House Bill hb0913c1

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    Florida House of Representatives - 2002              CS/HB 913

        By the Council for Competitive Commerce and
    Representatives Farkas, Kravitz, Lynn and Gannon





  1                      A bill to be entitled

  2         An act relating to health care; amending s.

  3         627.6699, F.S.; revising a definition;

  4         authorizing carriers to separate certain

  5         experience groups for certain purposes;

  6         providing limitations for rates under an

  7         alternative modified community rating under

  8         certain circumstances; requiring the Insurance

  9         Commissioner to appoint a health benefit plan

10         committee to modify the standard, basic, and

11         flexible health benefit plans; prohibiting

12         small employer carriers from using certain

13         policies, contracts, forms, or rates unless

14         filed with and approved by the Department of

15         Insurance pursuant to certain provisions;

16         restricting application of certain laws to

17         flexible benefit policies under certain

18         circumstances; authorizing offering or

19         delivering flexible benefit policies or

20         contracts to certain employers; providing

21         requirements for benefits in flexible benefit

22         policies or contracts for small employers;

23         providing an effective date.

24

25         WHEREAS, the Legislature recognizes that the increasing

26  number of uninsured Floridians is due in part to small

27  employers' and their employees' inability to afford

28  comprehensive health insurance coverage, and

29         WHEREAS, the Legislature recognizes the need for small

30  employers and their employees to have the opportunity to

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  1  choose more affordable and flexible health insurance plans,

  2  and

  3         WHEREAS, it is the intent of the Legislature that

  4  insurers and health maintenance organizations have maximum

  5  flexibility in health plan design or in developing a health

  6  plan design to complement a medical savings account program

  7  established by a small employer for the benefit of its

  8  employees, NOW, THEREFORE,

  9

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

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12         Section 1.  Paragraph (m) of subsection (3), paragraph

13  (b) of subsection (6), paragraphs (a), (c), (d), and (e) of

14  subsection (12), and subsection (15) of section 627.6699,

15  Florida Statutes, are amended, and paragraphs (f) and (g) are

16  added to subsection (12) of said section, to read:

17         627.6699  Employee Health Care Access Act.--

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

19         (m)  "Flexible Limited benefit policy or contract"

20  means a policy or contract that provides coverage for each

21  person insured under the policy for a specifically named

22  disease or diseases, a specifically named accident, or a

23  specifically named limited market that fulfills a an

24  experimental or reasonable need by providing more affordable

25  health insurance to a small employer or a small employer

26  health alliance under s. 627.654, such as the small group

27  market.

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

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

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

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

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  1  benefit plans subject to this section are subject to the

  2  following:

  3         1.  Small employer carriers must use a modified

  4  community rating methodology in which the premium for each

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

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

  7  family composition, tobacco use, or geographic area as

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

  9  be adjusted as permitted by subparagraphs 5. and 6.

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

11  composition, tobacco use, or geographic location may be

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

13  The factors used by carriers are subject to department review

14  and approval.

15         3.  Small employer carriers may not modify the rate for

16  a small employer for 12 months from the initial issue date or

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

18  benefits are changed. However, a small employer carrier may

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

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

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

22  employers covered under the policy if:

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

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

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

26         b.  The insurer demonstrates to the department that

27  efficiencies in administration are achieved and reflected in

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

29         4.  A carrier may issue a group health insurance policy

30  to a small employer health alliance or other group association

31  with rates that reflect a premium credit for expense savings

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  1  attributable to administrative activities being performed by

  2  the alliance or group association if such expense savings are

  3  specifically documented in the insurer's rate filing and are

  4  approved by the department.  Any such credit may not be based

  5  on different morbidity assumptions or on any other factor

  6  related to the health status or claims experience of any

  7  person covered under the policy. Nothing in this subparagraph

  8  exempts an alliance or group association from licensure for

  9  any activities that require licensure under the insurance

10  code. A carrier issuing a group health insurance policy to a

11  small employer health alliance or other group association

12  shall allow any properly licensed and appointed agent of that

13  carrier to market and sell the small employer health alliance

14  or other group association policy. Such agent shall be paid

15  the usual and customary commission paid to any agent selling

16  the policy.

17         5.  Any adjustments in rates for claims experience,

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

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

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

21  small employer which deviates more than 15 percent from the

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

23  uniformly to the rates charged for all employees and

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

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

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

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

28  dependents of the small employer. Semiannually, small group

29  carriers shall report information on forms adopted by rule by

30  the department, to enable the department to monitor the

31  relationship of aggregate adjusted premiums actually charged

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  1  policyholders by each carrier to the premiums that would have

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

  3  community rates. If the aggregate resulting from the

  4  application of such adjustment exceeds the premium that would

  5  have been charged by application of the approved modified

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

  7  the carrier shall limit the application of such adjustments

  8  only to minus adjustments beginning not more than 60 days

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

10  reporting period, if the total aggregate adjusted premium

11  actually charged does not exceed the premium that would have

12  been charged by application of the approved modified community

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

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

15  a small employer's premium based on administrative and

16  acquisition expense differences resulting from the size of the

17  group. Group size administrative and acquisition expense

18  factors may be developed by each carrier to reflect the

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

20  approval.

