Senate Bill 1800c1
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
By the Committee on Banking and Insurance and Senator
Diaz-Balart
311-1853-98
1 A bill to be entitled
2 An act relating to health insurance; amending
3 s. 222.22, F.S.; exempting moneys paid into a
4 Medical Savings Account from attachment,
5 garnishment, or legal process; amending s.
6 627.410, F.S.; exempting certain policies from
7 rating requirements; amending s. 627.6425,
8 F.S.; specifying exceptions to guaranteed
9 renewability of individual health insurance
10 policies; amending s. 627.6487, F.S.;
11 redefining the term "eligible individual" for
12 purposes of guaranteed-issuance of an
13 individual health insurance policy; amending s.
14 627.6498, F.S.; requiring the Department of
15 Insurance to establish standard risk rates for
16 purposes of determining premium rates of
17 coverage issued by the Florida Comprehensive
18 Health Association; amending s. 627.6571, F.S.;
19 specifying exceptions to guaranteed
20 renewability of group health insurance
21 policies; amending s. 627.6675, F.S.; requiring
22 the Department of Insurance to annually
23 establish standard risk rates for purposes of
24 determining maximum premiums for conversion
25 policies; revising standards for renewal of
26 converted insurance policies; requiring the
27 insurer to mail certain information to a person
28 eligible for a converted policy, upon request;
29 creating s. 627.6685, F.S.; requiring health
30 insurers and health maintenance organizations
31 to include in their plans that offer mental
1
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 health coverage certain mental health benefits
2 that are not less favorable than those for
3 medical or surgical benefits covered by the
4 plan; defining terms; providing exemptions;
5 limiting applicability of this section;
6 amending s. 627.674, F.S.; revising the minimum
7 standards for Medicare Supplement policies;
8 amending s. 627.6741, F.S.; revising
9 requirements for insurers to issue, cancel,
10 nonrenew, and replace Medicare supplement
11 policies; restricting preexisting-condition
12 exclusions; authorizing the Department of
13 Insurance to adopt rules governing guaranteed
14 issue of Medicare supplement coverage for
15 continuously covered individuals; amending s.
16 627.9403, F.S.; specifying the provisions of
17 the Long-term Care Insurance Act that apply to
18 limited benefit policies; amending s. 627.9404,
19 F.S.; defining the term "limited benefit
20 policy"; amending s. 627.9407, F.S.; revising
21 the requirements for exclusion of coverage for
22 preexisting conditions for long-term care
23 policies; requiring limited-benefit policies to
24 contain a disclosure statement regarding their
25 qualification for favorable tax treatment;
26 amending s. 627.94073, F.S.; revising the
27 notice requirement for long-term care policies
28 regarding the right to designate a secondary
29 person to receive notice of lapse of coverage;
30 amending s. 641.225, F.S.; increasing surplus
31 requirements for health maintenance
2
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 organizations; amending s. 641.285, F.S.;
2 increasing deposit requirements for health
3 maintenance organizations; revising exceptions;
4 amending s. 641.26, F.S.; requiring health
5 maintenance organizations to file certain
6 reports with the Department of Insurance;
7 requiring that health maintenance organizations
8 provide additional information upon the request
9 of the department; amending s. 641.31074, F.S.;
10 revising requirements for guaranteed
11 renewability of a health maintenance
12 organization contract; amending s. 641.3111,
13 F.S.; requiring health maintenance organization
14 contracts to provide for an extension of
15 benefits upon termination of the contract;
16 amending s. 641.316, F.S.; revising the amount
17 of the bond that a fiscal intermediary services
18 organization is required to maintain;
19 specifying certain additional requirements and
20 conditions for the bond and the intermediary;
21 amending s. 641.3922, F.S.; revising the method
22 for establishing the maximum premium for
23 converted contracts issued by health
24 maintenance organizations; revising the
25 exceptions to guaranteed renewability of
26 converted health maintenance organization
27 contracts; requiring a health maintenance
28 organization to mail certain information to a
29 person eligible for a converted contract;
30 amending s. 641.495, F.S.; exempting from
31 licensure under part I of ch. 395, F.S.,
3
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 certain beds of a health maintenance
2 organization; providing an effective date.
3
4 Be It Enacted by the Legislature of the State of Florida:
5
6 Section 1. Section 222.22, Florida Statutes, is
7 amended to read:
8 222.22 Exemption of moneys in the Prepaid
9 Postsecondary Education Expense Trust Fund and in a Medical
10 Savings Account from legal process.--
11 (1) Moneys paid into or out of the Prepaid
12 Postsecondary Education Expense Trust Fund by or on behalf of
13 a purchaser or qualified beneficiary pursuant to an advance
14 payment contract made under s. 240.551, which contract has not
15 been terminated, are not liable to attachment, garnishment, or
16 legal process in the state in favor of any creditor of the
17 purchaser or beneficiary of such advance payment contract.
18 (2) Moneys paid into or out of a Medical Savings
19 Account by or on behalf of a person depositing money into such
20 account or a qualified beneficiary are not liable to
21 attachment, garnishment, or legal process in the state in
22 favor of any creditor of such person or beneficiary of such
23 Medical Savings Account.
24 Section 2. Subsection (6) of section 627.410, Florida
25 Statutes, is amended to read:
26 627.410 Filing, approval of forms.--
27 (6)(a) An insurer shall not deliver or issue for
28 delivery or renew in this state any health insurance policy
29 form until it has filed with the department a copy of every
30 applicable rating manual, rating schedule, change in rating
31 manual, and change in rating schedule; if rating manuals and
4
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 rating schedules are not applicable, the insurer must file
2 with the department applicable premium rates and any change in
3 applicable premium rates.
4 (b) The department may establish by rule, for each
5 type of health insurance form, procedures to be used in
6 ascertaining the reasonableness of benefits in relation to
7 premium rates and may, by rule, exempt from any requirement of
8 paragraph (a) any health insurance policy form or type thereof
9 (as specified in such rule) to which form or type such
10 requirements may not be practically applied or to which form
11 or type the application of such requirements is not desirable
12 or necessary for the protection of the public. With respect to
13 any health insurance policy form or type thereof which is
14 exempted by rule from any requirement of paragraph (a),
15 premium rates filed pursuant to ss. 627.640 and 627.662 shall
16 be for informational purposes.
17 (c) Every filing made pursuant to this subsection
18 shall be made within the same time period provided in, and
19 shall be deemed to be approved under the same conditions as
20 those provided in, subsection (2).
21 (d) Every filing made pursuant to this subsection,
22 except disability income policies and accidental death
23 policies, shall be prohibited from applying the following
24 rating practices:
25 1. Select and ultimate premium schedules.
26 2. Premium class definitions which classify insured
27 based on year of issue or duration since issue.
28 3. Attained age premium structures on policy forms
29 under which more than 50 percent of the policies are issued to
30 persons age 65 or over.
31
5
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (e) Except as provided in subparagraph 1., an insurer
2 shall continue to make available for purchase any individual
3 policy form issued on or after October 1, 1993. A policy form
4 shall not be considered to be available for purchase unless
5 the insurer has actively offered it for sale in the previous
6 12 months.
7 1. An insurer may discontinue the availability of a
8 policy form if the insurer provides to the department in
9 writing its decision at least 30 days prior to discontinuing
10 the availability of the form of the policy or certificate.
11 After receipt of the notice by the department, the insurer
12 shall no longer offer for sale the policy form or certificate
13 form in this state.
14 2. An insurer that discontinues the availability of a
15 policy form pursuant to subparagraph 1. shall not file for
16 approval a new policy form providing similar benefits as the
17 discontinued form for a period of 5 years after the insurer
18 provides notice to the department of the discontinuance. The
19 period of discontinuance may be reduced if the department
20 determines that a shorter period is appropriate.
21 3. The experience of all policy forms providing
22 similar benefits shall be combined for all rating purposes.
