Superintendent of Insurance seeks continuation of malpractice relief and funding for prescription drug transparency bureau; LFC differs on scale

Julissa Rodriguez, LFC analyst for the Office of Superintendent of Insurance, summarized the agency’s budget context and noted that OSI does not rely on recurring general fund revenue; it is funded by industry assessments and fees. The executive recommended a modest recurring increase of about 1.1 percent for the agency, largely for staffing.

Nut graf: OSI requested continuation and expansion of several targeted programs: (1) a medical‑malpractice premium relief program that distributed $15.4 million in FY24 and that the agency proposes to scale to $25 million for FY26; (2) bar reauthorization and extension for a $1.3 million FY25 special to implement salary adjustments and recruit difficult‑to‑fill positions; and (3) funding and staffing for a new prescription drugs and pharmacy benefits bureau created by last year’s prescription drug transparency act.

Medical malpractice premium relief

Deputy Superintendent Timothy Beheel and agency staff described the FY24 distribution of $15.4 million to 3,688 independent providers, noting the program provided a 100 percent premium relief for OB‑GYNs and 60.5 percent on average for other groups in that distribution. OSI requested continued funding to extend the program; the agency’s FY26 request initially targeted $18 million and the executive recommendation increased that to $25 million. LFC did not include that increased amount in its recommendation; analysts said the LFC hesitated because last year’s distribution was a special appropriation and detailed provider‑level distributions and a longer record were needed before recommending an ongoing appropriation.

Prescription drug bureau and staffing

The agency requested staff and staff support for a new Prescription Drugs and Pharmacy Benefits bureau established by the prescription drug transparency law. The executive and LFC both proposed additional staff, though the specific personnel differs between recommendations; LFC recommended one new FTE for the bureau while the executive recommendation approved additional staffing in its budget framework.

Other operating requests and bar language

OSI asked the committee to reauthorize the $1.3 million special from FY25 to continue salary adjustments that helped recruit a chief actuary, a chief financial examiner and other specialized staff. The agency also requested bar language to allow the fraud program to use $400,000 from its fund balance for salary adjustments and one additional position, and a $150,000 draw from the insurance licensee continuing education fund to meet auditing requirements for continuing education providers.

Fraud bureau and fund balance question

Committee members raised a discrepancy about a roughly $131,000 transfer OSI requested to reclassify contract funding into other operating costs for the fraud bureau. OSI staff said LFC and the executive supported moving funds but noted the executive recommended a smaller amount and DFA expressed concern about the fraud fund balance; staff offered to return with a clearer fund‑balance explanation and potential assessment adjustments.

Ending: The OSI presentation outlined multiple targeted requests tied to provider affordability, prescription drug oversight and internal workforce stability. Lawmakers asked for additional auditing detail, distribution formulas for previous malpractice relief and clarification on fund‑balance calculations before deciding on recurring extensions.