House Bill 0645c1

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    Florida House of Representatives - 2000              CS/HB 645

        By the Committee on Health Care Services and
    Representatives C. Green, Jones, Peaden, Fasano, Maygarden,
    Wise, Fuller, Farkas and Jacobs




  1                      A bill to be entitled

  2         An act relating to health care; creating the

  3         Florida Health Endowment Association; providing

  4         for appointment of a board of directors;

  5         providing a limitation on the liability of

  6         members, employees of the association, and

  7         representatives of the Agency for Health Care

  8         Administration when performing responsibilities

  9         of the association; providing for open

10         meetings; prescribing duties of the board of

11         directors; requiring a plan of operation;

12         requiring procedures for transition of

13         policyholders from the Florida Comprehensive

14         Health Association to the Florida Health

15         Endowment Association; providing rulemaking

16         authority; specifying mandatory and

17         discretionary powers of the board; requiring an

18         audit and report; providing definitions;

19         providing eligibility requirements for persons

20         who seek to join the new health endowment

21         insurance plan; specifying coverages and

22         limitations on coverages as a condition of a

23         person's eligibility; providing for the

24         selection, term of service, and duties of the

25         administrator for the association; providing

26         coverages, benefits, expenses, premiums, and

27         deductibles; authorizing the association to

28         contract with insurers to provide

29         disease-management services; providing

30         conditions; requiring individuals having

31         coverage issued by the Florida Comprehensive

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  1         Health Association to be issued coverage by the

  2         Florida Health Endowment Association; requiring

  3         the Florida Health Endowment Association to

  4         assume the assets and liabilities of the

  5         Florida Comprehensive Health Association;

  6         repealing s. 627.648, F.S., relating to the

  7         Florida Comprehensive Health Association Act;

  8         repealing s. 627.6482, F.S., relating to

  9         definitions; repealing s. 627.6484, F.S.,

10         relating to termination of enrollment;

11         repealing s. 627.6486, F.S., relating to

12         eligibility; repealing s. 627.6488, F.S.,

13         relating to the creation of the Florida

14         Comprehensive Health Association; repealing s.

15         627.6489, F.S., relating to the

16         disease-management program; repealing s.

17         627.649, F.S., relating to the administrator of

18         the program; repealing s. 627.6496, F.S.,

19         relating to issuance of policies; repealing s.

20         627.6498, F.S., relating to minimum benefits;

21         repealing s. 627.6492, F.S., relating to

22         participation of insurers; repealing s.

23         627.6494, F.S., relating to assessments;

24         providing an appropriation to the Florida

25         Health Endowment Association Trust Fund;

26         providing an effective date.

27

28  Be It Enacted by the Legislature of the State of Florida:

29

30         Section 1.  Florida Health Endowment Association.--

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  1         (1)  There is created a nonprofit legal corporation to

  2  be known as the "Florida Health Endowment Association." The

  3  association shall be considered a health insurer for purposes

  4  of the Florida Insurance Code. The association is exempt from

  5  the certificate-of-authority and financial requirements of the

  6  insurance code.

  7         (2)(a)  The association shall operate subject to the

  8  supervision and approval of a five-member board of directors.

  9  The board of directors shall consist of:

10         1.  The director of the Agency for Health Care

11  Administration, or his or her designee, who shall serve as

12  chair of the board.

13         2.  The Insurance Commissioner, or his or her designee

14  from the Department of Insurance.

15         3.  Three members appointed by the Governor as follows:

16         a.  One representative of policyholders who is not

17  associated with the medical profession or a hospital.

18         b.  One representative of the health insurance

19  industry.

20         c.  One member of the public.

21         (b)  The administrator for the association, or his or

22  her affiliate, may not be a member of the board. Any appointed

23  board member may be removed and replaced by his or her

24  appointor at any time without cause.

25         (c)  All appointed board members, including the chair,

26  shall be appointed to staggered 3-year terms beginning on a

27  date established in the plan of operation.

28         (d)  The board of directors may employ persons to

29  perform the administrative and financial transactions and

30  responsibilities of the association and to perform other

31  necessary functions not prohibited by law.

