugs; or
170+EH 1604—LS 7577/DI 154 4
171+1 (7) establishes a pharmacy network.
172+2 (b) The term does not include the following:
173+3 (1) A person licensed under IC 16.
174+4 (2) A health provider who is:
175+5 (A) described in IC 25-0.5-1; and
176+6 (B) licensed or registered under IC 25.
177+7 (3) A consultant who only provides advice concerning the
178+8 selection or performance of a pharmacy benefit manager.
179+9 SECTION 7. IC 27-1-24.5-20, AS AMENDED BY P.L.158-2024,
180+10 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
181+11 JANUARY 1, 2026]: Sec. 20. (a) The commissioner shall do the
182+12 following:
183+13 (1) Prescribe an application for use in applying for a license to
184+14 operate as a pharmacy benefit manager.
185+15 (2) Adopt rules under IC 4-22-2 to establish the following:
186+16 (A) Pharmacy benefit manager licensing requirements.
187+17 (B) Licensing fees.
188+18 (C) A license application.
189+19 (D) Financial standards for pharmacy benefit managers.
190+20 (E) Reporting requirements described in sections 21 and 29 of
191+21 this chapter.
192+22 (F) The time frame for the resolution of an appeal under
193+23 section 22 of this chapter.
194+24 (b) The commissioner may do the following:
195+25 (1) Charge a license application fee and renewal fees established
196+26 under subsection (a)(2) in an amount not to exceed five hundred
197+27 dollars ($500) to be deposited in the department of insurance fund
198+28 established by IC 27-1-3-28.
199+29 (2) Examine or audit the books and records of a pharmacy benefit
200+30 manager one (1) time per year to determine if the pharmacy
201+31 benefit manager is in compliance with this chapter.
202+32 (3) Adopt rules under IC 4-22-2 to:
203+33 (A) implement this chapter; and
204+34 (B) specify requirements for the following:
205+35 (i) Prohibited market conduct practices.
206+36 (ii) Data reporting in connection with violations of state law.
207+37 (iii) Maximum allowable cost list compliance and
208+38 enforcement requirements, including the requirements of
209+39 sections 22 and 23 of this chapter.
210+40 (iv) Prohibitions and limits on pharmacy benefit manager
211+41 practices that require licensure under IC 25-22.5.
212+42 (v) Pharmacy benefit manager affiliate information sharing.
213+EH 1604—LS 7577/DI 154 5
214+1 (vi) Lists of health plans administered by a pharmacy benefit
215+2 manager in Indiana.
216+3 (vii) Pharmacy benefit management services included
217+4 under section 11.5(4) of this chapter.
218+5 (c) Financial information and proprietary information submitted by
219+6 a pharmacy benefit manager to the department is confidential.
220+7 SECTION 8. IC 27-1-24.5-27.7 IS ADDED TO THE INDIANA
221+8 CODE AS A NEW SECTION TO READ AS FOLLOWS
222+9 [EFFECTIVE JANUARY 1, 2026]: Sec. 27.7. (a) This section applies
223+10 to a health plan that is issued, delivered, amended, or renewed
224+11 after December 31, 2025.
225+12 (b) A pharmacy benefit manager shall apply the annual
226+13 limitation on cost sharing set forth in the federal Patient Protection
227+14 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
228+15 prescription drugs that:
229+16 (1) are covered under a health plan administered by the
230+17 pharmacy benefit manager;
231+18 (2) are life-saving or intended to manage chronic pain; and
232+19 (3) do not have an approved generic version.
233+20 (c) Except as provided in subsection (d), when calculating a
234+21 covered individual's contribution to an applicable cost sharing
235+22 requirement, a pharmacy benefit manager must include any cost
236+23 sharing amounts paid:
237+24 (1) by the covered individual; or
238+25 (2) on behalf of the covered individual by another person.
239+26 (d) If application of subsection (c) would result in a covered
240+27 individual becoming ineligible for a health savings account under
241+28 Section 223 of the Internal Revenue Code, the requirement under
242+29 subsection (c) applies with respect to the deductible of a high
243+30 deductible health plan after the covered individual satisfies the
244+31 minimum deductible under Section 223 of the Internal Revenue
245+32 Code. However, subsection (c) applies to items or services that are
246+33 preventative care under Section 223(c)(2)(C) of the Internal
247+34 Revenue Code regardless of whether the minimum deductible
248+35 under Section 223 of the Internal Revenue Code is satisfied.