23 Section 3. Paragraph (a) of subsection (3) of section
24 627.6425, Florida Statutes, is amended to read:
25 627.6425 Renewability of individual coverage.--
26 (3)(a) In any case in which an insurer decides to
27 discontinue offering a particular policy form for health
28 insurance coverage offered in the individual market, coverage
29 under such form may be discontinued by the insurer only if:
30 1. The insurer provides notice to each covered
31 individual provided coverage under this policy form in the
6
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 individual market of such discontinuation at least 90 days
2 prior to the date of the nonrenewal discontinuation of such
3 coverage;
4 2. The insurer offers to each individual in the
5 individual market provided coverage under this policy form the
6 option to purchase any other individual health insurance
7 coverage currently being offered by the insurer for
8 individuals in such market in the state; and
9 3. In exercising the option to discontinue coverage of
10 this policy form and in offering the option of coverage under
11 subparagraph 2., the insurer acts uniformly without regard to
12 any health-status-related factor of enrolled individuals or
13 individuals who may become eligible for such coverage.
14 Section 4. Subsection (3) of section 627.6487, Florida
15 Statutes, is amended to read:
16 627.6487 Guaranteed availability of individual health
17 insurance coverage to eligible individuals.--
18 (3) For the purposes of this section, the term
19 "eligible individual" means an individual:
20 (a)1. For whom, as of the date on which the individual
21 seeks coverage under this section, the aggregate of the
22 periods of creditable coverage, as defined in s. 627.6561(5)
23 and (6), is 18 or more months; and
24 2.a. Whose most recent prior creditable coverage was
25 under a group health plan, governmental plan, or church plan,
26 or health insurance coverage offered in connection with any
27 such plan; or
28 b. Whose most recent prior creditable coverage was
29 under an individual plan issued by a health insurer or health
30 maintenance organization, which coverage is terminated due to
31 the insurer or health maintenance organization becoming
7
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 insolvent or discontinuing the offering of all individual
2 coverage in the state, or due to the insured no longer living
3 in the service area of the insurer or health maintenance
4 organization that provides coverage through a network plan;
5 (b) Who is not eligible for coverage under:
6 1. A group health plan, as defined in s. 2791 of the
7 Public Health Service Act;
8 2. A conversion policy under s. 627.6675, or s.
9 641.3921, federal law, the laws of any other state, or a
10 self-insured group health plan;
11 3. Part A or part B of Title XVIII of the Social
12 Security Act; or
13 4. A state plan under Title XIX of such act, or any
14 successor program, and does not have other health insurance
15 coverage;
16 (c) With respect to whom the most recent coverage
17 within the coverage period described in paragraph (1)(a) was
18 not terminated based on a factor described in s.
19 627.6571(2)(a) or (b), relating to nonpayment of premiums or
20 fraud, unless such nonpayment of premiums or fraud was due to
21 acts of an employer or person other than the individual;
22 (d) Who, having been offered the option of
23 continuation coverage under a COBRA continuation provision or
24 under s. 627.6692, elected such coverage; and
25 (e) Who, if the individual elected such continuation
26 provision, has exhausted such continuation coverage under such
27 provision or program.
28 Section 5. Paragraph (a) of subsection (4) of section
29 627.6498, Florida Statutes, is amended to read:
30 627.6498 Minimum benefits coverage; exclusions;
31 premiums; deductibles.--
8
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (4) PREMIUMS, DEDUCTIBLES, AND COINSURANCE.--
2 (a) The plan shall provide for annual deductibles for
3 major medical expense coverage in the amount of $1,000 or any
4 higher amounts proposed by the board and approved by the
5 department, plus the benefits payable under any other type of
6 insurance coverage or workers' compensation. The schedule of
7 premiums and deductibles shall be established by the
8 association. With regard to any preferred provider arrangement
9 utilized by the association, the deductibles provided in this
10 paragraph shall be the minimum deductibles applicable to the
11 preferred providers and higher deductibles, as approved by the
12 department, may be applied to providers who are not preferred
13 providers.
14 1. Separate schedules of premium rates based on age
15 may apply for individual risks.
16 2. Rates are subject to approval by the department.
17 3. Standard risk rates for coverages issued by the
18 association shall be established by the department, pursuant
19 to s. 627.6675(3) association, subject to approval by the
20 department, using reasonable actuarial techniques, and shall
21 reflect anticipated experience and expenses of such coverages
22 for standard risks.
23 4. The board shall establish separate premium
24 schedules for low-risk individuals, medium-risk individuals,
25 and high-risk individuals and shall revise premium schedules
26 pursuant to this section for each 6-month policy period
27 beginning January 1999 1992. For the calendar year 1991 and
28 thereafter, No rate shall exceed 200 percent of the standard
29 risk rate for low-risk individuals, 225 percent of the
30 standard risk rate for medium-risk individuals, or 250 percent
31 of the standard risk rate for high-risk individuals. For the
9
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 purpose of determining what constitutes a low-risk individual,
2 medium-risk individual, or high-risk individual, the board
3 shall consider the anticipated claims payment for individuals
4 based upon an individual's health condition.
5 Section 6. Paragraphs (a) and (b) of subsection (3) of
6 section 627.6571, Florida Statutes, are amended to read:
7 627.6571 Guaranteed renewability of coverage.--
8 (3)(a) An insurer may discontinue offering a
9 particular policy form of group health insurance coverage
10 offered in the small-group market or large-group market only
11 if:
12 1. The insurer provides notice to each policyholder
13 provided coverage of this form in such market, and to
14 participants and beneficiaries covered under such coverage, of
15 such discontinuation at least 90 days prior to the date of the
16 nonrenewal discontinuation of such coverage;
17 2. The insurer offers to each policyholder provided
18 coverage of this form in such market the option to purchase
19 all, or in the case of the large-group market, any other
20 health insurance coverage currently being offered by the
21 insurer in such market; and
22 3. In exercising the option to discontinue coverage of
23 this form and in offering the option of coverage under
24 subparagraph 2., the insurer acts uniformly without regard to
25 the claims experience of those policyholders or any
26 health-status-related factor that relates to any participants
27 or beneficiaries covered or new participants or beneficiaries
28 who may become eligible for such coverage.
29 (b)1. In any case in which an insurer elects to
30 discontinue offering all health insurance coverage in the
31 small-group market or the large-group market, or both, in this
10
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 state, health insurance coverage may be discontinued by the
2 insurer only if:
3 a. The insurer provides notice to the department and
4 to each policyholder, and participants and beneficiaries
5 covered under such coverage, of such discontinuation at least
6 180 days prior to the date of the discontinuation of such
7 coverage; and
8 b. All health insurance issued or delivered for
9 issuance in this state in such market markets is discontinued
10 and coverage under such health insurance coverage in such
11 market is not renewed.
12 2. In the case of a discontinuation under subparagraph
13 1. in a market, the insurer may not provide for the issuance
14 of any health insurance coverage in the market in this state
15 during the 5-year period beginning on the date of the
16 discontinuation of the last insurance coverage not renewed.
17 Section 7. Subsection (3), paragraph (b) of subsection
18 (7), and subsection (17) of section 627.6675, Florida
19 Statutes, are amended to read:
20 627.6675 Conversion on termination of
21 eligibility.--Subject to all of the provisions of this
22 section, a group policy delivered or issued for delivery in
23 this state by an insurer or nonprofit health care services
24 plan that provides, on an expense-incurred basis, hospital,
25 surgical, or major medical expense insurance, or any
26 combination of these coverages, shall provide that an employee
27 or member whose insurance under the group policy has been
28 terminated for any reason, including discontinuance of the
29 group policy in its entirety or with respect to an insured
30 class, and who has been continuously insured under the group
31 policy, and under any group policy providing similar benefits
11
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 that the terminated group policy replaced, for at least 3
2 months immediately prior to termination, shall be entitled to
3 have issued to him or her by the insurer a policy or
4 certificate of health insurance, referred to in this section
5 as a "converted policy." An employee or member shall not be
6 entitled to a converted policy if termination of his or her
7 insurance under the group policy occurred because he or she
8 failed to pay any required contribution, or because any
9 discontinued group coverage was replaced by similar group
10 coverage within 31 days after discontinuance.
