House Bill hb1439

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    Florida House of Representatives - 2001                HB 1439

        By Representative Berfield






  1                      A bill to be entitled

  2         An act relating to health insurance; amending

  3         s. 627.410, F.S.; requiring certain group

  4         certificates for health insurance coverage to

  5         be subject to the requirements for individual

  6         health insurance policies; exempting group

  7         health insurance policies insuring groups of a

  8         certain size from rate filing requirements;

  9         providing alternative rate filing requirements

10         for insurers with less than a specified number

11         of nationwide policyholders or members;

12         amending s. 627.411, F.S.; revising the grounds

13         for the disapproval of insurance policy forms;

14         providing that a health insurance policy form

15         may be disapproved if it results in certain

16         rate increases; specifying allowable new

17         business rates and renewal rates if rate

18         increases exceed certain levels; authorizing

19         the Department of Insurance to determine

20         medical trend for purposes of approving rate

21         filings; amending s. 627.6487, F.S.; revising

22         the types of policies that individual health

23         insurers must offer to persons eligible for

24         guaranteed individual health insurance

25         coverage; prohibiting individual health

26         insurers from applying discriminatory

27         underwriting or rating practices to eligible

28         individuals; amending s. 627.6515, F.S.;

29         requiring that coverage issued to a state

30         resident under certain group health insurance

31         policies issued outside the state be subject to

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  1         the requirements for individual health

  2         insurance policies; amending s. 627.6699, F.S.;

  3         revising definitions used in the Employee

  4         Health Care Access Act; allowing carriers to

  5         separate the experience of small employer

  6         groups with fewer than two employees; revising

  7         the rating factors that may be used by small

  8         employer carriers; amending s. 627.6741, F.S.;

  9         requiring that insurers offer Medicare

10         supplement policies to certain individuals;

11         amending s. 627.9408, F.S.; authorizing the

12         department to adopt by rule certain provisions

13         of the Long-Term Care Insurance Model

14         Regulation, as adopted by the National

15         Association of Insurance Commissioners;

16         amending s. 641.31, F.S.; exempting contracts

17         of group health maintenance organizations

18         covering a specified number of persons from the

19         requirements of filing with the department;

20         specifying the standards for department

21         approval and disapproval of a change in rates

22         by a health maintenance organization; providing

23         alternative rate filing requirements for

24         organizations with less than a specified number

25         of subscribers; providing an effective date.

26

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

28

29         Section 1.  Subsection (1) and paragraph (a) of

30  subsection (6) of section 627.410, Florida Statutes, are

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  1  amended, and paragraph (f) is added to subsection (7) of that

  2  section, to read:

  3         627.410  Filing, approval of forms.--

  4         (1)  No basic insurance policy or annuity contract

  5  form, or application form where written application is

  6  required and is to be made a part of the policy or contract,

  7  or group certificates issued under a master contract delivered

  8  in this state, or printed rider or endorsement form or form of

  9  renewal certificate, shall be delivered or issued for delivery

10  in this state, unless the form has been filed with the

11  department at its offices in Tallahassee by or in behalf of

12  the insurer which proposes to use such form and has been

13  approved by the department. This provision does not apply to

14  surety bonds or to policies, riders, endorsements, or forms of

15  unique character which are designed for and used with relation

16  to insurance upon a particular subject (other than as to

17  health insurance), or which relate to the manner of

18  distribution of benefits or to the reservation of rights and

19  benefits under life or health insurance policies and are used

20  at the request of the individual policyholder, contract

21  holder, or certificateholder.  As to group insurance policies

22  effectuated and delivered outside this state but covering

23  persons resident in this state, the group certificates to be

24  delivered or issued for delivery in this state shall be filed

25  with the department for information purposes only, except that

26  group certificates for health insurance coverage, as described

27  in s. 627.6561(5)(a)2., which require individual underwriting

28  to determine coverage eligibility or premium rates to be

29  charged, shall be considered policies issued on an individual

30  basis and are subject to and must comply with the Florida

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  1  Insurance Code in the same manner as individual health

  2  insurance policies issued in this state.

