SESSION OF 2024
CONFERENCE COMMITTEE REPORT BRIEF
SENATE BILL NO. 356
As Agreed to April 2, 2024
Brief*
SB 356 would amend the Utilization Review Organization Act and the Electronic Notice
and Document Act. The bill would amend provisions pertaining to certain financial reporting
requirements on group-funded liability and group-funded workers compensation pools, and
would also remove certain notification requirements. The bill would also amend existing law to
establish a tiered-fee structure for financial examinations of insurance companies and societies
based on the gross premiums received by such entities.
The bill would also amend the effective date specified in the Insurance Code for the risk-
based capital (RBC) instructions. Further, the bill would permit title insurance agents to deposit
escrow, settlement, and closing funds for real estate closings, including closings involving
refinances of existing mortgage loans, that exceed $2,500 to be in the form of a real-time or
instant payment.
The bill would also make technical amendments.
Utilization Review Organization Act (New Sections 1–2)
The bill would amend the Utilization Review Organization Act to require utilization review
entities to implement and maintain a prior authorization application programming interface (API),
pursuant to federal law in effect on January 1, 2028, to streamline the electronic prior
authorization process. This provision would be effective on January 1, 2028.
The bill would require each utilization review entity certified under the Utilization Review
Organization Act to implement and maintain a prior authorization API in accordance with 45
CFR § 156.223(b), as in effect on January 1, 2028. This section would not apply to a prior
authorization request for the coverage of drugs as defined in federal law.
This section would be part of and supplemental to the Utilization Review Organization Act
and would become effective on January 1, 2028.
[Note: The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule with
a January 1, 2026, implementation date for API enhancement or development. CMS considered
____________________
*Conference committee report briefs are prepared by the Legislative Research Department and do not express
legislative intent. No summary is prepared when the report is an agreement to disagree. Conference committee
report briefs may be accessed on the Internet at http://www.kslegislature.org/klrd
1 - 356 public comments on the proposed rule regarding the need for additional time for implementation
and changed the compliance date in its final rule to January 1, 2027. The compliance date for
the final rule applies to Medicare Advantage organizations and state Medicaid and Children’s
Health Insurance Program (CHIP) Fee for Service programs (by January 1, 2027), Medicaid
managed care plans and CHIP managed care entities (beginning with the first rating period that
begins on or after January 1, 2027), and qualified health plans in the federally facilitated
exchanges (by the first plan year beginning on or after January 1, 2017).]
Group-funded Liability Pools; Submission of Financial Statement (Section 3)
The bill would amend provisions pertaining to certain financial reporting requirements on
group-funded liability pools.
Under current law, group-funded liability pools must submit a certified, independent
financial statement within 150 days after the end of the fiscal year whenever the Commissioner
of Insurance (Commissioner) deems it necessary to examine the affairs and financial condition
of any pool. The bill would increase the time limit specified to 180 days.
Tiered-fee Structure for Financial Examinations of Insurance Companies and Societies
(Section 4)
The bill would amend existing law to establish a tiered-fee structure for financial
examinations of insurance companies and societies based on the gross premiums received by
such entities. The bill would also establish that certain examination costs be “average and
reasonable.”
“Average and Reasonable” Fees
●The bill would require the following examination costs be “average and reasonable”:
●Full compensation for examiners’ services, on a per diem basis;
●Outside consulting and data processing fees necessary to perform any examination;
and
●Purchase, maintenance, and enhancement of examination equipment and computer
software.
The bill would specify expenses for traveling and subsistence incurred by examiners in the
performance of their services be “reasonably” necessary.
The bill would require the amount paid to perform any market regulation examination,
including examination of a company or society’s subsidiaries, and the pro rata amount to fund
the purchase of examination equipment and computer software be “reasonable” and not exceed
the existing statutory collective total cap of $25,000.
2 - 356 “Average and reasonable” would mean the amount or fees that are in line with fees
assessed by other people in the area where the examination occurred who have rendered
similar services.
Tiered-fee Structure
The bill would amend the amounts paid for examination costs to create a tiered-fee
structure. The examination costs would include:
●Compensation, expenses, and the employer’s share of the Federal Insurance
Contributions Act taxes;
●The employer’s contribution to the Kansas Public Employees Retirement System;
●The self-insurance assessment for the Workers Compensation Act;
●The employer’s cost of the state health care benefits program;
●A pro rata amount determined by the Commissioner to provide vacation and sick
leave for the examiner;
●All average and reasonable outside consulting and data processing fees necessary to
perform any examination; and
●An average and reasonable pro rata amount determined by the Commissioner to fund
the purchase, maintenance, and enhancement of examination equipment and
computer software.