11 (3) CONVERSION PREMIUM; EFFECT ON PREMIUM RATES FOR
12 GROUP COVERAGE.--
13 (a) The premium for the converted policy shall be
14 determined in accordance with premium rates applicable to the
15 age and class of risk of each person to be covered under the
16 converted policy and to the type and amount of insurance
17 provided. However, the premium for the converted policy may
18 not exceed 200 percent of the standard risk rate as
19 established by the department, pursuant to this subsection
20 Florida Comprehensive Health Association, adjusted for
21 differences in benefit levels and structure between the
22 converted policy and the policy offered by the Florida
23 Comprehensive Health Association.
24 (b) Actual or expected experience under converted
25 policies may be combined with such experience under group
26 policies for the purposes of determining premium and loss
27 experience and establishing premium rate levels for group
28 coverage.
29 (c) The department shall annually determine standard
30 risk rates, using reasonable actuarial techniques and
31
12
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 standards adopted by the department by rule. The standard risk
2 rates must be determined as follows:
3 1. Standard risk rates for individual coverage must be
4 determined separately for indemnity policies, preferred
5 provider/exclusive provider policies, and health maintenance
6 organization contracts.
7 2. The department shall survey insurers and health
8 maintenance organizations representing at least an 80 percent
9 market share, based on premiums earned in the state for the
10 most recent calendar year, for each of the categories
11 specified in subparagraph 1.
12 3. Standard risk rate schedules must be determined,
13 computed as the average rates charged by the carriers
14 surveyed, giving appropriate weight to each carrier's
15 statewide market share of earned premiums.
16 4. The rate schedule shall be determined from analysis
17 of the one county with the largest market share in the state
18 of all such carriers.
19 5. The rate for other counties must be determined by
20 using the weighted average of each carrier's county factor
21 relationship to the county determined in subparagraph 4.
22 6. The rate schedule must be determined for different
23 age brackets and family-size brackets.
24 (7) INFORMATION REQUESTED BY INSURER.--
25 (b) The converted policy may provide that the insurer
26 may refuse to renew the policy or the coverage of any person
27 only for one or more of the following reasons:
28 1. Either the benefits provided under the sources
29 referred to in subparagraphs (a)1. and 2. for the person or
30 the benefits provided or available under the sources referred
31 to in subparagraph (a)3. for the person, together with the
13
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 benefits provided by the converted policy, would result in
2 overinsurance according to the insurer's standards on file
3 with the department.
4 2. The converted policyholder fails to provide the
5 information requested pursuant to paragraph (a).
6 3. Fraud or intentional material misrepresentation in
7 applying for any benefits under the converted policy.
8 4. Eligibility of the insured person for coverage
9 under Medicare or under any other state or federal law
10 providing for benefits similar to those provided by the
11 converted policy.
12 4.5. Other reasons approved by the department.
13 (17) NOTIFICATION.--A notification of the conversion
14 privilege shall be included in each certificate of coverage.
15 The insurer shall mail an election and premium notice form,
16 including an outline of coverage, on a form approved by the
17 department, within 14 days after an individual who is eligible
18 for a converted policy gives notice to the insurer that the
19 individual is considering applying for the converted policy or
20 otherwise requests such information. The outline of coverage
21 must contain a description of the principal benefits and
22 coverage provided by the policy and its principal exclusions
23 and limitations, including, but not limited to, deductibles
24 and coinsurance.
25 Section 8. Section 627.6685, Florida Statutes, is
26 created to read:
27 627.6685 Mental health coverage.--
28 (1) DEFINITIONS.--As used in this section, the term:
29 (a) "Aggregate lifetime limit" means, with respect to
30 benefits under a group health plan or health insurance
31 coverage, a dollar limitation on the total amount that may be
14
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 paid with respect to such benefits under the plan or health
2 insurance coverage with respect to an individual or other
3 coverage unit.
4 (b) "Annual limit" means, with respect to benefits
5 under a group health plan or health insurance coverage, a
6 dollar limitation on the total amount of benefits that may be
7 paid with respect to such benefits in a 12-month period under
8 the plan or health insurance coverage with respect to an
9 individual or other coverage unit.
10 (c) "Medical or surgical benefits" means benefits with
11 respect to medical or surgical services, as defined under the
12 terms of the plan or coverage, but does not include mental
13 health benefits.
14 (d) "Mental health benefits" means benefits with
15 respect to mental health services, as defined under the terms
16 of the plan or coverage, but does not include benefits with
17 respect to treatment of substance abuse or chemical
18 dependency.
19 (e) "Health insurance coverage" means coverage
20 provided by an authorized insurer or by a health maintenance
21 organization.
22 (2) BENEFITS.--
23 (a)1. In the case of a group health plan, or health
24 insurance coverage offered in connection with such a plan,
25 which provides both medical and surgical benefits and mental
26 health benefits:
27 a. If the plan or coverage does not include an
28 aggregate lifetime limit on substantially all medical and
29 surgical benefits, the plan or coverage may not impose any
30 aggregate lifetime limit on mental health benefits.
31
15
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 b. If the plan or coverage includes an aggregate
2 lifetime limit on substantially all medical and surgical
3 benefits, the plan or coverage must:
4 (I) Apply that applicable lifetime limit both to the
5 medical and surgical benefits to which it otherwise would
6 apply and to mental health benefits and not distinguish in the
7 application of such limit between such medical and surgical
8 benefits and mental health benefits; or
9 (II) Not include any aggregate lifetime limit on
10 mental health benefits which is less than that applicable
11 lifetime limit.
12 c. For any plan or coverage that is not described in
13 sub-subparagraph a. or sub-subparagraph b. and that includes
14 no or different aggregate lifetime limits on different
15 categories of medical and surgical benefits, the department
16 shall establish rules under which sub-subparagraph b. is
17 applied to such plan or coverage with respect to mental health
18 benefits by substituting for the applicable lifetime limit an
19 average aggregate lifetime limit that is computed taking into
20 account the weighted average of the aggregate lifetime limits
21 applicable to such categories.
22 2. In the case of a group health plan, or health
23 insurance coverage offered in connection with such a plan,
24 which provides both medical and surgical benefits and mental
25 health benefits:
26 a. If the plan or coverage does not include an annual
27 limit on substantially all medical and surgical benefits, the
28 plan or coverage may not impose any annual limit on mental
29 health benefits.
30
31
16
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 b. If the plan or coverage includes an annual limit on
2 substantially all medical and surgical benefits, the plan or
3 coverage must:
4 (I) Apply that applicable annual limit both to medical
5 and surgical benefits to which it otherwise would apply and to
6 mental health benefits and not distinguish in the application
7 of such limit between such medical and surgical benefits and
8 mental health benefits; or
9 (II) Not include any annual limit on mental health
10 benefits which is less than the applicable annual limit.
11 c. For any plan or coverage that is not described in
12 sub-subparagraph a. or sub-subparagraph b. and that includes
13 no or different annual limits on different categories of
14 medical and surgical benefits, the department shall establish
15 rules under which sub-subparagraph b. is applied to such plan
16 or coverage with respect to mental health benefits by
17 substituting for the applicable annual limit an average annual
18 limit that is computed taking into account the weighted
19 average of the annual limits applicable to such categories.
20 (b) This section may not be construed:
21 1. As requiring a group health plan, or health
22 insurance coverage offered in connection with such a plan, to
23 provide any mental health benefits; or
24 2. In the case of a group health plan, or health
25 insurance coverage offered in connection with such a plan,
26 which provides mental health benefits, as affecting the terms
27 and conditions, including cost-sharing, limits on numbers of
28 visits or days of coverage, and requirements relating to
29 medical necessity, relating to the amount, duration, or scope
30 of mental health benefits under the plan or coverage, except
31 as specifically provided in paragraph (a) with respect to
17
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 parity in the imposition of aggregate lifetime limits and
2 annual limits for mental health benefits.
3 (3) EXEMPTIONS.--
4 (a) This section does not apply to any group health
5 plan, or group health insurance coverage offered in connection
6 with a group health plan, for any plan year of a small
7 employer as defined in s. 627.6699.
8 (b) This section does not apply with respect to a
9 group health plan, or health insurance coverage offered in
10 connection with a group health plan, if the application of
11 this section to such plan or coverage results in an increase
12 in the cost under the plan or for such coverage of at least 1
13 percent.