  3         (6)(a)  An insurer shall not deliver or issue for

  4  delivery or renew in this state any health insurance policy

  5  form until it has filed with the department a copy of every

  6  applicable rating manual, rating schedule, change in rating

  7  manual, and change in rating schedule; if rating manuals and

  8  rating schedules are not applicable, the insurer must file

  9  with the department applicable premium rates and any change in

10  applicable premium rates. This paragraph does not apply to

11  group health insurance policies insuring groups of 51 or more

12  persons, except for Medicare supplement insurance, long-term

13  care insurance, and any coverage under which the increase in

14  claim costs over the lifetime of the contract due to advancing

15  age or duration is prefunded in the premium.

16         (7)

17         (f)  Insurers with fewer than 1,000 nationwide

18  policyholders or insured group members or subscribers covered

19  under any form or pooled group of forms with health insurance

20  coverage, as described in s. 627.6561(5)(a)2., excluding

21  Medicare supplement insurance coverage under part VIII, at the

22  time of a rate filing made pursuant to subparagraph (b)1., may

23  file for an annual rate increase limited to medical trend as

24  adopted by the department pursuant to s. 627.411(4). The

25  filing is in lieu of the actuarial memorandum required for a

26  rate filing prescribed by paragraph (6)(b). The filing must

27  include forms adopted by the department and a certification by

28  an officer of the company that the filing includes all similar

29  forms.

30         Section 2.  Section 627.411, Florida Statutes, is

31  amended to read:

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  1         627.411  Grounds for disapproval.--

  2         (1)  The department shall disapprove any form filed

  3  under s. 627.410, or withdraw any previous approval thereof,

  4  only if the form:

  5         (a)  Is in any respect in violation of, or does not

  6  comply with, this code.

  7         (b)  Contains or incorporates by reference, where such

  8  incorporation is otherwise permissible, any inconsistent,

  9  ambiguous, or misleading clauses, or exceptions and conditions

10  which deceptively affect the risk purported to be assumed in

11  the general coverage of the contract.

12         (c)  Has any title, heading, or other indication of its

13  provisions which is misleading.

14         (d)  Is printed or otherwise reproduced in such manner

15  as to render any material provision of the form substantially

16  illegible.

17         (e)  Is for health insurance, and:

18         1.  Provides benefits that which are unreasonable in

19  relation to the premium charged;,

20         2.  Contains provisions that which are unfair or

21  inequitable or contrary to the public policy of this state or

22  that which encourage misrepresentation;, or

23         3.  Contains provisions that which apply rating

24  practices that which result in premium escalations that are

25  not viable for the policyholder market or result in unfair

26  discrimination pursuant to s. 626.9541(1)(g)2.; in sales

27  practices.

28         4.  Results in an actuarially justified rate increase

29  that includes the insurer reducing the portion of the premium

30  used to pay claims from the loss-ratio standard certified in

31  the last actuarial certification filed by the insurer, which

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  1  rate increase is in excess of the actuarially justified rate

  2  increase without such loss-ratio change, by an amount

  3  exceeding the greater of 50 percent of annual medical trend or

  4  5 percent;

  5         5.  Results in an actuarially justified rate increase

  6  that includes the insurer changing established rate

  7  relationships between insureds or types of coverage, which

  8  rate increase is in excess of the actuarially justified rate

  9  increase without such relationship change, to any insured by

10  an amount exceeding the greater of 50 percent of annual

11  medical trend or 5 percent;

12         6.  Results in an actuarially justified rate increase

13  that is in excess of the greater of 150 percent of annual

14  medical trend or 10 percent attributed to the insurer not

15  complying with the annual filing requirements of s. 627.410(7)

16  or department rule adopted under s. 641.31; or

17         7.  Results in an actuarially justified rate increase

18  that is in excess of the greater of 150 percent of annual

19  medical trend or 10 percent on a form or block of pooled forms

20  in which no form is currently available for sale.

21         (f)  Excludes coverage for human immunodeficiency virus

22  infection or acquired immune deficiency syndrome or contains

23  limitations in the benefits payable, or in the terms or

24  conditions of such contract, for human immunodeficiency virus

25  infection or acquired immune deficiency syndrome which are

26  different than those which apply to any other sickness or

27  medical condition.