The bill would specify the amount paid for the above costs; outside consulting and data
processing fees necessary to perform any financial examination at any one company or society,
including examination of the company’s or society’s subsidiaries, or any combination; and the
pro rata amount to fund the purchase of examination equipment and computer software could
not collectively total more than the following amounts:
●$50,000 for any insurance company or society that has less than $5.0 million in gross
premiums, both direct and assumed, in the preceding calendar year;
●$75,000 for any insurance company or society that has at least $5.0 million but less
than $25.0 million in gross premiums, both direct and assumed, in the preceding
calendar year;
●$100,000 for any insurance company or society that has at least $25.0 million but
less than $50.0 million in gross premiums, both direct and assumed, in the preceding
calendar year;
●$125,000 for any insurance company or society that has at least $50.0 million but
less than $100.0 million in gross premiums, both direct and assumed, in the
preceding calendar year;
3 - 356 ●$175,000 for any insurance company or society that has at least $100.0 million but
less than $250.0 million in gross premiums, both direct and assumed, in the
preceding calendar year;
●$250,000 for any insurance company or society that has at least $250.0 million but
less than $500.0 million in gross premiums, both direct and assumed, in the
preceding calendar year; or
●The actual total costs paid in connection with the examination for any insurance
company or society that has at least $500.0 million in gross premiums, both direct
and assumed, in the preceding calendar year.
[Note: Current law provides the amount paid may not collectively total more than $50,000
for any insurance company or society that has less than $200.0 million or more in gross
premiums, both direct and assumed, in the preceding calendar year or not more than $500,000
for any insurance company or society that has $200.0 million or more in gross premiums, both
direct and assumed, in the previous calendar year.]
Risk-based Capital Instructions; Effective Date Change (Section 5)
The bill would amend the effective date specified in the Insurance Code for the RBC
instructions promulgated by the National Association of Insurance Commissioners for property
and casualty companies and for life insurance companies. The instructions currently specified
became effective on December 31, 2022. The bill would update the effective date of the RBC
instructions to December 31, 2023.
Real-time or Instant Payment Deposit of Real Estate Closing Funds (Section 6)
The bill would permit title insurance agents to deposit escrow, settlement, and closing
funds for real estate closings, including closings involving refinances of existing mortgage loans,
that exceed $2,500 to be in the form of a real-time or instant payment through the FedNow
service operated by the federal reserve banks or The Clearing House payment company’s Real-
Time Payments (RTP) system.
Electronic Notice and Document Act (Sections 7–9)
The bill would amend the Electronic Notice and Document Act to allow a plan sponsor of a
health benefit plan (HBP) to authorize electronic delivery of plan documents and identification
cards for insured individuals covered by an HBP. The bill would add and clarify definitions in the
Electronic Notice and Document Act. The bill would also repeal a current statute pertaining to
the consent required to send electronic notices and documents and the exceptions to such
requirements.
Definitions (Section 8)
The bill would define the following:
4 - 356 ●“Health benefit plan covered person” (HBPCP) would mean a policyholder,
subscriber, enrollee, or other individual participating in an HBP;
●“Insured” would mean an individual who is covered by an insurance policy, including
an HBP;
●“Plan sponsor” would mean the:
○Employer in the case of an employee benefit plan established or maintained by
a single employer;
○Employee organization in the case of a plan established or maintained by an
employee organization; or
○Association, committee, joint board of trustees, or similar group of
representatives of the parties who establish or maintain the plan in the case of a
plan established or maintained by two or more employers or jointly by one or
more employers and one or more employee organizations.
The bill would clarify that the term “party” does not include an HBPCP.
[Note: Current law defines “party” as any recipient of a notice or document required as part
of an insurance transaction, including, but not limited to, an applicant, an insured, a policyholder,
or an annuity contract holder.]
Consent to Electronic Delivery of Health Benefit Plan Communications (Section 9)
The bill would allow the HBP sponsor, on behalf of HBPCPs, to provide consent to the
electronic delivery of all communications related to the plan that are required by the Electronic
Notice and Document Act and any health insurance identification cards. Before providing
consent on behalf of an HBPCP, the bill would require a plan sponsor to confirm that the HBPCP
routinely (at least once every 24 hours during the work week) uses electronic communications
during the normal course of such covered person’s employment.