249+36 (e) A pharmacy benefit manager may not directly or indirectly:
250+37 (1) set;
251+38 (2) alter;
252+39 (3) implement; or
253+40 (4) condition;
254+41 the terms of health plan coverage, including the benefit design,
255+42 based in part or entirely on information about the availability or
256+EH 1604—LS 7577/DI 154 6
257+1 amount of financial or product assistance available for a
258+2 prescription drug.
259+3 SECTION 9. IC 27-1-48.5 IS ADDED TO THE INDIANA CODE
260+4 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
261+5 JULY 1, 2025]:
262+6 Chapter 48.5. Out-of-Pocket Expense Credit
263+7 Sec. 1. This chapter applies to a health plan entered into or
264+8 renewed after June 30, 2025.
265+9 Sec. 2. As used in this chapter, "covered individual" means an
266+10 individual entitled to coverage under a health plan.
267+11 Sec. 3. As used in this chapter, "health care provider" means an
268+12 individual or entity that is licensed, certified, registered, or
269+13 regulated by an entity described in IC 25-0.5-11.
270+14 Sec. 4. As used in this chapter, "health care services" means any
271+15 services or products rendered by a health care provider within the
272+16 scope of the provider's license or legal authorization.
273+17 Sec. 5. (a) As used in this chapter, "health plan" means any of
274+18 the following:
275+19 (1) A self-insurance program established under IC 5-10-8-7(b)
276+20 to provide group coverage.
277+21 (2) A prepaid health care delivery plan through which health
278+22 services are provided under IC 5-10-8-7(c).
279+23 (3) A policy of accident and sickness insurance as defined in
280+24 IC 27-8-5-1, but not including any insurance, plan, or policy
281+25 set forth in IC 27-8-5-2.5(a).
282+26 (4) An individual contract (as defined in IC 27-13-1-21) or a
283+27 group contract (as defined in IC 27-13-1-16) with a health
284+28 maintenance organization that provides coverage for basic
285+29 health care services (as defined in IC 27-13-1-4).
286+30 (b) The term includes a person that administers any of the
287+31 following:
288+32 (1) A self-insurance program established under IC 5-10-8-7(b)
289+33 to provide group coverage.
290+34 (2) A prepaid health care delivery plan through which health
291+35 services are provided under IC 5-10-8-7(c).
292+36 (3) A policy of accident and sickness insurance as defined in
293+37 IC 27-8-5-1, but not including any insurance, plan, or policy
294+38 set forth in IC 27-8-5-2.5(a).
295+39 (4) An individual contract (as defined in IC 27-13-1-21) or a
296+40 group contract (as defined in IC 27-13-1-16) with a health
297+41 maintenance organization that provides coverage for basic
298+42 health care services (as defined in IC 27-13-1-4).
299+EH 1604—LS 7577/DI 154 7
300+1 (c) The term includes hospital, medical, surgical, and
301+2 pharmaceutical services or products.
302+3 Sec. 6. As used in this chapter, "network" means a group of
303+4 health care providers that:
304+5 (1) provide health care services to covered individuals; and
305+6 (2) have agreed to, or are otherwise subject to, maximum
306+7 limits on the prices for the health care services to be provided
307+8 to the covered individuals.
308+9 Sec. 7. A health plan shall credit toward a covered individual's
309+10 deductible and annual maximum out-of-pocket expenses any
310+11 amount the covered individual pays directly to any health care
311+12 provider for a medically necessary covered health care service if a
312+13 claim for the health care service is not submitted to the health plan
313+14 and the amount paid by the covered individual to the health care
314+15 provider is less than the average discounted rate for the health care
315+16 service paid to a health care provider in the health plan's network.
316+17 Sec. 8. A health plan shall:
317+18 (1) establish a procedure by which a covered individual may
318+19 claim a credit under section 7 of this chapter;
319+20 (2) identify documentation necessary to support a claim for a
320+21 credit under section 7 of this chapter; and
321+22 (3) publish average discounted rates that the health plan has
322+23 negotiated to pay health care providers for health care
323+24 services.
324+25 Sec. 9. A health plan shall display information about the
325+26 procedure and documentation described in section 8 of this chapter
326+27 on its website.
327+28 Sec. 10. The department shall adopt rules under IC 4-22-2 to
328+29 effectuate the provisions of this chapter.
329+30 SECTION 10. IC 27-1-51 IS ADDED TO THE INDIANA CODE
330+31 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
331+32 JANUARY 1, 2026]:
332+33 Chapter 51. Cost Sharing for Health Insurance Coverage
333+34 Sec. 1. This chapter applies to a policy of health insurance
334+35 coverage that is issued, delivered, amended, or renewed after
335+36 December 31, 2025.