14 (4) SEPARATE APPLICATION TO EACH OPTION OFFERED.--For
15 any group health plan that offers a participant or beneficiary
16 two or more benefit-package options under the plan, the
17 requirements of this section apply separately with respect to
18 each such option.
19 (5) DURATION.--This section does not apply to benefits
20 for services furnished on or after September 30, 2001.
21 (6) CONFLICTING PROVISIONS.--The provisions of this
22 section prevail over any conflicting provision of s. 627.668.
23 Section 9. Paragraphs (a) and (d) of subsection (2)
24 and subsection (3) of section 627.674, Florida Statutes, are
25 amended to read:
26 627.674 Minimum standards; filing requirements.--
27 (2)(a) The department must adopt rules establishing
28 minimum standards for Medicare supplement policies that, taken
29 together with the requirements of this part, are no less
30 comprehensive or beneficial to persons insured or covered
31 under Medicare supplement policies issued, delivered, or
18
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 issued for delivery in this state, including certificates
2 under group or blanket policies issued, delivered, or issued
3 for delivery in this state, than the standards provided in 42
4 U.S.C. Section 1395ss, or the most recent version of the NAIC
5 Model Regulation To Implement the NAIC Medicare Supplement
6 Insurance Minimum Standards Model Act adopted by the National
7 Association of Insurance Commissioners on July 31, 1991, or
8 the Omnibus Budget Reconciliation Act of 1990 (Pub. L. No.
9 101-508).
10 (d) For policies issued on or after January 1, 1991,
11 the department may adopt rules to establish minimum policy
12 standards to authorize the types of policies specified by 42
13 U.S.C. Section 1395ss(p)(2)(c) and any optional benefits to
14 facilitate policy comparisons.
15 (3) A policy may not be filed with the department as a
16 Medicare supplement policy unless the policy meets or exceeds,
17 either in a single policy or, in the case of nonprofit health
18 care services plans, in one or more policies issued in
19 conjunction with one another, the requirements of 42 U.S.C.
20 Section 1395ss, or the most recent version of the NAIC
21 Medicare Supplement Insurance Minimum Standards Model Act,
22 adopted by the National Association of Insurance Commissioners
23 on July 31, 1991, and the Omnibus Budget Reconciliation Act of
24 1990 (Pub. L. No. 101-508).
25 Section 10. Section 627.6741, Florida Statutes, is
26 amended to read:
27 627.6741 Issuance, cancellation, nonrenewal, and
28 replacement.--
29 (1) An insurer issuing Medicare supplement policies in
30 this state shall offer the opportunity of enrolling in a
31 Medicare supplement policy, without conditioning the issuance
19
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 or effectiveness of the policy on, and without discriminating
2 in the price of the policy based on, the medical or health
3 status or receipt of health care by the individual:
4 (a) To any individual who is 65 years of age or older
5 and who resides in this state, upon the request of the
6 individual during the 6-month period beginning with the first
7 month in which the individual has attained 65 years of age and
8 is enrolled in Medicare part B; or
9 (b) To any individual who is 65 years of age or older
10 and is enrolled in Medicare part B, who resides in this state,
11 upon the request of the individual during the 2-month period
12 following termination of coverage under a group health
13 insurance policy.;
14
15 A Medicare supplement policy issued to an individual under
16 paragraph (a) or paragraph (b) may not exclude benefits based
17 on a pre-existing condition if the individual has a continuous
18 period of creditable coverage, as defined in s. 627.6561(5),
19 of at least 6 months as of the date of application for
20 coverage.
21
22 the opportunity of enrolling in a Medicare supplement policy,
23 without conditioning the issuance or effectiveness of the
24 policy on, and without discriminating in the price of the
25 policy based on, the medical or health status or receipt of
26 health care by the individual.
27 (2) For both individual and group Medicare supplement
28 policies:
29 (a) An insurer shall neither cancel nor nonrenew a
30 Medicare supplement policy or certificate for any reason other
31 than nonpayment of premium or material misrepresentation.
20
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (b) If it is not replacing an existing policy, a
2 Medicare supplement policy shall not limit or preclude
3 liability under the policy for a period longer than 6 months
4 because of a health condition existing before the policy is
5 effective. The policy may not define a preexisting condition
6 more restrictively than a condition for which medical advice
7 was given or treatment was recommended by or received from a
8 physician within 6 months before the effective date of
9 coverage.
10 (c) If a Medicare supplement policy or certificate
11 replaces another Medicare supplement policy or certificate or
12 creditable coverage as defined in s. 627.6561(5) a group
13 health insurance policy or certificate, the replacing insurer
14 shall waive any time periods applicable to preexisting
15 conditions, waiting periods, elimination periods, and
16 probationary periods in the new Medicare supplement policy for
17 similar benefits to the extent such time was spent under the
18 original policy, subject to the requirements of s.
19 627.6561(6)-(11).
20 (3) For group Medicare supplement policies:
21 (a) If a group Medicare supplement insurance policy is
22 terminated by the group policyholder and not replaced as
23 provided in paragraph (c), the insurer shall offer
24 certificateholders an individual Medicare supplement policy.
25 The insurer shall offer the certificateholder at least the
26 following choices:
27 1. An individual Medicare supplement policy that
28 provides for continuation of the benefits contained in the
29 group policy.
30
31
21
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 2. An individual Medicare supplement policy that
2 provides only the benefits required to meet the minimum
3 standards.
4 (b) If membership in a group is terminated, the
5 insurer shall:
6 1. Offer the certificateholder conversion
7 opportunities specified in paragraph (a); or
8 2. At the option of the group policyholder, offer the
9 certificateholder continuation of coverage under the group
10 policy.
11 (c) If a group Medicare supplement policy is replaced
12 by another group Medicare supplement policy purchased by the
13 same policyholder, the succeeding insurer shall offer coverage
14 to all persons covered under the old group policy on its date
15 of termination. Coverage under the new group policy may not
16 result in any exclusion for preexisting conditions that would
17 have been covered under the group policy being replaced.
18 (4) If a policy is canceled, the insurer must return
19 promptly the unearned portion of any premium paid. If the
20 insured cancels the policy, the earned premium shall be
21 computed by the use of the short-rate table last filed with
22 the state official having supervision of insurance in the
23 state where the insured resided when the policy was issued.
24 If the insurer cancels, the earned premium shall be computed
25 pro rata. Cancellation shall be without prejudice to any
26 claim originating prior to the effective date of the
27 cancellation.
28 (5) The department shall by rule prescribe standards
29 relating to the guaranteed issue of coverage, without
30 exclusions for preexisting conditions, for continuously
31
22
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 covered individuals consistent with the provisions of 42
2 U.S.C. Section 1395ss(s)(3).
3 Section 11. Section 627.9403, Florida Statutes, is
4 amended to read:
5 627.9403 Scope.--The provisions of this part shall
6 apply to long-term care insurance policies delivered or issued
7 for delivery in this state, and to policies delivered or
8 issued for delivery outside this state to the extent provided
9 in s. 627.9406, by an insurer, a fraternal benefit society as
10 defined in s. 632.601, a health care services plan as defined
11 in s. 641.01, a health maintenance organization as defined in
12 s. 641.19, a prepaid health clinic as defined in s. 641.402,
13 or a multiple-employer welfare arrangement as defined in s.
14 624.437. A policy which is advertised, marketed, or offered as
15 a long-term care policy and as a Medicare supplement policy
16 shall meet the requirements of this part and the requirements
17 of ss. 627.671-627.675 and, to the extent of a conflict, be
18 subject to the requirement that is more favorable to the
19 policyholder or certificateholder. The provisions of this
20 part shall not apply to a continuing care contract issued
21 pursuant to chapter 651 and shall not apply to guaranteed
22 renewable policies issued prior to October 1, 1988. Any
23 limited benefit policy that limits coverage to care in a
24 nursing home or to one or more lower levels of care required
25 or authorized to be provided by this part or by department
26 rule must meet all requirements of this part that apply to
27 long-term care insurance policies, except s. 627.9407(3)(c),
28 (9), (10)(f), and (12), and s. 627.94073(2) s. 627.9407(3)(c)
29 and (9). If the limited benefit policy does not provide
30 coverage for care in a nursing home, but does provide coverage
31
23
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 for one or more lower levels of care, the policy shall also be
2 exempt from the requirements of s. 627.9407(3)(d).