Before the electronic delivery of any plan communications or health insurance identification
cards, the HBP would be required to:
●Provide the HBPCP with an opportunity to opt out of electronic delivery and to select
U.S. mail as the preferred method of delivery; and
●Document satisfaction of all applicable statutory requirements regarding electronic
delivery, consent, withdrawal of consent, and accessibility.
Provisions Included in Electronic Notice and Document Act (Section 9)
The bill would make the provisions in New Section 2 of SB 553, as passed by the Senate,
part of the Electronic Notice and Document Act.
5 - 356 Requirements for Electronic Delivery, Consent, and Withdrawal of Consent and Accessibility
(Section 9)
The bill would amend law regarding the requirements for authorized electronic delivery,
storage, and presentation of notices or other required documents in an insurance transaction or
that serve as evidence of insurance coverage to a party. The bill would extend certain provisions
to apply the following conditions for electronic delivery to both a party and an HBPCP:
●If provisions in the Electronic Notice and Document Act or applicable law expressly
require verification or acknowledgment of receipt of a notice or document be provided
to a party or an HBPCP, electronic delivery could be used only if the delivery method
used provides verification or acknowledgment of receipt;
●The legal effectiveness, validity, or enforceability of any contract or policy of insurance
executed by a party or an HBPCP could not be denied solely because of the failure to
obtain electronic consent or confirmation of consent as required under New Section 1
of SB 553, as passed by the Senate;
●A withdrawal of consent by a party or HBPCP would not affect the legal effectiveness,
validity, or enforceability of a notice or document delivered by electronic means to the
party or HBPCP before the withdrawal of consent is effective. A withdrawal of consent
by a party or HBPCP would be effective within a reasonable period of time after
receipt of the withdrawal by the insurer; and
●If after consent to electronic delivery is given by the party, a change in the hardware
or software requirements needed to access or retain a notice or document delivered
electronically creates a material risk that the party would be unable to access or
retain a subsequent notice or document to which the consent applies, the party or
HBPCP could elect to treat an insurer’s failure to provide the following statements as
a withdrawal of consent:
○The revised hardware or software requirements for access to and retention of a
notice or document delivered electronically; and
○The right of the party to withdraw consent without the imposition of any
undisclosed fee, condition, or consequence.
This section of the bill would not apply to a notice or document delivered electronically by
an insurer before the effective date of the Electronic Notice and Document Act to a party or
HBPCP who, before that date, had consented to receive a notice or document in an electronic
form otherwise allowed by law.
Group-funded Workers Compensation Pools (Sections 10–11)
Submission of Financial Statement (10)
The bill would amend provisions pertaining to certain financial reporting requirements on
group-funded workers compensation pools and would also remove a notification requirement
relating to termination or cancellation of a member in a group-funded workers compensation
pool.
6 - 356 Under current law, group-funded workers compensation pools must submit a certified,
independent financial statement within 150 days after the end of the fiscal year whenever the
Commissioner deems it necessary to examine the affairs and financial condition of any pool.
The bill would increase the time limit specified to 180 days.
Changes in Notice of Cancellation or Termination (Section 11)
The bill would also remove a requirement on group-funded workers compensation pools to
provide notice to the Commissioner of a cancellation or termination of an individual member.
Pool members would be required to maintain coverage for 30 days or until the canceled or
terminating member has procured workers compensation and employer’s liability coverage.
Repealed Statutes (Section 12)
In addition to the statutes amended, the bill would repeal KSA 40-5802, which contains the
consent requirements for electronic delivery of notices and documents and the exceptions to
such requirements.
Conference Committee Action
The Conference Committee agreed to the House amendments to SB 356 (further modified
by the Conference Committee to restore the effective date to upon publication in the statute
book) and agreed to add the following provisions:
●HB 2663, as passed by the Senate, regarding the deposit of real estate closing funds
through real-time or instant payment;
●SB 338, as passed by the Senate, regarding the submission of certified audited
financial statements by group-funded liability and group-funded workers
compensation pools;
●SB 339, as passed by the Senate, amending the effective date for risk-based capital
(RBC) instructions; and
●SB 553, as passed by the Senate, regarding amendments to the Utilization Review
Organization Act and the Electronic Notice Document Act.
The Conference Committee further agreed to restore the effective date of all bills to be
upon publication in the statute book.
Background
The Conference Committee report contains provisions of SB 356, HB 2663, SB 338, SB
339, SB 356, and SB 553. The background information on these bills follows.
