LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6933 NOTE PREPARED: Jan 31, 2025
BILL NUMBER: SB 270 BILL AMENDED: Jan 30, 2025
SUBJECT: Coverage of Orthotic and Prosthetic Devices.
FIRST AUTHOR: Sen. Hunley BILL STATUS: CR Adopted - 1
st
House
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Coverage: This bill sets forth requirements for coverage of orthotic devices and
prosthetic devices by a state employee health plan (SEHP), a policy of accident and sickness insurance, and
a health maintenance organization contract.
Reporting: This bill requires, not later than October 1, 2026, the State Personnel Department (SPD), an
insurer that issues a policy of accident and sickness insurance, and a health maintenance organization to
submit a report to the Insurance Commissioner regarding the total number of claims and the total amount of
claims paid for orthotic devices and prosthetic devices during the preceding plan year. This bill requires the
Insurance Commissioner to: (1) aggregate the data received in the reports regarding coverage of orthotic
devices and prosthetic devices; and (2) report the aggregated data, not later than December 1, 2026, to the
standing committees of the House of Representatives and the Senate that consider insurance matters. This
bill makes corresponding changes.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Coverage: The bill expands insurance coverage for orthotic and
prosthetic devices, which will result in an indeterminate, but likely significant, increase in expenditures for
the SEHP. Any increase in costs will depend on utilization of newly-covered orthotic and prosthetic devices.
Reporting: The bill’s reporting requirements will increase workload for SPD and the Department of
Insurance (DOI) but should be able to be implemented using existing staffing and resources. [The DOI is
funded through a dedicated agency fund.]
Additional Information: The bill requires insurers, including the SEHP, to consider the coverage of orthotic
and prosthetic devices to be essential health benefits as defined under federal law. The bill maintains
utilization review for such devices but with additional requirements, as prescribed in the bill.
Under current law, the orthotic and prosthetic devices are covered under the SEHP when determined to be
medically necessary to restore or maintain the covered individual's ability to perform activities of daily living
SB 270 1 or essential job related activities when the devices are not solely for comfort or convenience. The SEHP
currently excludes coverage for accessories, additions, or components used primarily for leisure or sporting
activities. This bill expands the coverage for such devices when they are deemed to meet the medical needs
of the covered individual regarding: 1) physical activities such as running, biking, swimming, or strength
training, 2) medical needs for the purposes of showering or bathing, 3) all materials and components
necessary to use the devices, 4) instruction on using the devices, and 5) medically necessary repair or
replacement of the devices.
SEHP expenditures for claims in this category totaled approximately $635,000 in FY 2023 (2,710 claimants)
and $491,000 in FY 2024 (2,844 claimants).
Explanation of State Revenues: If insurance premium collections in the state increase as the result of the
bill’s coverage requirements for orthotic and prosthetic devices, revenue to the state General Fund from the
corporate Adjusted Gross Income Tax and the Insurance Premium Tax could increase. The Insurance
Premium Tax is a 1.3% tax on gross premiums received by insurance companies. The Insurance Premium
Tax generated roughly $266.4 M in revenue during FY 2024.
A violation of the bill's requirements may result in a cease and desist order from the DOI. If an entity violates
a cease and desist order, the DOI may impose a civil penalty of up to $10,000 per day, which would be
deposited into the state General Fund, and may suspend or revoke an entity's Certificate of Authority which
would reduce fee revenue deposited in the agency's dedicated fund.
Explanation of Local Expenditures: Local units offering health plans may have increased costs due to the
bill's requirements. Any increase in costs is indeterminable and will depend on utilization of orthotic and/or
prosthetic devices.
Explanation of Local Revenues:
State Agencies Affected: State Personnel Department; Department of Insurance; all state agencies.
Local Agencies Affected: Local units offering health plans.
Information Sources: Susan Barnhart, SPD
Fiscal Analyst: Dhiann Kinsworthy-Blye, 317-234-1360.
SB 270 2