3 Section 12. Subsection (1) of section 627.9404,
4 Florida Statutes, is amended, present subsections (7), (8),
5 (9), and (10) of that section are renumbered as subsections
6 (8), (9), (10), and (11), respectively, and a new subsection
7 (7) is added to that section, to read:
8 627.9404 Definitions.--For the purposes of this part:
9 (1) "Long-term care insurance policy" means any
10 insurance policy or rider advertised, marketed, offered, or
11 designed to provide coverage on an expense-incurred,
12 indemnity, prepaid, or other basis for one or more necessary
13 or medically necessary diagnostic, preventive, therapeutic,
14 curing, treating, mitigating, rehabilitative, maintenance, or
15 personal care services provided in a setting other than an
16 acute care unit of a hospital. Long-term care insurance shall
17 not include any insurance policy which is offered primarily to
18 provide basic Medicare supplement coverage, basic hospital
19 expense coverage, basic medical-surgical expense coverage,
20 hospital confinement indemnity coverage, major medical expense
21 coverage, disability income protection coverage, accident only
22 coverage, specified disease or specified accident coverage, or
23 limited benefit health coverage.
24 (7) "Limited benefit policy" means any policy that
25 limits coverage to care in a nursing home or to one or more
26 lower levels of care required or authorized to be provided by
27 this part or by department rule.
28 Section 13. Paragraph (a) of subsection (4) of section
29 627.9407, Florida Statutes, is amended, and subsection (13) is
30 added to that section, to read:
31
24
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 627.9407 Disclosure, advertising, and performance
2 standards for long-term care insurance.--
3 (4) PREEXISTING CONDITION.--
4 (a) A long-term care insurance policy or certificate,
5 other than a policy or certificate issued to a group referred
6 to in s. 627.9405(1)(a), may not use a definition of
7 "preexisting condition" which is more restrictive than the
8 following: "Preexisting condition" means the existence of
9 symptoms which would cause an ordinarily prudent person to
10 seek diagnosis, care, or treatment, or a condition for which
11 medical advice or treatment was recommended by or received
12 from a provider of health care services within 6 months
13 preceding the effective date of coverage of an insured person.
14 (13) ADDITIONAL DISCLOSURE.--A limited benefit policy
15 qualified under s. 7702B of the Internal Revenue Code must
16 include a disclosure statement within the policy and within
17 the outline of coverage that the policy is intended to be a
18 qualified limited benefit insurance contract. A limited
19 benefit policy that is not intended to be a qualified limited
20 benefit insurance contract must include a disclosure statement
21 within the policy and within the outline of coverage that the
22 policy is not intended to be a qualified limited benefit
23 insurance contract. The disclosure must be prominently
24 displayed and must read as follows: "This limited benefit
25 insurance policy is not intended to be a qualified limited
26 benefit insurance contract. You need to be aware that benefits
27 received under this policy may create unintended, adverse
28 income tax consequences to you. You may want to consult with a
29 knowledgeable individual about such potential income tax
30 consequences."
31
25
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 Section 14. Subsection (2) of section 627.94073,
2 Florida Statutes, is amended to read:
3 627.94073 Notice of cancellation; grace period.--
4 (2) A long-term care policy may not be canceled for
5 nonpayment of premium unless, after expiration of the grace
6 period in subsection (1), and at least 30 days prior to the
7 effective date of such cancellation, the insurer has mailed a
8 notification of possible lapse in coverage to the policyholder
9 and to a specified secondary addressee if such addressee has
10 been designated in writing by name and address by the
11 policyholder. For policies issued or renewed on or after
12 October 1, 1996, the insurer shall notify the policyholder, at
13 least once every 2 years, of the right to designate a
14 secondary addressee. The applicant has the right to designate
15 at least one person who is to receive the notice of
16 termination, in addition to the insured. Designation shall not
17 constitute acceptance of any liability on the third party for
18 services provided to the insured. The form used for the
19 written designation must provide space clearly designated for
20 listing at least one person. The designation shall include
21 each person's full name and home address. In the case of an
22 applicant who elects not to designate an additional person,
23 the waiver shall state: "Protection against unintended
24 lapse.--I understand that I have the right to designate at
25 least one person other than myself to receive notice of lapse
26 or termination of this long-term care/limited benefit
27 long-term care insurance policy for nonpayment of premium. I
28 understand that notice will not be given until 30 days after a
29 premium is due and unpaid. I elect NOT to designate any person
30 to receive such notice." Notice shall be given by first class
31 United States mail, postage prepaid, and notice may not be
26
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 given until 30 days after a premium is due and unpaid. Notice
2 shall be deemed to have been given as of 5 days after the date
3 of mailing.
4 Section 15. Subsections (1) and (2) of section
5 641.225, Florida Statutes, are amended to read:
6 641.225 Surplus requirements.--
7 (1) Each health maintenance organization shall at all
8 times maintain a minimum surplus in an amount that which is
9 the greater of $1,500,000, $500,000 or 10 percent of total
10 liabilities, or 2 percent of total annualized premium. All
11 health maintenance organizations that which have a valid
12 certificate of authority before October 1, 1998 1988, or an
13 entity described in subsection (3), and that which do not meet
14 the minimum surplus requirement, shall increase their surplus
15 as follows:
16
17 Date Amount
18
19 September 30, 1998 1989 $800,000, $200,000 or 10 6 percent
20 of total liabilities, or 1 percent
21 of annualized premium, whichever is
22 greater
23
24 September 30, 1999 1990 $1,150,000, $350,000 or 10 8
25 percent of total liabilities, or
26 1.25 percent of annualized premium,
27 whichever is greater
28
29
30
31
27
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 September 30, 2000 1991 $1,500,000, $500,000 or 10 percent
2 of total liabilities, or 2 percent
3 of annualized premium, whichever is
4 greater
5
6 (2) The department shall not issue a certificate of
7 authority, except as provided in subsection (3), unless the
8 health maintenance organization has a minimum surplus in an
9 amount which is the greater of:
10 (a) $1,500,000;
11 (a)(b) Ten percent of their total liabilities based on
12 their startup actuarial projection as set forth in this part;
13 or
14 (b) Two percent of their total projected premiums
15 based on their startup projection as set forth in this part;
16 or
17 (c) $1,500,000, $500,000 plus all startup losses,
18 excluding profits, projected to be incurred on their startup
19 actuarial projection until the projection reflects statutory
20 net profits for 12 consecutive months.
21 Section 16. Section 641.285, Florida Statutes, is
22 amended to read:
23 641.285 Insolvency protection.--
24 (1) Unless otherwise provided in this section, Each
25 health maintenance organization shall deposit with the
26 department cash or securities of the type eligible under s.
27 625.52, which shall have at all times a market value in the
28 amount set forth in this subsection. The amount of the
29 deposit shall be reviewed annually, or more often, as the
30 department deems necessary. The market value of the deposit
31 shall be a minimum of $300,000. the greater of:
28
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (a) Twice its reasonably estimated average monthly
2 uncovered expenditures; or
3 (b) $100,000.
4 (2) If securities or assets deposited by a health
5 maintenance organization under this part are subject to
6 material fluctuations in market value, the department may, in
7 its discretion, require the organization to deposit and
8 maintain on deposit additional securities or assets in an
9 amount as may be reasonably necessary to assure that the
10 deposit will at all times have a market value of not less than
11 the amount specified under this section.
12 (a) If for any reason the market value of assets and
13 securities of a health maintenance organization held on
14 deposit in this state under this code falls below the amount
15 required, the organization shall promptly deposit other or
16 additional assets or securities eligible for deposit
17 sufficient to cure the deficiency. If the health maintenance
18 organization has failed to cure the deficiency within 30 days
19 after receipt of notice thereof by registered or certified
20 mail from the department, the department may revoke the
21 certificate of authority of the health maintenance
22 organization.