28         (2)  In determining whether the benefits are reasonable

29  in relation to the premium charged, the department, in

30  accordance with reasonable actuarial techniques, shall

31  consider:

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  1         (a)  Past loss experience and prospective loss

  2  experience within and without this state.

  3         (b)  Allocation of expenses.

  4         (c)  Risk and contingency margins, along with

  5  justification of such margins.

  6         (d)  Acquisition costs.

  7         (3)  If the renewal rate increase to existing insureds

  8  at the time of the rate filing would exceed the indicated

  9  levels based on the conditions in subparagraph (1)(e)4.,

10  subparagraph (1)(e)5., or subparagraph (1)(e)6., the insurer

11  may file for approval of a higher new business rate schedule

12  for new insureds and a rate increase of the amount that is

13  actuarially justified by the aggregate data without such

14  condition, plus the greater of 50 percent of annual medical

15  trend or 5 percent for existing insureds. Future annual rate

16  increases for the existing insureds at the time of the

17  exercise of this provision is limited to the greater of 150

18  percent of the rate increase approved for new insureds, the

19  greater of 150 percent of medical trend, or 10 percent, until

20  the rate schedules converge. The application of this

21  subsection is not a violation of s. 627.410(6)(d).

22         (4)  If a rate filing changes the established rate

23  relationship between insureds, the aggregate effect of such

24  change shall be revenue neutral. The change to the new

25  relationship shall be phased in over a period not to exceed 3

26  years, as approved by the department.

27         (5)  In determining medical trend for application of

28  subparagraphs (1)(e)4., 5., 6., and 7., the department shall

29  semiannually determine medical trend for each health care

30  market, using reasonable actuarial techniques and standards.

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  1  The trend must be adopted by the department by rule and

  2  determined as follows:

  3         (a)  Trend must be determined separately for medical

  4  expense; preferred provider organization; Medicare supplement;

  5  health maintenance organization; and other coverage for

  6  individual, small group, and large group, where applicable.

  7         (b)  The department shall survey insurers and health

  8  maintenance organizations currently issuing products and

  9  representing at least an 80-percent market share based on

10  premiums earned in the state for the most recent calendar year

11  for each of the categories specified in paragraph (a).

12         (c)  Trend must be computed as the average annual

13  medical trend approved for the carriers surveyed, giving

14  appropriate weight to each carrier's statewide market share of

15  earned premiums.

16         (d)  The annual trend is the annual change in claims

17  cost per unit of exposure. Trend includes the combined effect

18  of medical provider price changes, new medical procedures, and

19  technology and cost shifting.

20         Section 3.  Subsections (4) and (8) of section

21  627.6487, Florida Statutes, are amended to read:

22         627.6487  Guaranteed availability of individual health

23  insurance coverage to eligible individuals.--

24         (4)(a)  The health insurance issuer may elect to limit

25  the coverage offered under subsection (1) if the issuer offers

26  at least two different policy forms of health insurance

27  coverage, both of which:

28         1.  Are designed for, made generally available to,

29  actively marketed to, and enroll both eligible and other

30  individuals by the issuer; and

31         2.  Meet the requirement of paragraph (b).

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  1

  2  For purposes of this subsection, policy forms that have

  3  different cost-sharing arrangements or different riders are

  4  considered to be different policy forms.

  5         (b)  The requirement of this subsection is met for

  6  health insurance coverage policy forms offered by an issuer in

  7  the individual market if the issuer offers the basic and

  8  standard health benefit plans as established pursuant to s.

  9  627.6699(12). policy forms for individual health insurance

10  coverage with the largest, and next to largest, premium volume

11  of all such policy forms offered by the issuer in this state

12  or applicable marketing or service area, as prescribed in

13  rules adopted by the department, in the individual market in

14  the period involved. To the greatest extent possible, such

15  rules must be consistent with regulations adopted by the

16  United States Department of Health and Human Services.

17         (8)  This section does not:

18         (a)  Restrict the issuer from applying the same

19  nondiscriminatory underwriting and rating practices that are

20  applied by the issuer to other individuals applying for

21  coverage amount of the premium rates that an issuer may charge

22  an individual for individual health insurance coverage; or

23         (b)  Prevent a health insurance issuer that offers

24  individual health insurance coverage from establishing premium

25  discounts or rebates or modifying otherwise applicable

26  copayments or deductibles in return for adherence to programs

27  of health promotion and disease prevention.