21         6.  A small employer carrier rating methodology may

22  include separate rating categories for one dependent child,

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

24  children for family coverage of employees having a spouse and

25  dependent children or employees having dependent children

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

27  greater, numbers of categories for dependent children than

28  those specified in this subparagraph.

29         7.  Small employer carriers may not use a composite

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

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

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  1  rating methodology" means a rating methodology that averages

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

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

  4         8.a.  A carrier may separate the experience of small

  5  employer groups with less than 2 eligible employees from the

  6  experience of small employer groups with 2-50 eligible

  7  employees for purposes of determining an alternative modified

  8  community rating.

  9         b.  If a carrier separates the experience of small

10  employer groups as provided in sub-subparagraph a., the rate

11  to be charged to small employer groups of less than 2 eligible

12  employees may not exceed 150 percent of the rate determined

13  for small employer groups of 2-50 eligible employees. However,

14  the carrier may charge excess losses of the experience pool

15  consisting of small employer groups with less than 2 eligible

16  employees to the experience pool consisting of small employer

17  groups with 2-50 eligible employees so that all losses are

18  allocated and the 150-percent rate limit on the experience

19  pool consisting of small employer groups with less than 2

20  eligible employees is maintained. Notwithstanding s.

21  627.411(1), the rate to be charged to a small employer group

22  of fewer than 2 eligible employees, insured as of July 1,

23  2002, may be up to 125 percent of the rate determined for

24  small employer groups of 2-50 eligible employees for the first

25  annual renewal and 150 percent for subsequent annual renewals.

26         (12)  STANDARD, BASIC, AND FLEXIBLE LIMITED HEALTH

27  BENEFIT PLANS.--

28         (a)1.  By May 15, 1993, the commissioner shall appoint

29  a health benefit plan committee composed of four

30  representatives of carriers which shall include at least two

31  representatives of HMOs, at least one of which is a staff

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  1  model HMO, two representatives of agents, four representatives

  2  of small employers, and one employee of a small employer.  The

  3  carrier members shall be selected from a list of individuals

  4  recommended by the board.  The commissioner may require the

  5  board to submit additional recommendations of individuals for

  6  appointment.

  7         2.  The plans shall comply with all of the requirements

  8  of this subsection.

  9         3.  The plans must be filed with and approved by the

10  department prior to issuance or delivery by any small employer

11  carrier.

12         4.  Before October 1, 2003, and in every fourth year

13  thereafter, the commissioner shall appoint a new health

14  benefit plan committee in the manner provided in subparagraph

15  1. to determine if modifications to a plan might be

16  appropriate and to submit recommended modifications to the

17  department for approval.  Such determination shall be based

18  upon prevailing industry standards regarding managed care and

19  cost containment provisions and shall be for the purpose of

20  ensuring that the benefit plans offered to small employers on

21  a guaranteed issue basis are consistent with the low-priced to

22  mid-priced benefit plans offered in the large group market.

23  Each new health benefit plan committee shall evaluate the

24  implementation of this act and its impact on the entities that

25  provide the plans, the number of enrollees, the participants

26  covered by the plans and their access to care, the scope of

27  health care coverage offered under the plans, and an

28  assessment of the plans. This determination shall be included

29  in a report submitted to the President of the Senate and the

30  Speaker of the House of Representatives annually by October 1.

31  After approval of the revised health benefit plans, if the

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  1  department determines that modifications to a plan might be

  2  appropriate, the commissioner shall appoint a new health

  3  benefit plan committee in the manner provided in subparagraph

  4  1. to submit recommended modifications to the department for

  5  approval.

  6         (c)  If a small employer rejects, in writing, the

  7  standard health benefit plan and the basic health benefit

  8  plan, the small employer carrier may offer the small employer

  9  a flexible limited benefit policy or contract.

10         (d)1.  Upon offering coverage under a standard health

11  benefit plan, a basic health benefit plan, or a flexible

12  limited benefit policy or contract for any small employer, the

13  small employer carrier shall provide such employer group with

14  a written statement that contains, at a minimum:

15         a.  An explanation of those mandated benefits and

16  providers that are not covered by the policy or contract;

17         b.  An explanation of the managed care and cost control

18  features of the policy or contract, along with all appropriate

19  mailing addresses and telephone numbers to be used by insureds

20  in seeking information or authorization; and

21         c.  An explanation of the primary and preventive care

22  features of the policy or contract.

23

24  Such disclosure statement must be presented in a clear and

25  understandable form and format and must be separate from the

26  policy or certificate or evidence of coverage provided to the

27  employer group.