23 (b) A health maintenance organization may, at its
24 option, deposit assets or securities in an amount exceeding
25 its deposit required or otherwise permitted under this code by
26 not more than 20 percent of the required or permitted deposit,
27 or $20,000, whichever is the larger amount, for the purpose of
28 absorbing fluctuations in the value of securities and assets
29 deposited and to facilitate the exchange and substitution of
30 securities and assets. During the solvency of the health
31 maintenance organization, any excess shall be released to the
29
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 organization upon its request. During the insolvency of the
2 health maintenance organization, any excess deposit shall be
3 released only as provided in s. 625.62.
4 (3) Whenever the department determines that the
5 financial condition of a health maintenance organization has
6 deteriorated to the point that the policyholders' or
7 subscribers' best interests are not being preserved by the
8 activities of a health maintenance organization, the
9 department may require such health maintenance organization to
10 deposit and maintain deposited in trust with the department
11 for the protection of the health maintenance organization's
12 policyholders, subscribers, and creditors, for such time as
13 the department deems necessary, securities eligible for such
14 deposit under s. 625.52 having a market value of not less than
15 the amount that the department determines is necessary, which
16 amount must not be less than $100,000 or greater than $2
17 million. The deposit required under this subsection is in
18 addition to any other deposits required of a health
19 maintenance organization pursuant to subsections (1) and (2).
20 The department shall waive the deposit requirements set forth
21 in subsection (1) whenever it is satisfied that:
22 (a) The health maintenance organization has sufficient
23 surplus and an adequate history of generating net income to
24 assure its financial viability for the next year;
25 (b) The performance and obligations of the health
26 maintenance organization are guaranteed by a guaranteeing
27 organization of the type and subject to the same provisions as
28 outlined in s. 641.225; or
29 (c) The assets of the health maintenance organization
30 or its contracts with any insurer, health care provider,
31 governmental entity, or other person are reasonably sufficient
30
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 to assure the performance of the obligations of the
2 organization.
3 (4) All income from deposits shall belong to the
4 depositing health maintenance organization and shall be paid
5 to it as it becomes available. A health maintenance
6 organization that has made a securities deposit may withdraw
7 that deposit, or any part thereof, after making a substitute
8 deposit of cash or eligible securities or any combination of
9 these or other acceptable measures of equal amount and value.
10 (5)(a) The requirements of this section do not apply
11 to an applying or licensed health maintenance organization
12 which has a plan, approved by the department, for handling
13 insolvency which provides for continuation of benefits and
14 payments to unaffiliated providers for services rendered both
15 prior to and after insolvency for the duration of the contract
16 period for which payment has been made, except that benefits
17 to members who are confined on the date of insolvency in an
18 inpatient facility shall be continued until their discharge.
19 This plan shall include at least one of the following:
20 1. Contracts of insurance or reinsurance on file with
21 the department that will protect subscribers in the event the
22 health maintenance organization is unable to meet its
23 obligations. Each agreement between the organization and an
24 insurer shall be subject to the laws of this state regarding
25 reinsurance. Each agreement and any modification thereto
26 shall be filed with and approved by the department. Each
27 agreement shall remain in full force and in effect until
28 replaced or for at least 90 days following written
29 notification to the department by registered mail of
30 cancellation or termination by either party. The department
31
31
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 shall be endorsed on the agreement as an additional insured
2 party;
3 2. Contractual arrangements with health care providers
4 that include a guarantee by the provider to continue providing
5 health care services to any subscriber of the health
6 maintenance organization, upon insolvency of the organization,
7 until the end of the contract period for which payment by or
8 on behalf of the subscriber has been made or the discharge of
9 the subscriber from an inpatient facility, whichever occurs
10 later; or
11 3. Other measures acceptable to the department.
12 (b) The department shall reduce the deposit
13 requirements specified in subsection (1) whenever the
14 department has determined that the health maintenance
15 organization has a plan for handling insolvency which
16 partially meets the requirements of this section. The amount
17 of the deposit reduction shall be based on the extent to which
18 the organization meets the requirements of this section.
19 Section 17. Section 641.26, Florida Statutes, is
20 amended to read:
21 641.26 Annual report.--
22 (1) Every health maintenance organization shall,
23 annually within 3 months after the end of its fiscal year, or
24 within an extension of time therefor as the department, for
25 good cause, may grant, in a form prescribed by the department,
26 file a report with the department, verified by the oath of two
27 officers of the organization or, if not a corporation, of two
28 persons who are principal managing directors of the affairs of
29 the organization, properly notarized, showing its condition on
30 the last day of the immediately preceding reporting period.
31 Such report shall include:
32
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (a) A financial statement of the health maintenance
2 organization filed on a computer diskette using a format
3 acceptable to the department.;
4 (b) A financial statement of the health maintenance
5 organization filed on forms acceptable to the department.;
6 (c) An audited financial statement of the health
7 maintenance organization, including its balance sheet and a
8 statement of operations for the preceding year certified by an
9 independent certified public accountant, prepared in
10 accordance with statutory accounting principles.;
11 (d) The number of health maintenance contracts issued
12 and outstanding and the number of health maintenance contracts
13 terminated.;
14 (e) The number and amount of damage claims for medical
15 injury initiated against the health maintenance organization
16 and any of the providers engaged by it during the reporting
17 year, broken down into claims with and without formal legal
18 process, and the disposition, if any, of each such claim.;
19 (f) An actuarial certification that:
20 1. The health maintenance organization is actuarially
21 sound, which certification shall consider the rates, benefits,
22 and expenses of, and any other funds available for the payment
23 of obligations of, the organization.;
24 2. The rates being charged or to be charged are
25 actuarially adequate to the end of the period for which rates
26 have been guaranteed.;
27 3. Incurred but not reported claims and claims
28 reported but not fully paid have been adequately provided
29 for.; and
30 (g) A report prepared by the Certified Public
31 Accountant and filed with the department describing material
33
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 weaknesses in the health maintenance organization's internal
2 control structure as noted by the Certified Public Accountant
3 during the audit. The report must be filed with the annual
4 audited financial report as required in paragraph (c). The
5 health maintenance organization shall provide a description of
6 remedial actions taken or proposed to correct material
7 weaknesses, if the actions are not described in the
8 independent certified public accountant's report.
9 (h)(g) Such other information relating to the
10 performance of health maintenance organizations as is required
11 by the department.
12 (2) The department may require updates of the
13 actuarial certification as to a particular health maintenance
14 organization if the department has reasonable cause to believe
15 that such reserves are understated to the extent of materially
16 misstating the financial position of the health maintenance
17 organization. Workpapers in support of the statement of the
18 updated actuarial certification must be provided to the
19 department upon request.
20 (3)(2) Every health maintenance organization shall
21 file quarterly, within 45 days after each of its quarterly
22 reporting periods, an unaudited financial statement of the
23 organization as described in paragraphs (1)(a) and (b). The
24 quarterly report shall be verified by the oath of two officers
25 of the organization, properly notarized.
26 (4)(3) Any health maintenance organization that which
27 neglects to file an annual report or quarterly report in the
28 form and within the time required by this section shall
29 forfeit up to $1,000 for each day for the first 10 days during
30 which the neglect continues and shall forfeit up to $2,000 for
31 each day after the first 10 days during which the neglect
34
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 continues; and, upon notice by the department to that effect,
2 the organization's authority to enroll new subscribers or to
3 do business in this state shall cease while such default
4 continues. The department shall deposit all sums collected by
5 it under this section to the credit of the Insurance
6 Commissioner's Regulatory Trust Fund. The department shall not
7 collect more than $100,000 for each report.
8 (5)(4) Each authorized health maintenance organization
9 shall retain an independent certified public accountant,
10 hereinafter referred to in this section as "CPA," who agrees
11 by written contract with the health maintenance organization
12 to comply with the provisions of this part. The contract
13 shall state:
14 (a) The CPA shall provide to the HMO audited financial
15 statements consistent with this part.