28         Section 4.  Subsection (9) is added to section

29  627.6515, Florida Statutes, to read:

30         627.6515  Out-of-state groups.--

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  1         (9)  Notwithstanding any other provision of this

  2  section, any group health insurance policy or group

  3  certificate for health insurance, as described in s.

  4  627.6561(5)(a)2., which is issued to a resident of this state

  5  and requires individual underwriting to determine coverage

  6  eligibility or premium rates to be charged shall be considered

  7  a policy issued on an individual basis and is subject to and

  8  must comply with the Florida Insurance Code in the same manner

  9  as individual insurance policies issued in this state.

10         Section 5.  Paragraphs (i) and (n) of subsection (3)

11  and paragraph (b) of subsection (6) of section 627.6699,

12  Florida Statutes, are amended to read:

13         627.6699  Employee Health Care Access Act.--

14         (3)  DEFINITIONS.--As used in this section, the term:

15         (i)  "Established geographic area" means the county or

16  counties, or any portion of a county or counties, within which

17  the carrier provides or arranges for health care services to

18  be available to its insureds, members, or subscribers.

19         (n)  "Modified community rating" means a method used to

20  develop carrier premiums which spreads financial risk across a

21  large population; allows the use of separate rating factors

22  for age, gender, family composition, tobacco usage, and

23  geographic area as determined under paragraph (5)(j); and

24  allows adjustments for: claims experience, health status, or

25  duration of coverage as permitted under subparagraph (6)(b)5.;

26  and administrative and acquisition expenses as permitted under

27  subparagraph (6)(b)5. A carrier may separate the experience of

28  small employer groups with less than two eligible employees

29  from the experience of small employer groups with two through

30  50 eligible employees.

31         (6)  RESTRICTIONS RELATING TO PREMIUM RATES.--

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  1         (b)  For all small employer health benefit plans that

  2  are subject to this section and are issued by small employer

  3  carriers on or after January 1, 1994, premium rates for health

  4  benefit plans subject to this section are subject to the

  5  following:

  6         1.  Small employer carriers must use a modified

  7  community rating methodology in which the premium for each

  8  small employer must be determined solely on the basis of the

  9  eligible employee's and eligible dependent's gender, age,

10  family composition, tobacco use, or geographic area as

11  determined under paragraph (5)(j) and in which the premium may

12  be adjusted as permitted by subparagraphs 6. 5. and 7. 6.

13         2.  Rating factors related to age, gender, family

14  composition, tobacco use, or geographic location may be

15  developed by each carrier to reflect the carrier's experience.

16  The factors used by carriers are subject to department review

17  and approval.

18         3.  If the modified community rate is determined from

19  two experience pools as authorized by paragraph (5)(n), the

20  rate to be charged to small employer groups of less than two

21  eligible employees may not exceed 150 percent of the rate

22  determined for groups of two through 50 eligible employees;

23  however, the carrier may charge excess losses of the

24  less-than-two-eligible-employee experience pool to the

25  experience pool of the two through 50 eligible employees so

26  that all losses are allocated and the 150-percent rate limit

27  on the less-than-two-eligible-employee experience pool is

28  maintained.

29         4.3.  Small employer carriers may not modify the rate

30  for a small employer for 12 months from the initial issue date

31  or renewal date, unless the composition of the group changes

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  1  or benefits are changed. However, a small employer carrier may

  2  modify the rate one time prior to 12 months after the initial

  3  issue date for a small employer who enrolls under a previously

  4  issued group policy that has a common anniversary date for all

  5  employers covered under the policy if:

  6         a.  The carrier discloses to the employer in a clear

  7  and conspicuous manner the date of the first renewal and the

  8  fact that the premium may increase on or after that date.

  9         b.  The insurer demonstrates to the department that

10  efficiencies in administration are achieved and reflected in

11  the rates charged to small employers covered under the policy.