336+37 Sec. 2. As used in this chapter, "administrator" means a person
337+38 who, directly or indirectly and on behalf of an insurer:
338+39 (1) underwrites; or
339+40 (2) collects charges or premiums from or adjusts or settles
340+41 claims on:
341+42 (A) residents of Indiana; or
342+EH 1604—LS 7577/DI 154 8
343+1 (B) residents of another state from offices in Indiana;
344+2 in connection with health insurance coverage offered or provided
345+3 by an insurer.
346+4 Sec. 3. As used in this chapter, "cost sharing" means any
347+5 copayment, coinsurance, deductible, or other similar charge that
348+6 is:
349+7 (1) required of a covered individual for a health care service
350+8 covered by a policy of health insurance coverage, including a
351+9 prescription drug; and
352+10 (2) paid:
353+11 (A) by; or
354+12 (B) on behalf of;
355+13 the covered individual.
356+14 Sec. 4. As used in this chapter, "covered individual" means an
357+15 individual who is entitled to health insurance coverage.
358+16 Sec. 5. As used in this chapter, "health care service" means a
359+17 service or good furnished for the purpose of preventing,
360+18 alleviating, curing, or healing:
361+19 (1) human illness;
362+20 (2) physical disability; or
363+21 (3) injury.
364+22 Sec. 6. (a) As used in this chapter, "health insurance coverage"
365+23 means:
366+24 (1) an individual or group policy of accident and sickness
367+25 insurance (as defined in IC 27-8-5-1);
368+26 (2) an individual contract (as defined in IC 27-13-1-21) or a
369+27 group contract (as defined in IC 27-13-1-16) that provides
370+28 coverage for basic health care services (as defined in
371+29 IC 27-13-1-4); and
372+30 (3) any other health plan that is issued on an individual or
373+31 group basis;
374+32 that is subject to state law and rules regulating insurance or
375+33 subject to the jurisdiction of the department. The term includes
376+34 coverage of a dependent of the covered individual under a policy
377+35 or contract described in subdivisions (1) through (3).
378+36 (b) The term does not include a self-funded health benefit plan
379+37 that complies with the federal Employee Retirement Income
380+38 Security Act (ERISA) of 1974 (29 U.S.C. 1001 et seq.).
381+39 Sec. 7. As used in this chapter, "insurer" means an insurer that
382+40 provides health insurance coverage to a covered individual.
383+41 Sec. 8. As used in this chapter, "person" means a natural
384+42 person, corporation, mutual company, unincorporated association,
385+EH 1604—LS 7577/DI 154 9
386+1 partnership, joint venture, limited liability company, trust, estate,
387+2 foundation, not-for-profit corporation, unincorporated
388+3 organization, government, or governmental subdivision or agency.
389+4 Sec. 9. An insurer and an administrator shall apply the annual
390+5 limitation on cost sharing set forth in the federal Patient Protection
391+6 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
392+7 prescription drugs that:
393+8 (1) are covered under a policy or contract of health insurance
394+9 coverage offered or issued by the insurer;
395+10 (2) are life-saving or intended to manage chronic pain; and
396+11 (3) do not have an approved generic version.
397+12 Sec. 10. (a) Except as provided in subsection (b), when
398+13 calculating a covered individual's contribution to an applicable
399+14 cost sharing requirement, an insurer and administrator must
400+15 include any cost sharing amounts paid:
401+16 (1) by the covered individual; and
402+17 (2) on behalf of the covered individual by another person.
403+18 (b) If application of subsection (a) would result in a covered
404+19 individual becoming ineligible for a health savings account under
405+20 Section 223 of the Internal Revenue Code, the requirement under
406+21 subsection (a) applies with respect to the deductible of a high
407+22 deductible health plan after the covered individual satisfies the
408+23 minimum deductible under Section 223 of the Internal Revenue
409+24 Code. However, subsection (a) applies to items or services that are
410+25 preventative care under Section 223(c)(2)(C) of the Internal
411+26 Revenue Code regardless of whether the minimum deductible
412+27 under Section 223 of the Internal Revenue Code is satisfied.
413+28 Sec. 11. An insurer and an administrator may not directly or
414+29 indirectly:
415+30 (1) set;
416+31 (2) alter;
417+32 (3) implement; or
418+33 (4) condition;
419+34 the terms of health insurance coverage, including the benefit
420+35 design, based in part or entirely on information about the
421+36 availability or amount of financial or product assistance available
422+37 for a prescription drug.