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  1         (e)  The members of the board shall serve without

  2  compensation for such service, but are entitled to be

  3  reimbursed for expenses incurred in carrying out their

  4  responsibilities under this act, as provided in s. 112.061,

  5  Florida Statutes.

  6         (f)  There is no liability on the part of, and no cause

  7  of action of any nature shall arise against, any employee of

  8  the association, member of the board of directors of the

  9  association, or representative of the Agency for Health Care

10  Administration for any act or omission taken by such person in

11  the performance of his or her powers and duties under this

12  act, unless the act or omission is committed with intentional

13  disregard of the rights of the claimant.

14         (g)  Meetings of the board are subject to s. 286.011,

15  Florida Statutes.

16         (3)  The board of directors of the association shall:

17         (a)  Adopt a plan of operation, articles, bylaws, and

18  operating rules pursuant to this act and submit the plan of

19  operation to the Agency for Health Care Administration for

20  approval. The plan of operation, articles, bylaws, and

21  operating rules of the Florida Comprehensive Health

22  Association, and any amendments thereto, shall remain in

23  effect until the Agency for Health Care Administration has

24  approved the Florida Health Endowment Association's plan of

25  operation.

26         (b)  Direct the association in a manner that ensures

27  that the financial resources of the association are adequate

28  to meet the obligations of the program.

29         (c)  Establish administrative and accounting procedures

30  for the operation of the association and provide for an annual

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  1  audit of the financial statements by an independent certified

  2  public accountant.

  3         (d)  Annually evaluate or cause to be evaluated the

  4  actuarial soundness of the association. The association shall

  5  contract with an actuary to evaluate the pool of insureds in

  6  the association and monitor the financial condition of the

  7  Florida Health Endowment Trust Fund. The actuary shall

  8  determine the feasibility of enrolling new members in the

  9  association, which must be based on the projected revenues and

10  expenses of the association.

11         (e)  Establish eligibility requirements for individuals

12  participating in the association to ensure that the financial

13  resources of the association are adequate to meet the

14  obligations and are consistent with the actuarial

15  determination pursuant to paragraph (d) and with the

16  eligibility requirements of section 3.

17         (f)  Establish procedures under which members in the

18  association may have grievances reviewed internally by an

19  impartial body and reported to the association. Individuals

20  receiving care through the association under contract from a

21  health maintenance organization must follow the grievance

22  procedures established in ss. 408.7056 and 641.31(5), Florida

23  Statutes.

24         (g)  Select an administrator.

25         (h)  Develop and implement a program to publicize the

26  existence of the association, the eligibility requirements,

27  and the procedures for enrollment.

28         (i)  Design and employ cost-containment measures and

29  requirements that shall include preadmission certification,

30  any out-of-state health care, home health care, hospice care,

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  1  negotiated purchase of medical and pharmaceutical supplies,

  2  and individual case management.

  3         (j)  Contract with authorized insurers, health

  4  maintenance organizations, or health care providers.

  5         (k)  Use a case manager or managers to supervise and

  6  manage the medical care or coordinate the supervision and

  7  management of the medical care of specified individuals. A

  8  case manager, with the approval of the association, shall have

  9  final approval over the case management for any specific

10  individual. If cost-effective and available in the county

11  where the policyholder resides, the association, upon

12  application or renewal of a policy, may place an individual,

13  as established under section 5, with a case manager, who shall

14  determine the most cost-effective quality care system or

15  health care provider and shall place the individual in such

16  system or with such health care provider. Prior to and during

17  the implementation of case management, the case manager shall

18  obtain input from the policyholder, parent, guardian, and

19  health care providers.

20         (l)  Appoint an executive director to serve as the

21  chief administrative and operational officer of the

22  association and perform other duties assigned to him or her by

23  the board.

24         (m)  Establish in the plan of operation procedures for

25  the transition of policyholders from the Florida Comprehensive

26  Health Association to the association.

27         1.  The plan of operation must include procedures for

28  calculating, issuing, and collecting the final assessment for

29  operating losses of the Florida Comprehensive Health

30  Association as specified in s. 627.6488(4)(d), Florida

31  Statutes.

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  1         2.  The plan of operation must ensure that remaining

  2  Florida Comprehensive Health Association policyholders,

  3  including those currently enrolled in Medicare, will not be

  4  subjected to a new preexisting condition waiting period and

  5  that any previous claims paid by the Florida Comprehensive

  6  Health Association will apply towards the lifetime maximum

  7  benefit available in the Florida Health Endowment Association.