7 - 356 SB 356 (Tiered-fee Structure for Financial Examinations of Insurance Companies and
Societies)
The bill was introduced in the Senate Committee on Financial Institutions and Insurance at
the request of a representative of the Kansas Insurance Department (Department).
[Note: A companion bill, HB 2533, was introduced in the House. On February 23, 2024, the
bill was stricken from the calendar pursuant to House Rule 1507.]
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, proponent testimony was provided by representatives
of the Department and the Kansas Association of Property and Casualty Insurance Companies
(KAPCIC). The Department representative stated the new, seven-tiered financial examination
fee schedule correlates with an insurer’s annual gross premium written. The fee schedule was
developed in collaboration with the industry to provide regulatory certainty to insurers by
creating an overall cap for both Department expenses and contractual services. The actual
internal costs incurred by the Department in conducting the required financial examinations are
invoiced to the insurers, but the amount paid by insurers related to the use of a contracted
examiner cannot exceed the current statutory cap, leaving any contractual services that exceed
the statutory cap to be paid by the Department. It was also noted Kansas is the only state with a
cap on financial examination fees.
The KAPCIC representative stated the current cap only applies to work outsourced by the
Department, but there is no cap on Department-incurred charges or on the combined
Department and outsourced charges. The single cap on charges, regardless of the entity that
does the work, would provide Kansas domiciled companies with the ability to budget for the
costs of the financial examinations. The representative stated support for the multiple cap levels
in the bill, noting that although the caps are increased, they are more reflective of total exam
costs.
No other testimony was provided.
House Committee on Insurance
In the House Committee hearing, proponent testimony was provided by representatives of
the Department and KAPCIC, who stated the bill would create more consistent expectations for
the cost of financial examinations.
No other testimony was provided.
The House Committee amended the bill to define the term “average and reasonable” and
to add “average and” before “reasonable” regarding per diem compensation for examiner
services; outside consulting and processing fees; and the purchase, maintenance, and
enhancement of examination equipment and computer software. [Note: The Conference
Committee retained these amendments.] The House Committee also amended the bill to
change its effective date to be upon publication in the Kansas Register. [Note: The Conference
Committee did not retain this amendment.]
8 - 356 HB 2663 (Real-time or Instant Payment Deposit of Real Estate Closing Funds)
The bill was introduced by the House Committee on Insurance at the request of a
representative of the Kansas Land Title Association.
House Committee on Insurance
In the House Committee hearing, proponent testimony was provided by a representative
of the Kansas Land Title Association. The proponent indicated the bill would modify Kansas law
by adding two safe, secure, and fast real-time payment options for individuals attempting to
execute real estate transactions. The proponent further explained these payment options would
guarantee funds received for closing or escrow are “good funds,” or those that would be
irrevocable and available in the closing account.
Written-only proponent testimony was provided by representatives of the Kansas Bar
Association and Kansas Association of Realtors.
No other testimony was provided.
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, proponent testimony was provided by a representative
of Kansas Land Title Association, who stated that the bill would provide for real-time payment on
real estate closings, which can sometimes be delayed by the timing of wire transfers. The
conferee stated the bill would not alter access to any currently available payment methods but
would simply add another payment option.
Written-only proponent testimony was provided by representatives of Kansas Association
of Realtors and the Kansas Bar Association.
No other testimony was provided.
The Senate Committee amended the bill to change the effective date to be upon
publication in the Kansas Register. [Note: The Conference Committee did not retain this
amendment.]
SB 338 (Group-funded Liability and Group-funded Workers Compensation Pools;
Submission of Financial Statements)
The bill was introduced by the Senate Committee on Financial Institutions and Insurance at
the request of the Department.
[Note: A companion bill, HB 2532, was introduced in the House.]
9 - 356 Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, a representative of the Department provided proponent
testimony, stating the Department submitted the bill after discussion with the pools regarding the
difficulty in finding an auditor to complete the audit with the time frame specified in current law.
The representative noted the notification requirement placed on group-funded workers
compensation pools is no longer necessary.
No other testimony was provided.
House Committee on Insurance
In the House Committee hearing, a representative of the Department provided proponent
testimony, stating the bill would help ensure the pools can remain in statutory compliance with
reporting requirements.
No other testimony was provided.
The House Committee amended the bill’s effective date to be upon publication in the
Kansas Register. [Note: The Conference Committee did not retain this amendment.]
SB 339 (Risk-based Capital Instructions; Effective Date Change)
The bill was introduced by the Senate Committee on Financial Institutions and Insurance at
the request of the Department.