423+38 Sec. 12. Before December 31 of each year, each insurer and
424+39 administrator shall certify to the commissioner that the insurer or
425+40 administrator has fully and completely complied with the
426+41 requirements of this chapter during the previous calendar year.
427+42 The certification must be signed by the chief executive officer or
428+EH 1604—LS 7577/DI 154 10
429+1 chief financial officer of the insurer or administrator.
430+2 Sec. 13. The commissioner may adopt rules under IC 4-22-2 to
431+3 implement this chapter.
432+EH 1604—LS 7577/DI 154 11
433+COMMITTEE REPORT
434+Mr. Speaker: Your Committee on Insurance, to which was referred
435+House Bill 1604, has had the same under consideration and begs leave
436+to report the same back to the House with the recommendation that said
437+bill be amended as follows:
438+Page 3, line 6, delete "and".
439+Page 3, line 8, delete "chapter." and insert "chapter; and".
440+Page 3, between lines 8 and 9, begin a new line block indented and
441+insert:
442+ "(3) publish average discounted rates that the health plan has
443+negotiated to pay health care providers for health care
444+services.".
445+and when so amended that said bill do pass.
446+(Reference is to HB 1604 as introduced.)
447+CARBAUGH
448+Committee Vote: yeas 11, nays 0.
449+_____
450+COMMITTEE REPORT
451+Mr. President: The Senate Committee on Insurance and Financial
452+Institutions, to which was referred House Bill No. 1604, has had the
453+same under consideration and begs leave to report the same back to the
454+Senate with the recommendation that said bill be AMENDED as
455+follows:
456+Page 1, between the enacting clause and line 1, begin a new
457+paragraph and insert:
458+"SECTION 1. IC 27-1-24.5-0.8 IS ADDED TO THE INDIANA
15459 CODE AS A NEW SECTION TO READ AS FOLLOWS
16460 [EFFECTIVE JANUARY 1, 2026]: Sec. 0.8. As used in this chapter,
17461 "cost sharing" means any copayment, coinsurance, deductible, or
18462 other similar charge that is:
19463 (1) required of a covered individual for a health care service
20464 covered by a health plan, including a prescription drug; and
21465 (2) paid:
22466 (A) by; or
23467 (B) on behalf of;
24468 the covered individual.
469+EH 1604—LS 7577/DI 154 12
25470 SECTION 2. IC 27-1-24.5-4.5 IS ADDED TO THE INDIANA
26471 CODE AS A NEW SECTION TO READ AS FOLLOWS
27472 [EFFECTIVE JANUARY 1, 2026]: Sec. 4.5. As used in this chapter,
28473 "health care service" means a service or good furnished for the
29474 purpose of preventing, alleviating, curing, or healing:
30475 (1) human illness;
31476 (2) physical disability; or
32477 (3) injury.
33478 SECTION 3. IC 27-1-24.5-5, AS AMENDED BY P.L.207-2021,
34479 SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
35480 JANUARY 1, 2026]: Sec. 5. As used in this chapter, "health plan"
36-HEA 1604 — CC 1 2
37481 means a plan through which coverage is provided for health care
38482 services through insurance, prepayment, reimbursement, or
39483 otherwise. The term includes the following:
40484 (1) A state employee health plan (as defined in IC 5-10-8-6.7).
41485 (2) A policy of accident and sickness insurance (as defined in
42486 IC 27-8-5-1). However, the term does not include the coverages
43487 described in IC 27-8-5-2.5(a).
44488 (3) An individual contract (as defined in IC 27-13-1-21) or a
45489 group contract (as defined in IC 27-13-1-16) that provides
46490 coverage for basic health care services (as defined in
47491 IC 27-13-1-4).
48492 (4) Any other plan or program that provides payment,
49493 reimbursement, or indemnification to a covered individual for the
50494 cost of prescription drugs.
51495 SECTION 4. IC 27-1-24.5-6.5 IS ADDED TO THE INDIANA
52496 CODE AS A NEW SECTION TO READ AS FOLLOWS
53497 [EFFECTIVE JANUARY 1, 2026]: Sec. 6.5. As used in this chapter,
54498 "insurer" means an insurer subject to state law and rules
55499 regulating insurance or subject to the jurisdiction of the
56500 department that contracts, or offers to contract, to:
57501 (1) provide;
58502 (2) deliver;
59503 (3) arrange for;
60504 (4) pay for; or
61505 (5) reimburse;
62506 any of the costs of health care services to a covered individual
63507 under a health plan.