  8         (n)  Contract with the State Board of Administration

  9  for the investment of the funds held in the Florida Health

10  Endowment Trust Fund in accordance with a trust agreement

11  entered into by the association and the State Board of

12  Administration in accordance with ss. 215.44-215.53, Florida

13  Statutes.

14         (o)  Submit a report to the Governor, the President of

15  the Senate, the Speaker of the House of Representatives, and

16  the Minority Leaders of the Senate and the House of

17  Representatives not later than October 1 of each year. The

18  report shall summarize the activities of the association for

19  the 12-month period ending December 31 of the previous year,

20  including then-current data and estimates as to premiums, the

21  expense of administration, the paid and incurred losses for

22  the year, and the financial status of the Florida Health

23  Endowment Trust Fund, and any recommendations by the actuary

24  and actions by the association for the opening or closing of

25  the association. The report shall also include analysis and

26  recommendations for legislative changes regarding utilization

27  review, quality assurance, an evaluation of the administrator

28  of the association, access to cost-effective health care, and

29  cost containment or case management policy and recommendations

30  concerning enrollment.

31         (4)  The association may:

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  1         (a)  Sue or be sued.

  2         (b)  Prepare or contract for an independent performance

  3  audit of the administrator of the association.

  4         (c)  Invest funds not required for immediate

  5  disbursement.

  6         (d)  Appear on its own behalf before boards,

  7  commissions, or other governmental agencies.

  8         (e)  Execute, hold, buy, and sell any instruments,

  9  obligations, securities, and property as determined

10  appropriate by the board.

11         (f)  Restrict the number of participants in the

12  association based on actuarial estimates. However, any person

13  denied participation solely on the basis of such restriction

14  must be granted priority on a first-come, first-served basis

15  for participation in the succeeding years in which the

16  association is reopened for participants.

17         (g)  Contract for necessary goods and services; employ

18  necessary personnel; and engage the services of private

19  consultants, actuaries, managers, legal counsel, and

20  independent certified public accountants for administrative or

21  technical assistance.

22         (h)  Solicit and accept gifts, grants, loans, and other

23  aid from any source or participate in any other way in any

24  government program to carry out the purposes of this act.

25         (i)  Require and collect administrative fees and

26  charges in connection with any transaction and impose

27  reasonable penalties, including default, for delinquent

28  payments or for entering into the association on a fraudulent

29  basis.

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  1         (j)  Procure insurance against any loss in connection

  2  with the property, assets, and activities of the association

  3  or the board.

  4         (k)  Establish other policies, procedures, and criteria

  5  to implement and administer this section.

  6         (l)  Adopt procedures to govern contract dispute

  7  proceedings between the association and its vendors.

  8         (5)  The Auditor General shall conduct an operational

  9  audit and an actuarial study of the Florida Health Endowment

10  Association. The actuarial study shall determine the projected

11  revenues and expenses associated with providing continuing

12  coverage to the current members of the Florida Comprehensive

13  Health Association and the feasibility of enrolling new

14  members. The reports shall be submitted to the President of

15  the Senate and Speaker of the House of Representatives on or

16  before January 1, 2002.

17         Section 2.  Definitions.--As used in sections 1-6 of

18  this act, the term:

19         (1)  "Administrator" means an authorized insurer or a

20  third-party administrator licensed under chapter 626, Florida

21  Statutes.

22         (2)  "Association" means the Florida Health Endowment

23  Association.

24         (3)  "Board" means the board of directors of the

25  association.

26         (4)  "Case management" means the specific supervision

27  and management of the medical care provided or prescribed for

28  a specific individual or a specific episode of care, which may

29  include the use of health care providers designated by the

30  case manager.

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  1         (5)  "Agency" means the Agency for Health Care

  2  Administration.

  3         (6)  "Medicare" means coverage under both parts A and B

  4  of Title XVII of the Social Security Act, 42 U.S.C. s. 1395 et

  5  seq., as amended.