[Note: A companion bill, HB 2531, was introduced in the House.]
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, a representative of the Department provided proponent
testimony, stating the goal of the RBC law is to ensure each Kansas domestic insurance
company has the required amount of capital needed to support its overall business operations in
consideration of its size and risk profile. The representative also noted amendments to the
effective date have been made each year since 2009.
[Note: In 2009, a legislative oversight process for updating the annual RBC instructions
was established. This process allows the Department to update the requirements by rules and
regulations unless one of the two statutory triggers has been met.]
No other testimony was provided.
House Committee on Insurance
In the House Committee hearing, proponent testimony was provided by a representative
of the Department, who stated the bill updates the version of the RBC instructions that
companies are required to utilize as they calculate and report RBC.
10 - 356 The House Committee amended the bill to change enactment of the bill to be upon
publication in the Kansas Register. [Note: The Conference Committee did not retain this
amendment.]
SB 553 (Utilization Review Organization Act; Electronic Notice and Document Act)
The bill was introduced by the Senate Committee on Federal and State Affairs at the
request of Senator Longbine.
Senate Committee on Financial Institutions and Insurance
In the Senate Committee hearing, proponent testimony was provided by a representative
of Kansas Employers for Affordable Healthcare, who stated the bill could benefit employers who
take advantage of the electronic communication option and has the potential to lower
administrative overhead, streamline communications, and allow insured members to use a
format with which they are comfortable.
Written-only proponent testimony was provided by representatives of Blue Cross Blue
Shield of Kansas, Inc., and the Kansas Chamber.
Neutral testimony was provided by a representative of the Kansas Hospital Association,
who proposed two amendments that would allow for the acceptance and response to prior
authorization requests through a secure electronic transmission.
No other testimony was provided.
The Senate Committee amended the bill to add provisions to the Utilization Review
Organization Act requiring utilization review entities to implement and maintain a prior
authorization API by January 1, 2028. [Note: The Conference Committee retained this
amendment.]
Fiscal Information
Fiscal information for provisions of the bill, as amended by Conference Committee action,
appears below.
SB 356 (Tiered-fee Structure for Financial Examinations of Insurance Companies and
Societies)
According to the fiscal note prepared by the Division of the Budget on SB 356, as
introduced, the Department indicates the bill would increase its expenditures by a total of
$305,000 from its Insurance Department Service Regulation Fee Fund over four years, because
each insurance company is examined every four years. Therefore, the average increase in
expenditures per year would be $76,250. This is because the Department would pay any
amount above the cap defined in the bill when an insurance company’s cost for the examination
is more than the cap on gross premiums. The estimate is based on past exam costs, including
amounts paid by the companies to contractors, the amount the Department paid on behalf of the
11 - 356 companies, and the amount paid by the companies to contractors. Any fiscal effect associated
with enactment of the bill is not reflected in The FY 2025 Governor’s Budget Report.
HB 2663 (Real-time or Instant Payment Deposit of Real Estate Closing Funds)
According to the fiscal note prepared by the Division of the Budget on HB 2663, as
introduced, the Kansas Department of Insurance, Office of the State Bank Commissioner, and
Department of Credit Unions all indicate enactment of the bill would have no fiscal effect on
agency operating expenditures.
SB 338 (Group-funded Liability and Group-funded Workers Compensation Pools;
Submission of Financial Statements)
According to the fiscal note prepared by the Division of the Budget on SB 338, as
introduced, the Department states that enactment of the bill would not have a fiscal effect on
agency operations.
SB 339 (Risk-based Capital Instructions; Effective Date Change)
According to the fiscal note prepared by the Division of the Budget on SB 339, as
introduced, the Department indicates enactment of the bill would have no fiscal effect.
SB 553 (Utilization Review Organization Act; Electronic Notice and Document Act)
According to the fiscal note prepared by the Division of the Budget on SB 553, as
introduced, the Department of Administration and the Department indicate enactment of the bill
would not have a fiscal effect on the operations of either agency.
Insurance; group-funded liability pools; group-funded workers’ compensation pools; reporting; health insurance; Electronic Notice
and Document Act; health benefit plan; electronic delivery; Utilization Review Organization Act; prior authorization application
programming interface; Kansas Insurance Department; financial and market regulation examinations; tiered fee structure; risk-based
capital; NAIC; title insurance; closing funds; real-time payment; instant payment; good funds
ccrb_sb356_01_04022024.odt
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