16 (b) Any determination by the CPA that the health
17 maintenance organization does not meet minimum surplus
18 requirements as set forth in this part shall be stated by the
19 CPA, in writing, in the audited financial statement.
20 (c) The completed work papers and any written
21 communications between the CPA firm and the health maintenance
22 organization relating to the audit of the health maintenance
23 organization shall be made available for review on a
24 visual-inspection-only basis by the department at the offices
25 of the health maintenance organization, at the department, or
26 at any other reasonable place as mutually agreed between the
27 department and the health maintenance organization. The CPA
28 must retain for review the work papers and written
29 communications for a period of not less than 6 years.
30 (d) The CPA shall provide to the department a written
31 report describing material weaknesses in the health
35
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 maintenance organizations's internal control structure as
2 noted during the audit.
3 (6)(5) To facilitate uniformity in financial
4 statements and to facilitate department analysis, the
5 department may by rule adopt the form for financial statements
6 of a health maintenance organization, including supplements as
7 approved by the National Association of Insurance
8 Commissioners in 1995, and may adopt subsequent amendments
9 thereto if the methodology remains substantially consistent,
10 and may by rule require each health maintenance organization
11 to submit to the department all or part of the information
12 contained in the annual statement in a computer-readable form
13 compatible with the electronic data processing system
14 specified by the department.
15 (7) In addition to information called for and
16 furnished in connection with its annual or quarterly
17 statements, the health maintenance organization shall furnish
18 to the department as soon as reasonably possible such
19 information as to its transactions or affairs which, in the
20 department's opinion, may have a material effect on the health
21 maintenance organizations financial condition, as the
22 department may from time to time request in writing. All such
23 information furnished pursuant to the department's request
24 must be verified by the oath of two executive officers of the
25 health maintenance organization.
26 (8) Each health maintenance organization shall file
27 one copy of its annual statement convention blank in
28 electronic form, along with such additional filings as
29 prescribed by the department for the preceding year, with the
30 National Association of Insurance Commissioners. Each health
31 maintenance organization shall pay to the department a
36
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 reasonable fee to cover costs associated with the filing and
2 analysis of the documents by the National Association of
3 Insurance Commissioners.
4 Section 18. Paragraph (d) of subsection (2), and
5 paragraphs (a) and (b) of subsection (3) of section 641.31074,
6 Florida Statutes, are amended to read:
7 641.31074 Guaranteed renewability of coverage.--
8 (2) A health maintenance organization may nonrenew or
9 discontinue a contract based only on one or more of the
10 following conditions:
11 (d) The health maintenance organization is ceasing to
12 offer coverage in such a market in accordance with subsection
13 (3) and applicable state law.
14 (3)(a) A health maintenance organization may
15 discontinue offering a particular contract form for group
16 coverage offered in the small group market or large group
17 market only if:
18 1. The health maintenance organization provides notice
19 to each contract holder provided coverage of this form in such
20 market, and participants and beneficiaries covered under such
21 coverage, of such discontinuation at least 90 days prior to
22 the date of the nonrenewal discontinuation of such coverage;
23 2. The health maintenance organization offers to each
24 contract holder provided coverage of this form in such market
25 the option to purchase all, or in the case of the large-group
26 market, any other health insurance coverage currently being
27 offered by the health maintenance organization in such market;
28 and
29 3. In exercising the option to discontinue coverage of
30 this form and in offering the option of coverage under
31 subparagraph 2., the health maintenance organization acts
37
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 uniformly without regard to the claims experience of those
2 contract holders or any health-status-related factor that
3 relates to any participants or beneficiaries covered or new
4 participants or beneficiaries who may become eligible for such
5 coverage.
6 (b)1. In any case in which a health maintenance
7 organization elects to discontinue offering all coverage in
8 the small group market or the large group market, or both, in
9 this state, coverage may be discontinued by the insurer only
10 if:
11 a. The health maintenance organization provides notice
12 to the department and to each contract holder, and
13 participants and beneficiaries covered under such coverage, of
14 such discontinuation at least 180 days prior to the date of
15 the discontinuation of such coverage; and
16 b. All health insurance issued or delivered for
17 issuance in this state in such market is markets are
18 discontinued and coverage under such health insurance coverage
19 in such market is not renewed.
20 2. In the case of a discontinuation under subparagraph
21 1. in a market, the health maintenance organization may not
22 provide for the issuance of any health maintenance
23 organization contract coverage in the market in this state
24 during the 5-year period beginning on the date of the
25 discontinuation of the last insurance contract not renewed.
26 Section 19. Section 641.3111, Florida Statutes, is
27 amended to read:
28 641.3111 Extension of benefits.--
29 (1) Every group health maintenance contract shall
30 provide that termination of the contract by the health
31 maintenance organization shall be without prejudice to any
38
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 continuous loss which commenced while the contract was in
2 force, but any extension of benefits beyond the period the
3 contract was in force may be predicated upon the continuous
4 total disability of the subscriber and may be limited to
5 payment for the treatment of a specific accident or illness
6 incurred while the subscriber was a member. Such extension of
7 benefits may be limited to the occurrence of the earliest of
8 the following events:
9 (a) The expiration of 12 months.
10 (b) Such time as the member is no longer totally
11 disabled.
12 (c) A succeeding carrier elects to provide replacement
13 coverage without limitation as to the disability condition.
14 (d) The maximum benefits payable under the contract
15 have been paid.
16 (2) For the purposes of this section, an individual is
17 totally disabled if the individual has a condition resulting
18 from an illness or injury which prevents an individual from
19 engaging in any employment or occupation for which the
20 individual is or may become qualified by reason of education,
21 training, or experience, and the individual is under the
22 regular care of a physician.
23 (3) In the case of maternity coverage, when not
24 covered by the succeeding carrier, a reasonable extension of
25 benefits or accrued liability provision is required, which
26 provision provides for continuation of the contract benefits
27 in connection with maternity expenses for a pregnancy that
28 commenced while the policy was in effect. The extension shall
29 be for the period of that pregnancy and shall not be based
30 upon total disability.
31
39
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (4) Except as provided in subsection (1), no
2 subscriber is entitled to an extension of benefits if the
3 termination of the contract by the health maintenance
4 organization is based upon any event referred to in s.
5 641.3922(7)(a)-(g).
6 Section 20. Section 641.316, Florida Statutes, is
7 amended to read:
8 641.316 Fiscal intermediary services.--
9 (1) It is the intent of the Legislature, through the
10 adoption of this section, to ensure the financial soundness of
11 fiscal intermediary services organizations established to
12 develop, manage, and administer the business affairs of health
13 care professional providers such as medical doctors, doctors
14 of osteopathy, doctors of chiropractic, doctors of podiatric
15 medicine, doctors of dentistry, or other health professionals
16 regulated by the Department of Health.
17 (2)(a) The term "fiduciary" or "fiscal intermediary
18 services" means reimbursements received or collected on behalf
19 of health care professionals for services rendered, patient
20 and provider accounting, financial reporting and auditing,
21 receipts and collections management, compensation and
22 reimbursement disbursement services, or other related
23 fiduciary services pursuant to health care professional
24 contracts with health maintenance organizations.
25 (b) The term "fiscal intermediary services
26 organization" means a person or entity which performs
27 fiduciary or fiscal intermediary services to health care
28 professionals who contract with health maintenance
29 organizations other than a fiscal intermediary services
30 organization owned, operated, or controlled by a hospital
31 licensed under chapter 395, an insurer licensed under chapter
40
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 624, a third-party administrator licensed under chapter 626, a
2 prepaid limited health organization licensed under chapter
3 636, a health maintenance organization licensed under this
4 chapter, or physician group practices as defined in s.
5 455.236(3)(f).
6 (3) A fiscal intermediary services organization that
7 which is operated for the purpose of acquiring and
8 administering provider contracts with managed care plans for
9 professional health care services, including, but not limited
10 to, medical, surgical, chiropractic, dental, and podiatric
11 care, and which performs fiduciary or fiscal intermediary
12 services shall be required to secure and maintain a fidelity
13 bond in the minimum amount of 10 percent of the funds handled
14 by the intermediary in connection with its fiscal and
15 fiduciary services during the prior year or $1 million,
16 whichever is less. The minimum bond amount shall be $50,000.