  6         (7)  "Case manager" means the person or persons used by

  7  the association to supervise and manage or coordinate with the

  8  administrator the supervision and management of the medical

  9  care provided or prescribed for a specific individual.

10         (8)  "Plan of operation" means the articles, bylaws,

11  and operating rules and procedures adopted by the association.

12         (9)  "Resident" means a person who is legally domiciled

13  in this state.

14         Section 3.  Eligibility.--

15         (1)  Except as provided in subsection (2), any person

16  who has been a resident for the previous year and continues to

17  be a resident of the state is eligible for coverage if such

18  person provides evidence of a notice of rejection or refusal

19  to issue substantially similar insurance for health reasons by

20  an insurer licensed to do business in this state.

21         (2)  The association or administrator shall require

22  verification of residency for the preceding 12 months and

23  shall require any additional information or documentation or

24  statements under oath when necessary to determine residency

25  upon initial application and for the entire term of the

26  policy. A person may demonstrate his or her residency by

27  maintaining his or her residence in this state for the

28  preceding year, purchasing a home which is occupied by him or

29  her as his or her primary residence for the past 12 months, or

30  establishing a domicile in this state pursuant to s. 222.17,

31  Florida Statutes, for the previous 12 months.

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  1         (3)  A person is ineligible for coverage under the

  2  association if:

  3         (a)  The person has or obtains health insurance

  4  coverage substantially similar to or more comprehensive than

  5  the association's policy, or would be eligible to have

  6  coverage if the person elected to obtain coverage.

  7         (b)  The person is an inmate or resident of a public

  8  institution or correctional facility.

  9         (c)  The person's premiums are paid for or reimbursed

10  under any government-sponsored program or by any government

11  agency or health care provider, except as an agency or health

12  care provider.

13         (d)  The person has received the lifetime maximum

14  benefit under coverage issued by the association.

15         (e)  The person is eligible, on the date of issue of

16  coverage under the association, for substantially similar

17  coverage under another contract or policy.

18         (f)  The person is currently enrolled in or is eligible

19  for health care benefits under:

20         1.  The Medicare programs, except for those persons

21  currently insured by the Florida Comprehensive Health

22  Association and currently enrolled under Medicare.

23         2.  The Florida Medicaid program.

24         3.  The Florida Kidcare program.

25         4.  Any other government-funded health care program.

26         (4)  Coverage ceases:

27         (a)  On the date a person is no longer a resident of

28  this state;

29         (b)  On the date a person requests coverage to end;

30         (c)  Upon the date of death of the covered person;

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  1         (d)  On the date state law requires cancellation of the

  2  policy; or

  3         (e)  Sixty days after the person receives notice from

  4  the association making any inquiry concerning the person's

  5  eligibility or place of residence to which the person does not

  6  reply.

  7         (5)  All eligible persons must, upon application or

  8  renewal, agree to be placed in a case-management system when

  9  the association and the case manager determine that such

10  system will be cost-effective and provide quality care to the

11  individual.

12         (6)  The coverage of any person who ceases to meet the

13  eligibility requirements shall be terminated immediately. If

14  such person again becomes eligible for subsequent coverage,

15  any previous claims payments must be applied towards the

16  lifetime maximum benefit, and any limitation relating to

17  preexisting conditions in effect at the time such person again

18  becomes eligible applies to such person.

19         Section 4.  Administrator.--

20         (1)  The association shall select an administrator,

21  through a competitive bidding process, to administer the

22  coverage offered through the association. The association

23  shall evaluate bids based on criteria established by the

24  board, which must include:

25         (a)  The administrator's proven ability to handle

26  individual accident and health insurance.

27         (b)  The extent to which the administrator has

28  developed a network of health care providers for providing

29  managed health care on a statewide basis.

30         (c)  The efficiency of the administrator's

31  claims-paying procedures.

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  1         (d)  An estimate of total charges for administering the

  2  coverage for the association.