64508 SECTION 5. IC 27-1-24.5-11.5 IS ADDED TO THE INDIANA
65509 CODE AS A NEW SECTION TO READ AS FOLLOWS
66510 [EFFECTIVE JANUARY 1, 2026]: Sec. 11.5. As used in this chapter,
67511 "pharmacy benefit management services" means:
512+EH 1604—LS 7577/DI 154 13
68513 (1) negotiating the price of prescription drugs, including
69514 negotiating and contracting for direct or indirect rebates,
70515 discounts, or other price concessions;
71516 (2) managing any aspect of a prescription drug benefit,
72517 including:
73518 (A) the processing and payment of claims for prescription
74519 drugs;
75520 (B) arranging alternative access to or funding for
76521 prescription drugs;
77522 (C) the performance of drug utilization review;
78523 (D) the processing of drug prior authorization requests;
79-HEA 1604 — CC 1 3
80524 (E) the adjudication of appeals or grievances related to the
81525 prescription drug benefit;
82526 (F) contracting with network pharmacies;
83527 (G) controlling the cost of covered prescription drugs;
84528 (H) managing or providing data relating to the
85529 prescription drug benefit;
86530 (I) the provision of services related to the prescription drug
87531 benefit; or
88532 (J) creating or updating prescription drug formularies;
89533 (3) the performance of any administrative, managerial,
90534 clinical, pricing, financial, reimbursement, data
91535 administration or reporting, or billing service; and
92536 (4) any other services specified in a rule adopted by the
93537 department.
94538 SECTION 6. IC 27-1-24.5-12, AS AMENDED BY P.L.32-2021,
95539 SECTION 77, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
96540 JANUARY 1, 2026]: Sec. 12. (a) As used in this chapter, "pharmacy
97541 benefit manager" means: an entity that, on behalf of a health plan, state
98542 agency, insurer, managed care organization, or other third party payor:
99543 (1) a person who, under a written agreement with an insurer,
100544 health plan, state agency, managed care organization, or other
101545 third party payor, directly or indirectly provides one (1) or
102546 more pharmacy benefit management services on behalf of the
103547 insurer, health plan, state agency, managed care organization,
104548 or other third party payor; and
105549 (2) an agent, a contractor, an intermediary, an affiliate, a
106550 subsidiary, or a related entity of a person described in
107551 subdivision (1) who facilitates, provides, directs, or oversees
108552 the provision of the pharmacy benefit management services.
109553 (1) contracts directly or indirectly with pharmacies to provide
110554 prescription drugs to individuals;
555+EH 1604—LS 7577/DI 154 14
111556 (2) administers a prescription drug benefit;
112557 (3) processes or pays pharmacy claims;
113558 (4) creates or updates prescription drug formularies;
114559 (5) makes or assists in making prior authorization determinations
115560 on prescription drugs;
116561 (6) administers rebates on prescription drugs; or
117562 (7) establishes a pharmacy network.
118563 (b) The term does not include the following:
119564 (1) A person licensed under IC 16.
120565 (2) A health provider who is:
121566 (A) described in IC 25-0.5-1; and
122-HEA 1604 — CC 1 4
123567 (B) licensed or registered under IC 25.
124568 (3) A consultant who only provides advice concerning the
125569 selection or performance of a pharmacy benefit manager.
126570 SECTION 7. IC 27-1-24.5-20, AS AMENDED BY P.L.158-2024,
127571 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
128572 JANUARY 1, 2026]: Sec. 20. (a) The commissioner shall do the
129573 following:
130574 (1) Prescribe an application for use in applying for a license to
131575 operate as a pharmacy benefit manager.
132576 (2) Adopt rules under IC 4-22-2 to establish the following:
133577 (A) Pharmacy benefit manager licensing requirements.
134578 (B) Licensing fees.
135579 (C) A license application.
136580 (D) Financial standards for pharmacy benefit managers.
137581 (E) Reporting requirements described in sections 21 and 29 of
138582 this chapter.
139583 (F) The time frame for the resolution of an appeal under
140584 section 22 of this chapter.
141585 (b) The commissioner may do the following:
142586 (1) Charge a license application fee and renewal fees established
143587 under subsection (a)(2) in an amount not to exceed five hundred
144588 dollars ($500) to be deposited in the department of insurance fund
145589 established by IC 27-1-3-28.