12         5.4.  A carrier may issue a group health insurance

13  policy to a small employer health alliance or other group

14  association with rates that reflect a premium credit for

15  expense savings attributable to administrative activities

16  being performed by the alliance or group association if such

17  expense savings are specifically documented in the insurer's

18  rate filing and are approved by the department.  Any such

19  credit may not be based on different morbidity assumptions or

20  on any other factor related to the health status or claims

21  experience of any person covered under the policy. Nothing in

22  this subparagraph exempts an alliance or group association

23  from licensure for any activities that require licensure under

24  the insurance code. A carrier issuing a group health insurance

25  policy to a small employer health alliance or other group

26  association shall allow any properly licensed and appointed

27  agent of that carrier to market and sell the small employer

28  health alliance or other group association policy. Such agent

29  shall be paid the usual and customary commission paid to any

30  agent selling the policy.

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  1         6.5.  Any adjustments in rates for claims experience,

  2  health status, or duration of coverage may not be charged to

  3  individual employees or dependents. For a small employer's

  4  policy, such adjustments may not result in a rate for the

  5  small employer which deviates more than 15 percent from the

  6  carrier's approved rate. Any such adjustment must be applied

  7  uniformly to the rates charged for all employees and

  8  dependents of the small employer. A small employer carrier may

  9  make an adjustment to a small employer's renewal premium, not

10  to exceed 10 percent annually, due to the claims experience,

11  health status, or duration of coverage of the employees or

12  dependents of the small employer. Semiannually, small group

13  carriers shall report information on forms adopted by rule by

14  the department, to enable the department to monitor the

15  relationship of aggregate adjusted premiums actually charged

16  policyholders by each carrier to the premiums that would have

17  been charged by application of the carrier's approved modified

18  community rates. If the aggregate resulting from the

19  application of such adjustment exceeds the premium that would

20  have been charged by application of the approved modified

21  community rate by 5 percent for the current reporting period,

22  the carrier shall limit the application of such adjustments

23  only to minus adjustments beginning not more than 60 days

24  after the report is sent to the department. For any subsequent

25  reporting period, if the total aggregate adjusted premium

26  actually charged does not exceed the premium that would have

27  been charged by application of the approved modified community

28  rate by 5 percent, the carrier may apply both plus and minus

29  adjustments. A small employer carrier may provide a credit to

30  a small employer's premium based on administrative and

31  acquisition expense differences resulting from the size of the

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  1  group. Group size administrative and acquisition expense

  2  factors may be developed by each carrier to reflect the

  3  carrier's experience and are subject to department review and

  4  approval.

  5         7.6.  A small employer carrier rating methodology may

  6  include separate rating categories for one dependent child,

  7  for two dependent children, and for three or more dependent

  8  children for family coverage of employees having a spouse and

  9  dependent children or employees having dependent children

10  only. A small employer carrier may have fewer, but not

11  greater, numbers of categories for dependent children than

12  those specified in this subparagraph.

13         8.7.  Small employer carriers may not use a composite

14  rating methodology to rate a small employer with fewer than 10

15  employees. For the purposes of this subparagraph, a "composite

16  rating methodology" means a rating methodology that averages

17  the impact of the rating factors for age and gender in the

18  premiums charged to all of the employees of a small employer.

19         Section 6.  Subsection (1) of section 627.6741, Florida

20  Statutes, is amended to read:

21         627.6741  Issuance, cancellation, nonrenewal, and

22  replacement.--

23         (1)  An insurer issuing Medicare supplement policies in

24  this state shall offer the opportunity of enrolling in a

25  Medicare supplement policy, without conditioning the issuance

26  or effectiveness of the policy on, and without discriminating

27  in the price of the policy based on, the medical or health

28  status or receipt of health care by the individual:

29         (a)  To any individual who is 65 years of age or older,

30  or under 65 years of age and eligible for Medicare by reason

31  of disability, and who resides in this state, upon the request

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  1  of the individual during the 6-month period beginning with the

  2  first month in which the individual has attained 65 years of

  3  age and is enrolled in Medicare part B, or the first month in

  4  which the individual is eligible for Medicare by reason of

  5  disability and is enrolled in Medicare part B; or

  6         (b)  To any individual who is 65 years of age or older,

  7  or under 65 years of age and eligible for Medicare by reason

  8  of disability, and is enrolled in Medicare part B, who resides

  9  in this state, upon the request of the individual during the

10  2-month period following termination of coverage under a group

11  health insurance policy.