  3         (2)  The administrator shall serve for a period of 3

  4  years unless otherwise determined by the board. At least 1

  5  year prior to the expiration of each 3-year period of service

  6  by an administrator, the association shall invite all insurers

  7  or third party administrators, including the current

  8  administering insurer, to submit bids to serve as the

  9  administrator for the succeeding 3-year period. The selection

10  of the administrator for the succeeding period must be made at

11  least 6 months prior to the end of the current 3-year period.

12         (3)  The administrator may:

13         (a)  Perform all eligibility and administrative

14  claims-payment functions relating to the association, as

15  prescribed by the association.

16         (b)  Pay an agent's referral fee, as established by the

17  association, to each insurance agent who refers an applicant

18  to the association, if the applicant's application is

19  accepted. The selling or marketing of coverage is not limited

20  to the administrator or its agents. However, any agent must be

21  licensed by the Department of Insurance to sell health

22  insurance in this state. The referral fees must be paid by the

23  administrator from moneys received as premiums for the

24  coverage.

25         (c)  Establish a premium-billing procedure for

26  collecting premiums from insured persons. Billings must be

27  made periodically as determined by the association.

28         (d)  Perform all necessary functions to assure timely

29  payment of benefits, including:

30

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  1         1.  Making available information relating to the proper

  2  manner of submitting a claim for benefits and distributing

  3  forms upon which submissions are made.

  4         2.  Evaluating the eligibility of each claim for

  5  payment.

  6         3.  Notifying each claimant, within the time limits

  7  prescribed by law as to insurers and third-party

  8  administrators, after receiving a properly completed and

  9  executed proof of loss whether the claim is accepted,

10  rejected, or compromised.

11         (e)  Submit regular reports to the association. The

12  frequency, content, and form of the reports must be determined

13  by the association.

14         (f)  Following the close of each calendar year,

15  determine net premiums, reinsurance premiums less

16  administrative expense allowance, and the expense of

17  administration pertaining to the reinsurance operations of the

18  association.

19         (g)  Pay claims expenses from the premium payments

20  received from or on behalf of covered persons.

21         Section 5.  Minimum benefits coverage; exclusions;

22  premiums; deductibles.--

23         (1)  COVERAGE OFFERED.--

24         (a)  The association must offer in an annually

25  renewable policy the coverage specified in this section for

26  each eligible individual.

27         (b)  Coverage provided to a person who is eligible for

28  Medicare benefits may not be issued as a Medicare supplement

29  policy as defined in s. 627.672, Florida Statutes.

30         (2)  BENEFITS.--The association must offer coverage to

31  every eligible person, subject to limitations set by the

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  1  association. The coverage offered must pay an eligible

  2  person's covered expenses, subject to limits on the deductible

  3  and coinsurance payments authorized under subsection (4), up

  4  to a lifetime limit of $1 million per covered individual. The

  5  maximum limit under this subsection may not be altered by the

  6  association, and no actuarially equivalent benefit may be

  7  substituted by the association.

  8         (3)  COVERED EXPENSES.--The coverage issued by the

  9  association must, at a minimum, be patterned after the

10  standard health benefit as defined in s. 627.6699, Florida

11  Statutes.

12         (4)  PREMIUMS, DEDUCTIBLES, AND COINSURANCE.--

13         (a)  The association may provide for annual deductibles

14  for coverage in the amount of $1,000 or any higher amounts

15  proposed by the board and approved by the Department of

16  Insurance. The schedules of premiums and deductibles must be

17  established by the association.

18         1.  Separate schedules of premium rates based on age,

19  gender, and geography may apply for individual risks.

20         2.  Rates are subject to approval by the Department of

21  Insurance.

22         3.  Standard risk rates for coverage issued by the

23  association must be established by the Department of

24  Insurance, pursuant to s. 627.6675(3), Florida Statutes.

25         4.  An association policy may contain provisions under

26  which coverage is excluded during a period of 12 months

27  following the effective date of coverage with respect to a

28  given covered individual for any preexisting condition, as

29  long as:

30         a.  The condition manifested itself within a period of

31  6 months before the effective date of coverage; or

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  1         b.  Medical advice or treatment was recommended or

  2  received within a period of 6 months before the effective date

  3  of coverage.