146590 (2) Examine or audit the books and records of a pharmacy benefit
147591 manager one (1) time per year to determine if the pharmacy
148592 benefit manager is in compliance with this chapter.
149593 (3) Adopt rules under IC 4-22-2 to:
150594 (A) implement this chapter; and
151595 (B) specify requirements for the following:
152596 (i) Prohibited market conduct practices.
153597 (ii) Data reporting in connection with violations of state law.
598+EH 1604—LS 7577/DI 154 15
154599 (iii) Maximum allowable cost list compliance and
155600 enforcement requirements, including the requirements of
156601 sections 22 and 23 of this chapter.
157602 (iv) Prohibitions and limits on pharmacy benefit manager
158603 practices that require licensure under IC 25-22.5.
159604 (v) Pharmacy benefit manager affiliate information sharing.
160605 (vi) Lists of health plans administered by a pharmacy benefit
161606 manager in Indiana.
162607 (vii) Pharmacy benefit management services included
163608 under section 11.5(4) of this chapter.
164609 (c) Financial information and proprietary information submitted by
165-HEA 1604 — CC 1 5
166610 a pharmacy benefit manager to the department is confidential.
167611 SECTION 8. IC 27-1-24.5-27.7 IS ADDED TO THE INDIANA
168612 CODE AS A NEW SECTION TO READ AS FOLLOWS
169613 [EFFECTIVE JANUARY 1, 2026]: Sec. 27.7. (a) This section applies
170614 to a health plan that is issued, delivered, amended, or renewed
171615 after December 31, 2025.
172616 (b) A pharmacy benefit manager shall apply the annual
173617 limitation on cost sharing set forth in the federal Patient Protection
174618 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
175619 prescription drugs that:
176620 (1) are covered under a health plan administered by the
177621 pharmacy benefit manager;
178622 (2) are life-saving or intended to manage chronic pain; and
179623 (3) do not have an approved generic version.
180624 (c) Except as provided in subsection (d), when calculating a
181625 covered individual's contribution to an applicable cost sharing
182626 requirement, a pharmacy benefit manager must include any cost
183627 sharing amounts paid:
184628 (1) by the covered individual; or
185629 (2) on behalf of the covered individual by another person.
186630 (d) If application of subsection (c) would result in a covered
187631 individual becoming ineligible for a health savings account under
188632 Section 223 of the Internal Revenue Code, the requirement under
189633 subsection (c) applies with respect to the deductible of a high
190634 deductible health plan after the covered individual satisfies the
191635 minimum deductible under Section 223 of the Internal Revenue
192636 Code. However, subsection (c) applies to items or services that are
193637 preventative care under Section 223(c)(2)(C) of the Internal
194638 Revenue Code regardless of whether the minimum deductible
195639 under Section 223 of the Internal Revenue Code is satisfied.
196640 (e) A pharmacy benefit manager may not directly or indirectly:
641+EH 1604—LS 7577/DI 154 16
197642 (1) set;
198643 (2) alter;
199644 (3) implement; or
200645 (4) condition;
201646 the terms of health plan coverage, including the benefit design,
202647 based in part or entirely on information about the availability or
203648 amount of financial or product assistance available for a
204-prescription drug.
205-SECTION 9. IC 27-1-48.5 IS ADDED TO THE INDIANA CODE
206-AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
207-JULY 1, 2025]:
208-HEA 1604 — CC 1 6
209-Chapter 48.5. Out-of-Pocket Expense Credit
210-Sec. 1. This chapter applies to a health plan entered into or
211-renewed after June 30, 2025.
212-Sec. 2. As used in this chapter, "covered individual" means an
213-individual entitled to coverage under a health plan.
214-Sec. 3. As used in this chapter, "health care provider" means an
215-individual or entity that is licensed, certified, registered, or
216-regulated by an entity described in IC 25-0.5-11.
217-Sec. 4. As used in this chapter, "health care services" means any
218-services or products rendered by a health care provider within the
219-scope of the provider's license or legal authorization.
220-Sec. 5. (a) As used in this chapter, "health plan" means any of
221-the following:
222-(1) A self-insurance program established under IC 5-10-8-7(b)
223-to provide group coverage.
224-(2) A prepaid health care delivery plan through which health
225-services are provided under IC 5-10-8-7(c).
226-(3) A policy of accident and sickness insurance as defined in
227-IC 27-8-5-1, but not including any insurance, plan, or policy
228-set forth in IC 27-8-5-2.5(a).