12

13  A Medicare supplement policy issued to an individual under

14  paragraph (a) or paragraph (b) may not exclude benefits based

15  on a preexisting condition if the individual has a continuous

16  period of creditable coverage, as defined in s. 627.6561(5),

17  of at least 6 months as of the date of application for

18  coverage. Paragraphs (a) and (b) do not apply to end-stage

19  renal disease beneficiaries before they attain 65 years of

20  age. For those individuals otherwise eligible under paragraph

21  (a) or paragraph (b) who first enrolled in Medicare part B

22  before July 1, 2001, the 6-month period shall begin on July 1,

23  2001. A Medicare supplemental policy issued to an individual

24  under paragraph (a) or paragraph (b) who is less than 65 years

25  of age and who is eligible for Medicare by reason of

26  disability shall be issued at the premium rate for persons 65

27  years of age.

28         Section 7.  Section 627.9408, Florida Statutes, is

29  amended to read:

30         627.9408  Rules.--

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  1         (1)  The department may has authority to adopt rules

  2  pursuant to ss. 120.536(1) and 120.54 to administer implement

  3  the provisions of this part.

  4         (2)  The department may adopt by rule the provisions of

  5  the Long-Term Care Insurance Model Regulation adopted by the

  6  National Association of Insurance Commissioners in the second

  7  quarter of the year 2000 which are not in conflict with the

  8  Florida Insurance Code.

  9         Section 8.  Paragraphs (b) and (d) of subsection (3) of

10  section 641.31, Florida Statutes, are amended, and paragraph

11  (f) is added to that subsection, to read:

12         641.31  Health maintenance contracts.--

13         (3)

14         (b)  Any change in the rate is subject to paragraph (d)

15  and requires at least 30 days' advance written notice to the

16  subscriber. In the case of a group member, there may be a

17  contractual agreement with the health maintenance organization

18  to have the employer provide the required notice to the

19  individual members of the group. This paragraph does not apply

20  to a group contract covering 51 or more persons unless the

21  rate is for any coverage under which the increase in claim

22  costs over the lifetime of the contract due to advancing age

23  or duration is prefunded in the premium.

24         (d)  Any change in rates charged for the contract must

25  be filed with the department not less than 30 days in advance

26  of the effective date. At the expiration of such 30 days, the

27  rate filing shall be deemed approved unless prior to such time

28  the filing has been affirmatively approved or disapproved by

29  order of the department pursuant to s. 627.411. The approval

30  of the filing by the department constitutes a waiver of any

31  unexpired portion of such waiting period. The department may

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  1  extend by not more than an additional 15 days the period

  2  within which it may so affirmatively approve or disapprove any

  3  such filing, by giving notice of such extension before

  4  expiration of the initial 30-day period. At the expiration of

  5  any such period as so extended, and in the absence of such

  6  prior affirmative approval or disapproval, any such filing

  7  shall be deemed approved.

  8         (f)  A health maintenance organization with fewer than

  9  1,000 covered subscribers under all individual or group

10  contracts, at the time of a rate filing, may file for an

11  annual rate increase limited to annual medical trend, as

12  adopted by the department. The filing is in lieu of the

13  actuarial memorandum otherwise required for the rate filing.

14  The filing must include forms adopted by the department and a

15  certification by an officer of the company that the filing

16  includes all similar forms.

17         Section 9.  This act shall take effect July 1, 2001.

18

19            *****************************************

20                          SENATE SUMMARY

21    Revises various provisions of the Florida Insurance Code
      relating to health insurance. Revises requirements for
22    group insurance policies issued outside the state.
      Authorizes certain insurers to file for annual rate
23    increases based on medical trend. Provides requirements
      for the Department of Insurance in determining medical
24    trend. Revises provisions of the Employee Health Care
      Access Act. Authorizes carriers to revise the factors
25    used to establish premium rates. Requires insurers to
      issue Medicare supplement policies to persons under 65
26    years of age who are eligible for Medicare by reason of
      disability. Authorizes certain health maintenance
27    organizations to file for rate increases based on medical
      trend. (See bill for details.)
28

29

30

31

                                  17

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