FRANKFORT, Ky. — The Administrative Regulation Review Subcommittee on Feb. 10 considered rule changes from a range of state agencies and approved staff amendments for most items but deferred a proposed pharmacy benefit manager licensing regulation and did not adopt an education agency amendment limiting full‑time virtual enrollment.

The panel approved staff‑suggested amendments for regulations from the Department of Financial Institutions, the Office of the Attorney General, the Secretary of State, the Department for Public Health, the Department for Environmental Protection, the Department for Workplace Standards, and several others after agencies presented the changes and subcommittee members raised few questions. Members deferred one proposed regulation from the Department of Insurance and left an education agency amendment to be resolved later by the committees of jurisdiction.

Why it matters: the subcommittee’s actions either clear needed technical updates into state administrative code or pause rules with wider policy impacts. The deferred pharmacy benefit manager (PBM) regulation drew extended questioning on implementation and recent complaints tied to Senate Bill 188. The education discussion touched on how districts would manage virtual‑learning enrollment and the potential need for statutory, not just regulatory, fixes.

Most items approved with no objections

Agency representatives described mostly technical or statutory‑conforming amendments and the subcommittee approved staff amendments without objection for many items. Highlights include:

- Department of Financial Institutions (808 KAR 009/010): The rule was amended to require licensees report how a customer entered a deferred‑deposit transaction, to allow the database verification fee to be paid by the licensee or charged to the customer, and to increase the database verification fee; the subcommittee adopted the staff amendment without objection. Marnie Gibson, commissioner of the Department of Financial Institutions, appeared for the agency and thanked the panel for accommodating the change.

- Office of the Attorney General (040 KAR 050/010): Amendments reorganize hearing‑officer training requirements, add streaming technology provisions and mediation as approved training, and clarify definitions; the staff amendment was adopted without objection. Chris Bolen, executive director of the Office of Administrative Hearings, and Steve Heifers of the Office of Regulatory Relief presented the item.

- Department for Environmental Protection (401 KAR 047/110 and 401 KAR 048/320): The subcommittee approved rules that change a registration review period from 5 business days to 30 calendar days and expand operating and reporting requirements for certain construction/demolition landfills from sites under 1 acre up to those of 2 acres. Brian Osterman, director of the division of waste management, said the changes implement 2024 legislation (House Bill 478).

- Department for Public Health (902 KAR 004/105): The regulation implementing the Kentucky Lifeline for Moms program was approved after the amended‑after‑comments version added clinical clarifications.

Federal‑linked fee increases and hospital payments

- Justice and Public Safety Cabinet / State Police (502 KAR 101/120): The regulation increases the application fee for hazardous‑materials endorsement on commercial driver’s licenses to reflect a Transportation Security Administration security‑threat assessment fee increase. Nathan Goins, assistant general counsel for the Justice and Public Safety Cabinet, told the subcommittee the increase is “about $23 and change.”

- Department for Medicaid Services (907 KAR 010/015): The regulation establishes processes for direct and indirect graduate medical education (GME) reimbursement for in‑state hospitals, including a federal‑approval requirement to allow reimbursement of direct GME costs and a supplemental outpatient payment for indirect GME costs. The subcommittee adopted the staff amendment without objection; the rule relies on federal approvals and cost reports covering the year prior to the state fiscal year for which payments are made.

Education amendment not adopted; will go to committees of jurisdiction

The Commonwealth’s proposed agency amendment to 704 KAR 035/305 would cap enrollment in full‑time online, virtual and remote programs at 10% above the previous year’s in‑person enrollment. Dr. Robbie Fletcher, Commissioner of Education, and Todd Allen, general counsel and deputy commissioner, described district data and concerns: some small districts already show participation well under 10%, while other districts have courses and grade levels exceeding statutory class‑size limits. Allen said a district that wishes to exceed the 10% cap could seek a waiver from the State Board of Education under KRS 156.160.

Co‑chair Steve West and other members said they wanted further discussion and possible statutory solutions. The co‑chairs and members did not move to adopt the agency amendment at this meeting; the item will go to the committees of jurisdiction (Senate and House education committees) for further consideration. The subcommittee recorded no formal vote to adopt the amendment.

Department of Insurance PBM rule deferred after extended questioning

The Department of Insurance proposed 806 KAR 009/360 to establish a $10,000 registration fee and $1,000 annual license fee for PBMs, add mandatory application requirements, and update the application form. Sean Orme, executive advisor to the department, told the panel the agency requested a deferral to consider comments received after the formal comment period. Subcommittee members questioned implementation and enforcement issues related to Senate Bill 188 and the number of PBMs operating in Kentucky. Sean Orme estimated “approximately 57” PBMs in the state; the department reported it had received more than 3,000 complaints related to SB 188 implementation since the law took effect Jan. 1. After an agency request, a committee member moved to defer the regulation; the subcommittee granted the deferral without objection and the regulation was postponed.

Other notable items and questions

- Board of Speech‑Language Pathology and Audiology (201 KAR 171/120 emergency): The subcommittee approved incorporation by reference into state rules of the audiology and speech‑language pathology interstate compact rules, including data‑reporting and criminal background check implementation language.

- Tourism, Arts and Heritage / Department of Fish and Wildlife Resources (301 KAR 002/041): The subcommittee approved rules establishing conditions for fox‑hound training enclosures, including which species may be held, enclosure size, quarantine and disease response, recordkeeping, permitting and enforcement. Agency staff said the changes respond to requests from hunt associations and distinguish noncommercial training provisions from commercial operations.

- Department of Workplace Standards (803 KAR 002/320 emergency): The subcommittee approved emergency changes to occupational safety and health standards addressing toxic and hazardous substances, labeling, trade secrets, and safety data sheets.

What the subcommittee did not do

The panel did not adopt the education agency amendment at this meeting and deferred the PBM licensing regulation. Where agencies requested deferral or where members asked for further consideration, the subcommittee either postponed action or moved the item to the committees of jurisdiction for additional review.

Meeting context and next steps

The subcommittee convened with a quorum, handled roughly a dozen regulatory items in a roughly 32‑minute session, and sent the PBM rule and the education amendment on for further review rather than final adoption. The next meeting is scheduled for Monday, March 10, at 1 p.m. The committees of jurisdiction will take up items moved from this meeting as appropriate.

Ending note: Most approvals were procedural or technical and cleared by the subcommittee without objection; the department of insurance’s PBM proposal and the education virtual‑enrollment cap drew sustained interest and will receive further scrutiny.