229-(4) An individual contract (as defined in IC 27-13-1-21) or a
230-group contract (as defined in IC 27-13-1-16) with a health
231-maintenance organization that provides coverage for basic
232-health care services (as defined in IC 27-13-1-4).
233-(b) The term includes a person that administers any of the
234-following:
235-(1) A self-insurance program established under IC 5-10-8-7(b)
236-to provide group coverage.
237-(2) A prepaid health care delivery plan through which health
238-services are provided under IC 5-10-8-7(c).
239-(3) A policy of accident and sickness insurance as defined in
240-IC 27-8-5-1, but not including any insurance, plan, or policy
241-set forth in IC 27-8-5-2.5(a).
242-(4) An individual contract (as defined in IC 27-13-1-21) or a
243-group contract (as defined in IC 27-13-1-16) with a health
244-maintenance organization that provides coverage for basic
245-health care services (as defined in IC 27-13-1-4).
246-(c) The term includes hospital, medical, surgical, and
247-pharmaceutical services or products.
248-Sec. 6. As used in this chapter, "network" means a group of
249-health care providers that:
250-(1) provide health care services to covered individuals; and
251-HEA 1604 — CC 1 7
252-(2) have agreed to, or are otherwise subject to, maximum
253-limits on the prices for the health care services to be provided
254-to the covered individuals.
255-Sec. 7. A health plan shall credit toward a covered individual's
256-deductible and annual maximum out-of-pocket expenses any
257-amount the covered individual pays directly to any health care
258-provider for a medically necessary covered health care service if a
259-claim for the health care service is not submitted to the health plan
260-and the amount paid by the covered individual to the health care
261-provider is less than the average discounted rate for the health care
262-service paid to a health care provider in the health plan's network.
263-Sec. 8. (a) A health plan shall:
264-(1) establish a procedure by which a covered individual may
265-claim a credit under section 7 of this chapter; and
266-(2) identify documentation necessary to support a claim for a
267-credit under section 7 of this chapter.
268-(b) A health plan may either:
269-(1) publish average discounted rates that the health plan has
270-negotiated to pay health care providers for health care
271-services; or
272-(2) refer to average or typical rates on the all payer claims
273-data base established under IC 27-1-44.5;
274-for purposes of a covered individual claiming a credit under
275-section 7 of this chapter.
276-(c) A covered individual may use the data on average or typical
277-rates reported on the all payer claims data base established under
278-IC 27-1-44.5 to determine the average discounted rate for a health
279-care service under section 7 of this chapter.
280-Sec. 9. A health plan shall display information about the
281-procedure and documentation described in section 8 of this chapter
282-on the health plan's website, including a link to the website for the
283-all payer claims data base established under IC 27-1-44.5.
284-Sec. 10. The department shall adopt rules under IC 4-22-2 to
285-effectuate the provisions of this chapter.
286-SECTION 10. IC 27-1-51 IS ADDED TO THE INDIANA CODE
649+prescription drug.".
650+Page 1, line 12, delete "(a)".
651+Page 2, delete lines 11 through 13.
652+Page 2, delete lines 27 through 29.
653+Page 2, line 30, delete "(b)" and insert "(c)".
654+Page 3, after line 16, begin a new paragraph and insert:
655+"SECTION 10. IC 27-1-51 IS ADDED TO THE INDIANA CODE
287656 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
288657 JANUARY 1, 2026]:
289658 Chapter 51. Cost Sharing for Health Insurance Coverage
290659 Sec. 1. This chapter applies to a policy of health insurance
291660 coverage that is issued, delivered, amended, or renewed after
292661 December 31, 2025.
293662 Sec. 2. As used in this chapter, "administrator" means a person
294-HEA 1604 — CC 1 8
295663 who, directly or indirectly and on behalf of an insurer:
296664 (1) underwrites; or
297665 (2) collects charges or premiums from or adjusts or settles
298666 claims on:
299667 (A) residents of Indiana; or
300668 (B) residents of another state from offices in Indiana;
301669 in connection with health insurance coverage offered or provided
302670 by an insurer.
303671 Sec. 3. As used in this chapter, "cost sharing" means any
304672 copayment, coinsurance, deductible, or other similar charge that
305673 is:
306674 (1) required of a covered individual for a health care service
307675 covered by a policy of health insurance coverage, including a
308676 prescription drug; and
309677 (2) paid:
310678 (A) by; or
311679 (B) on behalf of;
312680 the covered individual.
313681 Sec. 4. As used in this chapter, "covered individual" means an
314682 individual who is entitled to health insurance coverage.