  4         5.  The board shall establish premium schedules and

  5  shall revise premium schedules pursuant to this section each

  6  12-month policy period, and the rate will be 200 percent of

  7  the standard risk rate as established by the Department of

  8  Insurance.

  9         a.  If the covered costs incurred by the eligible

10  person exceed the deductible for coverage selected by the

11  person in a policy year, the association shall pay in the

12  following manner:

13         (I)  For individuals placed under case management, the

14  association shall pay 90 percent of the additional covered

15  costs incurred by the person during the policy year for the

16  first $10,000, after which the association shall pay 100

17  percent of the covered costs incurred by the person during the

18  policy year.

19         (II)  For individuals using a preferred provider

20  network, the association shall pay 80 percent of the

21  additional covered costs incurred by the person during the

22  policy year for the first $10,000, after which the association

23  shall pay 90 percent of covered costs incurred by the person

24  during the policy year.

25         (III)  If the person does not use either the case

26  management system or a preferred provider network, the

27  association shall pay 60 percent of the additional covered

28  costs incurred by the person for the first $10,000, after

29  which the association shall pay 70 percent of the additional

30  covered costs incurred by the person during the policy year.

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  1         b.  All premiums paid to the association must be

  2  deposited with the Florida Health Endowment Association.

  3         c.  Notwithstanding the provisions of s. 624.509,

  4  Florida Statutes, premiums for coverage are, as to the

  5  association and participating insurers, exempt from premium

  6  taxation.

  7         (5)  OTHER SOURCES PRIMARY.--

  8         (a)  Any amounts paid or payable by Medicare or any

  9  other governmental program or any other insurance, or

10  self-insurance maintained in lieu of otherwise statutorily

11  required insurance, may not be made or recognized as claims

12  under such policy or be recognized as or towards satisfaction

13  of applicable deductibles or out-of-pocket maximums or to

14  reduce the limits of benefits available.

15         (b)  The association has a cause of action against a

16  participant for any benefits paid to the participant which

17  should not have been claimed or recognized as claims because

18  of the provisions of this subsection or because the condition

19  is not covered.

20         (6)  NONENTITLEMENT.--Coverage under the Florida Health

21  Endowment Association does not provide an individual with an

22  entitlement to health care services or health insurance. No

23  cause of action shall arise against the state or the board for

24  failure to make health care services or health insurance

25  available under this section.

26         Section 6.  Disease management services.--

27         (1)  The association may contract with insurers to

28  provide disease management services for insurers that elect to

29  participate in the association's disease management program.

30         (2)  An insurer that elects to contract for such

31  services must provide the association with all medical records

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CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2000              CS/HB 645

    169-447-00






  1  and claims information necessary for the association to

  2  effectively manage the services.

  3         (3)  Moneys collected by the association for providing

  4  disease management services must be used by the association to

  5  pay administrative expenses associated with the disease

  6  management program, and any remaining moneys must be deposited

  7  in the Florida Health Endowment Trust Fund.

  8         Section 7.  Effective upon the date of the opening of

  9  the association, all individuals who have insurance coverage

10  issued by the Florida Comprehensive Health Association on that

11  date must be issued insurance coverage under the Florida

12  Health Endowment Association. The Florida Health Endowment

13  Association shall assume all assets and liabilities of the

14  Florida Comprehensive Health Association. The articles,

15  bylaws, and operational rules of the Florida Comprehensive

16  Health Association, and any amendments thereto, shall remain

17  in effect until the Agency for Health Care Administration has

18  approved the Florida Health Endowment Association plan of

19  operation, articles, bylaws, and operating rules.

20         Section 8.  Sections 627.648, 627.6482, 627.6484,

21  627.6486, 627.6488, 627.6489, 627.649, 627.6496, and 627.6498,

22  Florida Statutes, are repealed effective upon the opening of

23  the association. Sections 627.6492 and 627.6494, Florida

24  Statutes, are repealed January 1, 2001.

25         Section 9.  The sum of $50 million is appropriated from

26  the General Revenue Fund to the Florida Health Endowment Trust

27  Fund to carry out the provisions of this act during fiscal

28  year 2000-2001.

29         Section 10.  This act shall take effect July 1, 2000.

30

31

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