28         2.  Before a small employer carrier issues a standard

29  health benefit plan, a basic health benefit plan, or a limited

30  benefit policy or contract, it must obtain from the

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  1  prospective policyholder a signed written statement in which

  2  the prospective policyholder:

  3         a.  Certifies as to eligibility for coverage under the

  4  standard health benefit plan, basic health benefit plan, or

  5  limited benefit policy or contract;

  6         b.  Acknowledges the limited nature of the coverage and

  7  an understanding of the managed care and cost control features

  8  of the policy or contract;

  9         c.  Acknowledges that if misrepresentations are made

10  regarding eligibility for coverage under a standard health

11  benefit plan, a basic health benefit plan, or a limited

12  benefit policy or contract, the person making such

13  misrepresentations forfeits coverage provided by the policy or

14  contract; and

15         d.  If a flexible benefit policy or contract limited

16  plan is requested, acknowledges that the prospective

17  policyholder had been offered, at the time of application for

18  the insurance policy or contract, the opportunity to purchase

19  any health benefit plan offered by the carrier and that the

20  prospective policyholder had rejected that coverage.

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22  A copy of such written statement shall be provided to the

23  prospective policyholder no later than at the time of delivery

24  of the policy or contract, and the original of such written

25  statement shall be retained in the files of the small employer

26  carrier for the period of time that the policy or contract

27  remains in effect or for 5 years, whichever period is longer.

28         3.  Any material statement made by an applicant for

29  coverage under a health benefit plan which falsely certifies

30  as to the applicant's eligibility for coverage serves as the

31  basis for terminating coverage under the policy or contract.

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  1         4.  Each marketing communication that is intended to be

  2  used in the marketing of a health benefit plan in this state

  3  must be submitted for review by the department prior to use

  4  and must contain the disclosures stated in this subsection.

  5         5.  The contract, policy, and certificates evidencing

  6  coverage under a flexible benefit policy or contract and the

  7  application for coverage under such plans must state in not

  8  less than 10 point type on the first page in contrasting color

  9  the following:  "The benefits provided by this health plan are

10  limited and may not cover all of your medical needs. You

11  should carefully review the benefits offered under this health

12  plan."

13         (e)  A small employer carrier may not use any policy,

14  contract, form, or rate under this section, including

15  applications, enrollment forms, policies, contracts,

16  certificates, evidences of coverage, riders, amendments,

17  endorsements, and disclosure forms, until the carrier insurer

18  has filed it with the department and the department has

19  approved it under ss. 627.410, and 627.411, and 641.31. and

20  this section.

21         (f)  A flexible benefit policy or contract must have an

22  annual maximum benefit of $10,000 or greater and such benefit

23  shall be disclosed in 10-point type in contrasting color.

24         (g)  A mandatory offer for catastrophic coverage shall

25  be provided by the carriers to employers whenever a flexible

26  benefit policy of contract is offered.

27         (15)  APPLICABILITY OF OTHER STATE LAWS.--

28         (a)  Except as expressly provided in this section, a

29  law requiring coverage for a specific health care service or

30  benefit, or a law requiring reimbursement, utilization, or

31  consideration of a specific category of licensed health care

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  1  practitioner, does not apply to a standard or basic health

  2  benefit plan policy or contract or a flexible limited benefit

  3  policy or contract offered or delivered to a small employer

  4  unless that law is made expressly applicable to such policies

  5  or contracts. A law restricting or limiting deductibles,

  6  coinsurance, copayments, or annual or lifetime maximum

  7  payments does not apply to any health plan policy, including a

  8  standard or basic health benefit plan policy or contract or a

  9  flexible benefit policy or contract, offered or delivered to a

10  small employer unless such law is made expressly applicable to

11  such policy or contract. The provisions of s. 627.419(2), (3),

12  and (4) apply to a flexible benefit policy or contract offered

13  or delivered to a small employer.

14         (b)  Except as provided in this section, a standard or

15  basic health benefit plan policy or contract or flexible

16  limited benefit policy or contract offered to a small employer

17  is not subject to any provision of this code which:

18         1.  Inhibits a small employer carrier from contracting

19  with providers or groups of providers with respect to health

20  care services or benefits;

21         2.  Imposes any restriction on a small employer

22  carrier's ability to negotiate with providers regarding the

23  level or method of reimbursing care or services provided under

24  a health benefit plan; or

25         3.  Requires a small employer carrier to either include

26  a specific provider or class of providers when contracting for

27  health care services or benefits or to exclude any class of

28  providers that is generally authorized by statute to provide

29  such care.

30         (c)  Any second tier assessment paid by a carrier

31  pursuant to paragraph (11)(j) may be credited against

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  1  assessments levied against the carrier pursuant to s.

  2  627.6494.

  3         (d)  Notwithstanding chapter 641, a health maintenance

  4  organization is authorized to issue contracts providing

  5  benefits equal to the standard health benefit plan, the basic

  6  health benefit plan, and the flexible limited benefit policy

  7  authorized by this section.

  8         Section 2.  This act shall take effect October 1, 2002.

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