17 The fidelity bond shall protect the fiscal intermediary from
18 loss caused by the dishonesty of its employees and must remain
19 unimpaired for as long as the intermediary continues in
20 business in the state. $10 million. This requirement shall
21 apply to all persons or entities engaged in the business of
22 providing fiduciary or fiscal intermediary services to any
23 contracted provider or provider panel. The fidelity bond shall
24 provide coverage against misappropriation of funds by the
25 fiscal intermediary or its officers, agents, or employees;
26 must be posted with the department for the benefit of managed
27 care plans, subscribers, and providers; and must be on a form
28 approved by the department. The fidelity bond must be
29 maintained and remain unimpaired as long as the fiscal
30 intermediary services organization continues in business in
31 this state and until the termination of its registration.
41
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (4) A fiscal intermediary services organization, as
2 described in subsection (3), shall secure and maintain a
3 surety bond on file with the department, naming the
4 intermediary as principal. The bond must be obtained from a
5 company authorized to write surety insurance in the state, and
6 the department shall be obligee on behalf of itself and third
7 parties. The penal sum of the bond may not be less than 5
8 percent of the funds handled by the intermediary in connection
9 with its fiscal and fiduciary services during the prior year
10 or $250,000, whichever is less. The minimum bond amount must
11 be $10,000. The condition of the bond must be that the
12 intermediary shall register with the department and shall not
13 misappropriate funds within its control or custody as a fiscal
14 intermediary or fiduciary. The aggregate liability of the
15 surety for any and all breaches of the conditions of the bond
16 may not exceed the penal sum of the bond. The bond must be
17 continuous in form, must be renewed annually by a continuation
18 certificate, and may be terminated by the surety upon its
19 giving 30 days' written notice of termination to the
20 department.
21 (5)(4) A fiscal intermediary services organization may
22 not collect from the subscriber any payment other than the
23 copayment or deductible specified in the subscriber agreement.
24 (6)(5) Any fiscal intermediary services organization,
25 other than a fiscal intermediary services organization owned,
26 operated, or controlled by a hospital licensed under chapter
27 395, an insurer licensed under chapter 624, a third-party
28 administrator licensed under chapter 626, a prepaid limited
29 health organization licensed under chapter 636, a health
30 maintenance organization licensed under this chapter, or
31 physician group practices as defined in s. 455.236(3)(f), must
42
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 register with the department and meet the requirements of this
2 section. In order to register as a fiscal intermediary
3 services organization, the organization must comply with ss.
4 641.21(1)(c) and (d) and 641.22(6). Should the department
5 determine that the fiscal intermediary services organization
6 does not meet the requirements of this section, the
7 registration shall be denied. In the event that the registrant
8 fails to maintain compliance with the provisions of this
9 section, the department may revoke or suspend the
10 registration. In lieu of revocation or suspension of the
11 registration, the department may levy an administrative
12 penalty in accordance with s. 641.25.
13 (7)(6) The department shall adopt promulgate rules
14 necessary to administer implement the provisions of this
15 section.
16 Section 21. Subsections (3), (7), and (14) of section
17 641.3922, Florida Statutes, are amended to read:
18 641.3922 Conversion contracts; conditions.--Issuance
19 of a converted contract shall be subject to the following
20 conditions:
21 (3) CONVERSION PREMIUM.--The premium for the converted
22 contract shall be determined in accordance with premium rates
23 applicable to the age and class of risk of each person to be
24 covered under the converted contract and to the type and
25 amount of coverage provided. However, the premium for the
26 converted contract may not exceed 200 percent of the standard
27 risk rate, as established by the department under s.
28 627.6675(3) Florida Comprehensive Health Association and
29 adjusted for differences in benefit levels and structure
30 between the converted policy and the policy offered by the
31 Florida Comprehensive Health Association. The mode of payment
43
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 for the converted contract shall be quarterly or more
2 frequently at the option of the organization, unless otherwise
3 mutually agreed upon between the subscriber and the
4 organization.
5 (7) REASONS FOR CANCELLATION; TERMINATION.--The
6 converted health maintenance contract must contain a
7 cancellation or nonrenewability clause providing that the
8 health maintenance organization may refuse to renew the
9 contract of any person covered thereunder, but cancellation or
10 nonrenewal must be limited to one or more of the following
11 reasons:
12 (a) Fraud or intentional material misrepresentation,
13 subject to the limitations of s. 641.31(23), in applying for
14 any benefits under the converted health maintenance contract;
15 (b) Eligibility of the covered person for coverage
16 under Medicare, Title XVIII of the Social Security Act, as
17 added by the Social Security Amendments of 1965, or as later
18 amended or superseded, or under any other state or federal law
19 providing for benefits similar to those provided by the
20 converted health maintenance contract, except for Medicaid,
21 Title XIX of the Social Security Act, as amended by the Social
22 Security Amendments of 1965, or as later amended or
23 superseded.
24 (b)(c) Disenrollment for cause, after following the
25 procedures outlined in s. 641.3921(4).
26 (c)(d) Willful and knowing misuse of the health
27 maintenance organization identification membership card by the
28 subscriber or the willful and knowing furnishing to the
29 organization by the subscriber of incorrect or incomplete
30 information for the purpose of fraudulently obtaining coverage
31 or benefits from the organization.
44
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (d)(e) Failure, after notice, to pay required
2 premiums.
3 (e)(f) The subscriber has left the geographic area of
4 the health maintenance organization with the intent to
5 relocate or establish a new residence outside the
6 organization's geographic area.
7 (f)(g) A dependent of the subscriber has reached the
8 limiting age under the converted contract, subject to
9 subsection (12); but the refusal to renew coverage shall apply
10 only to coverage of the dependent, except in the case of
11 handicapped children.
12 (g)(h) A change in marital status that makes a person
13 ineligible under the original terms of the converted contract,
14 subject to subsection (12).
15 (14) NOTIFICATION.--A notification of the conversion
16 privilege shall be included in each health maintenance
17 contract and in any certificate or member's handbook. The
18 organization shall mail an election and premium notice form,
19 including an outline of coverage, on a form approved by the
20 department, within 14 days after any individual who is
21 eligible for a converted health maintenance contract gives
22 notice to the organization that the individual is considering
23 applying for the converted contract or otherwise requests such
24 information. The outline of coverage must contain a
25 description of the principal benefits and coverage provided by
26 the contract and its principal exclusions and limitations,
27 including, but not limited to, deductibles and coinsurance.
28 Section 22. Subsection (12) is added to section
29 641.495, Florida Statutes, to read:
30 641.495 Requirements for issuance and maintenance of
31 certificate.--
45
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 1998 CS for SB 1800
311-1853-98
1 (12) The provisions of part I of chapter 395 do not
2 apply to a health maintenance organization that, on or before
3 January 1, 1991, provides not more than 10 outpatient holding
4 beds for short-term and hospice-type patients in an ambulatory
5 care facility for its members, provided that such health
6 maintenance organization maintains current accreditation by
7 the Joint Commission on Accreditation of Health Care
8 Organizations, the Accreditation Association for Ambulatory
9 Health Care, or the National Committee for Quality Assurance.
10 Section 23. This act shall take effect January 1,
11 1999.
12
13 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
14 Senate Bill 1800
15
16 Revises eligibility for guaranteed-issuance of individual
insurance coverage to include persons with 18 months of prior
17 coverage under an individual plan, if the prior insurance
coverage is terminated due to the insurer or HMO becoming
18 insolvent or discontinuing all policies in the state, or due
to the individual no longer living in the service area of the
19 insurer or HMO.
20 Provides that persons who are eligible for a conversion policy
under the laws of any other state, federal law, or a
21 self-insured plan, are not eligible for guaranteed-issuance of
individual coverage.
22
Increases solvency-related requirements for HMOs, including an
23 increase in minimum surplus requirements, an increase in the
amount that must be deposited with the Department of
24 Insurance, and additional financial reports and other
information that must be filed with the department.
25
Lowers and revises fidelity bond and surety bond requirements
26 that must be met by fiscal intermediary organizations.
27 Exempts disability income and accidental death policies from
certain prohibited rating practices that apply to health
28 insurance policies.
29
30
31
46