315683 Sec. 5. As used in this chapter, "health care service" means a
684+EH 1604—LS 7577/DI 154 17
316685 service or good furnished for the purpose of preventing,
317686 alleviating, curing, or healing:
318687 (1) human illness;
319688 (2) physical disability; or
320689 (3) injury.
321690 Sec. 6. (a) As used in this chapter, "health insurance coverage"
322691 means:
323692 (1) an individual or group policy of accident and sickness
324693 insurance (as defined in IC 27-8-5-1);
325694 (2) an individual contract (as defined in IC 27-13-1-21) or a
326695 group contract (as defined in IC 27-13-1-16) that provides
327696 coverage for basic health care services (as defined in
328697 IC 27-13-1-4); and
329698 (3) any other health plan that is issued on an individual or
330699 group basis;
331700 that is subject to state law and rules regulating insurance or
332701 subject to the jurisdiction of the department. The term includes
333702 coverage of a dependent of the covered individual under a policy
334703 or contract described in subdivisions (1) through (3).
335704 (b) The term does not include a self-funded health benefit plan
336705 that complies with the federal Employee Retirement Income
337-HEA 1604 — CC 1 9
338706 Security Act (ERISA) of 1974 (29 U.S.C. 1001 et seq.).
339707 Sec. 7. As used in this chapter, "insurer" means an insurer that
340708 provides health insurance coverage to a covered individual.
341709 Sec. 8. As used in this chapter, "person" means a natural
342710 person, corporation, mutual company, unincorporated association,
343711 partnership, joint venture, limited liability company, trust, estate,
344712 foundation, not-for-profit corporation, unincorporated
345713 organization, government, or governmental subdivision or agency.
346714 Sec. 9. An insurer and an administrator shall apply the annual
347715 limitation on cost sharing set forth in the federal Patient Protection
348716 and Affordable Care Act under 42 U.S.C. 18022(c)(1) to
349717 prescription drugs that:
350718 (1) are covered under a policy or contract of health insurance
351719 coverage offered or issued by the insurer;
352720 (2) are life-saving or intended to manage chronic pain; and
353721 (3) do not have an approved generic version.
354722 Sec. 10. (a) Except as provided in subsection (b), when
355723 calculating a covered individual's contribution to an applicable
356724 cost sharing requirement, an insurer and administrator must
357725 include any cost sharing amounts paid:
358726 (1) by the covered individual; and
727+EH 1604—LS 7577/DI 154 18
359728 (2) on behalf of the covered individual by another person.
360729 (b) If application of subsection (a) would result in a covered
361730 individual becoming ineligible for a health savings account under
362731 Section 223 of the Internal Revenue Code, the requirement under
363732 subsection (a) applies with respect to the deductible of a high
364733 deductible health plan after the covered individual satisfies the
365734 minimum deductible under Section 223 of the Internal Revenue
366735 Code. However, subsection (a) applies to items or services that are
367736 preventative care under Section 223(c)(2)(C) of the Internal
368737 Revenue Code regardless of whether the minimum deductible
369738 under Section 223 of the Internal Revenue Code is satisfied.
370739 Sec. 11. An insurer and an administrator may not directly or
371740 indirectly:
372741 (1) set;
373742 (2) alter;
374743 (3) implement; or
375744 (4) condition;
376745 the terms of health insurance coverage, including the benefit
377746 design, based in part or entirely on information about the
378747 availability or amount of financial or product assistance available
379748 for a prescription drug.
380-HEA 1604 — CC 1 10
381749 Sec. 12. Before December 31 of each year, each insurer and
382750 administrator shall certify to the commissioner that the insurer or
383751 administrator has fully and completely complied with the
384752 requirements of this chapter during the previous calendar year.
385753 The certification must be signed by the chief executive officer or
386754 chief financial officer of the insurer or administrator.
387755 Sec. 13. The commissioner may adopt rules under IC 4-22-2 to
388-implement this chapter.
389-HEA 1604 — CC 1 Speaker of the House of Representatives
390-President of the Senate
391-President Pro Tempore
392-Governor of the State of Indiana
393-Date: Time:
394-HEA 1604 — CC 1
756+implement this chapter.".
757+Renumber all SECTIONS consecutively.
758+and when so amended that said bill do pass.
759+(Reference is to HB 1604 as printed February 11, 2025.)
760+BALDWIN, Chairperson
761+Committee Vote: Yeas 6, Nays 1.
762+EH 1604—LS 7577/DI 154