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 Proffitt, Director Laura Kelly, Governor


March 18, 2021


The Honorable Steven Johnson, Chairperson
House Committee on Insurance and Pensions
Statehouse, Room 276A-W
Topeka, Kansas 66612
Dear Representative Johnson:
SUBJECT: Fiscal Note for HB 2325 by House Committee on Insurance and Pensions
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2325 is
respectfully submitted to your committee.
HB 2325 would enact the End Surprise Medical Bills Act. The bill would prohibit a health
benefit plan, health insurer, or healthcare provider to engage in balance billing practices for
services provided in hospitals, ambulatory surgery centers, emergency rooms, and state-accredited
freestanding emergency departments. The bill would also prohibit balance billing practices for
services ordered by an in-network healthcare provider and provided by an out-of-network
healthcare provider or laboratory if the covered person relies on the health plan’s provider directory
and the directory was inaccurate. The Insurance Commissioner would enforce the Act and would
be required to have rules and regulations established by July 1, 2022.
The bill would prohibit a health benefit plan, health insurer, or healthcare provider from
issuing a covered person a surprise medical bill. Under HB 2325, these groups would pay the
median in-network rate under the plan or coverage, less the covered person’s in-network cost-
sharing, directly to the healthcare provider. The healthcare provider could accept payment, or the
health benefit plan or health insurer would provide information to the healthcare provider about
how to initiate independent dispute resolution (IDR). The plan, issuer, or provider could negotiate
a payment amount or initiate IDR.
On or before July 1, 2022, the Insurance Commissioner would be required to establish an
IDR process with the Governor to resolve payment disputes between health benefit plans or
insurers and out-of-network healthcare providers involved in surprise medical bill disputes. A
party wishing to participate in an IDR would request certification from the Commissioner. The
parties involved in the dispute must agree upon a mediator and if they do not agree then a mediator
The Honorable Steven Johnson, Chairperson
Page 2—HB 2325

would be selected at random by the Department of Labor. HB 2325 describes the IDR process
and the final determination process.
The bill would require a healthcare provider to make a reasonable effort to notify a patient
within 48 hours of making an appointment with a provider who is not a member of the patient’s
health benefit plan’s provider network. A healthcare provider would be required to notify health
insurers within 48 hours of changes that could impact the accuracy of insurer provider directories.
The bill also describes the requirement a health insurer must follow for posting electronically and
in print.
The Department of Administration indicates enactment of HB 2325 would increase costs
to the State Employee Health Plan by $2,456,609 from special revenue funds in calendar year
2022. The Department estimates the cost would increase to $2,616,289 in calendar year 2023
which assumes a cost and usage increase of 6.5 percent.
The Kansas Insurance Department states that enactment of HB 2325 would require the
Department to certify requests for independent dispute resolutions. The Department would require
1.00 FTE position to process the certifications at a cost of $78,200 from its Insurance Department
Service Regulation Fund in FY 2022. Of that amount, $73,200 would be for salary and wage
expenditures and $5,000 would be for a one-time cost for a computer and other office supplies.
The Office of the Governor states that it would require $81,500 from the State General
Fund in FY 2022 for 1.00 Benefit Analyst FTE position that would coordinate with the Insurance
Department to establish an IDR process. Of that amount, $80,000 would be for salaries and wages
and $1,500 would be for a computer and office supplies. Any fiscal effect associated with HB
2325 is not reflected in The FY 2022 Governor’s Budget Report.
The Kansas Association of Counties states that the bill could have a fiscal effect on health
benefit plans provided by counties; however, the Association cannot provide a fiscal effect
estimate.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Jeff Scannell, Department of Administration
Bobbi Mariani, Insurance