Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor
March 7, 2024
The Honorable Daniel Hawkins, Chairperson
House Committee on Interstate Cooperation
300 SW 10th Avenue, Room 368-W
Topeka, Kansas 66612
Dear Representative Hawkins:
SUBJECT: Fiscal Note for HB 2713 by House Committee on Insurance
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2713 is
respectfully submitted to your committee.
HB 2713 would create the Ensuring Transparency in Prior Authorization Act that would
become part of the Health Maintenance Organization Act. The bill would define a “utilization
review entity” as an individual or entity that performs prior authorizations for groups described in
the bill. By January 1, 2025, a utilization review entity would accept and respond to prior
authorization requests under a pharmacy benefit through a secure electronic transmission using the
National Council for Prescription Drug Programs script standard for electronic prior authorization
transactions. By January 1, 2025, a utilization review entity would be required to accept and
respond to prior authorization requests for healthcare services using a secure electronic portal at
no cost to a healthcare provider. The bill details requirements of the utilization review entity to
review and notify patients and healthcare providers of an approval or adverse determination of any
prior authorization requests. The bill also limits which procedures are not subject to prior
authorization requests. A utilization review entity could not retroactively deny prior authorizations
for a covered healthcare service unless the prior authorization was based on fraudulent information
provided by an enrollee or the enrollee’s healthcare provider. The bill details the appeal rights for
prior authorization requests.
A utilization review entity would disclose all the requirements and restrictions related to
prior authorization on its website and would give notice of any changes to each healthcare provider
subject to the requirements or restrictions. Starting January 1, 2025, and annually thereafter, each
utilization review entity would be required to submit a report to the Insurance Commissioner that
The Honorable Daniel Hawkins, Chairperson
Page 2—HB 2713
provides statistics about the prior authorization practices. The bill details the items that must be
included in the report. The provisions of the bill would be severable.
Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- -- --
Fee Fund(s) -- $15,523,422 $33,118,182
Federal Fund -- -- --
Total Expenditures -- $15,523,422 $33,118,182
Revenues
State General Fund -- -- --
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Revenues -- -- --
FTE Positions -- -- --
The Department of Administration states that the provisions of the bill would increase costs
to the State Employee Health Benefits Program by removing prior authorization requirements for
certain services, including certain types of inpatient care and pharmacy claims. The Department
indicates that bill would increase costs for pharmacy benefits by $6,062,709 in FY 2025. Based
on recent claims data, the Department estimates pharmacy costs would increase for the state’s
pharmacy benefits manager by $12,125,418 in 2025. However, because the bill would go into
effect on January 1, 2025, the FY 2025 estimate totals $6,062,709 ($12,125,418 X 50.0 percent).
For pharmacy costs under the medical plan, the Department estimates enactment of the bill would
increase costs to the plan by $18,921,426. However, due to the timing of the bill, the FY 2025
estimate would total $9,460,713 ($18,921,426 X 50.0 percent). In total, enactment of the bill
would increase costs to the State Employee Health Benefits Program by $15,523,422 in FY 2025
($6,062,709 + 9,460,713). For FY 2026, the Department assumed an 8.5 percent increase in costs
under the pharmacy benefits plan, resulting in additional expenditures of approximately
$13,156,079 ($12,125,418 X 1.085). For pharmacy costs under the medical plan, the Department
assumed a 5.5 percent increase, resulting in additional expenditures of approximately $19,962,103
(18,921,425 X 1.055). In total, enactment of the bill would increase costs to the State Employee
Health Benefits Program by $33,118,182 ($13,156,079 + 19,962,103) in FY 2026. The
Department notes that the estimate only includes members of the State Employee Health Benefits
Program.
The Board of Healing Arts and the Insurance Department indicates that the requirements
of the bill could be managed within existing resources. The Behavioral Science Regulatory Board,
the Kansas Dental Board, the Board of Examiners in Optometry, the Board of Nursing, the Board
of Pharmacy, and the Department of Health and Environment state that the bill would not have a
The Honorable Daniel Hawkins, Chairperson
Page 3—HB 2713
fiscal effect on the agencies. Any fiscal effect associated with HB 2713 is not reflected in The FY
2025 Governor’s Budget Report.
Sincerely,
Adam C. Proffitt
Director of the Budget
cc: Bobbi Mariani, Insurance Department
Tamara Emery, Department of Administration
Susan Gile, Board of Healing Arts
Jan Murray, Board of Optometry
Alexandra Blasi, Board of Pharmacy
Jill Simons, Board of Nursing
Charity Carlat, Kansas Dental Board
David Fye, Behavioral Sciences Regulatory Board
Amy Penrod, Department of Health & Environment