Senate Bill sb2264c2
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Florida Senate - 2003 CS for CS for SB 2264
By the Committees on Health, Aging, and Long-Term Care;
Banking and Insurance; and Senator Atwater
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1 A bill to be entitled
2 An act relating to health insurance; amending
3 s. 627.411, F.S.; revising grounds for
4 disapproval of health insurance policy forms
5 that apply certain rating practices, or that
6 result in actuarially justified rate increases
7 under certain circumstances; requiring health
8 insurance policies to meet a minimum loss ratio
9 of a specified amount; amending s. 627.6515,
10 F.S.; amending conditions that must be met to
11 exempt from part VII of ch. 627, F.S., a group
12 health insurance policy issued or delivered
13 outside this state under which a resident of
14 this state is provided coverage; providing
15 rulemaking authority; providing an effective
16 date.
17
18 Be It Enacted by the Legislature of the State of Florida:
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20 Section 1. Section 627.411, Florida Statutes, is
21 amended to read:
22 627.411 Grounds for disapproval.--
23 (1) The department shall disapprove any form filed
24 under s. 627.410, or withdraw any previous approval thereof,
25 only if the form:
26 (a) Is in any respect in violation of, or does not
27 comply with, this code.
28 (b) Contains or incorporates by reference, where such
29 incorporation is otherwise permissible, any inconsistent,
30 ambiguous, or misleading clauses, or exceptions and conditions
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1 which deceptively affect the risk purported to be assumed in
2 the general coverage of the contract.
3 (c) Has any title, heading, or other indication of its
4 provisions which is misleading.
5 (d) Is printed or otherwise reproduced in such manner
6 as to render any material provision of the form substantially
7 illegible.
8 (e) Is for health insurance, and:
9 1. Provides benefits that which are unreasonable in
10 relation to the premium charged;,
11 2. Contains provisions that which are unfair or
12 inequitable or contrary to the public policy of this state or
13 that which encourage misrepresentation;, or
14 3. Contains provisions that which apply rating
15 practices that which result in premium escalations that are
16 not viable for the policyholder market or result in unfair
17 discrimination pursuant to s. 626.9541(1)(g)2.; in sales
18 practices.
19 4. Results in actuarially justified rate increases on
20 an annual basis:
21 a. Attributed to the insurer reducing the portion of
22 the premium used to pay claims from the loss ratio standard
23 certified in the last actuarial certification filed by the
24 insurer, in excess of the greater of 50 percent of annual
25 medical trend or 5 percent. At its option, the insurer may
26 file for approval of an actuarially justified new business
27 rate schedule for new insureds and a rate increase for
28 existing insureds that is equal to the greater of 150 percent
29 of annual medical trend or 10 percent. Future annual rate
30 increases for existing insureds shall be limited to the
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1 greater of 150 percent of the rate increase approved for new
2 insureds or 10 percent until the two rate schedules converge;
3 b. In excess of the greater of 150 percent of annual
4 medical trend or 10 percent and the company did not comply
5 with the annual filing requirements of s. 627.410(7) or
6 commission rule for health maintenance organizations pursuant
7 to s. 641.31. At its option the insurer may file for approval
8 of an actuarially justified new business rate schedule for new
9 insureds and a rate increase for existing insureds that is
10 equal to the rate increase allowed by the preceding sentence.
11 Future annual rate increases for existing insureds shall be
12 limited to the greater of 150 percent of the rate increase
13 approved for new insureds or 10 percent until the two rate
14 schedules converge; or
15 c. In excess of the greater of 150 percent of annual
16 medical trend or 10 percent on a form or block of pooled forms
17 in which no form is currently available for sale. This
18 sub-subparagraph does not apply to pre-standardized Medicare
19 supplement forms.
20 (f) Excludes coverage for human immunodeficiency virus
21 infection or acquired immune deficiency syndrome or contains
22 limitations in the benefits payable, or in the terms or
23 conditions of such contract, for human immunodeficiency virus
24 infection or acquired immune deficiency syndrome which are
25 different than those which apply to any other sickness or
26 medical condition.
27 (2) In determining whether the benefits are reasonable
28 in relation to the premium charged, the department, in
29 accordance with reasonable actuarial techniques, shall
30 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)(a) For health insurance coverage as described in
8 s. 627.6561(5)(a)2., the minimum loss ratio standard of
9 incurred claims to earned premium for the form shall be 65
10 percent.
11 (b) Incurred claims are claims occurring within a
12 fixed period, whether or not paid during the same period,
13 under the terms of the policy period.
14 1. Claims include scheduled benefit payments, or
15 services provided by a provider or through a provider network
16 for dental, vision, disability, and similar health benefits.
17 2. Claims do not include state assessments, taxes,
18 company expenses, or any expense incurred by the company for
19 the cost of adjusting and settling a claim, including the
20 review, qualification, oversight, management, or monitoring of
21 a claim or incentives or compensation to providers for other
22 than the provisions of health care services.
23 3. A company may at its discretion include costs that
24 are demonstrated to reduce claims, such as fraud intervention
25 programs or case management costs, which are identified in
26 each filing, are demonstrated to reduce claims costs, and do
27 not result in increasing the experience period loss ratio by
28 more than 5 percent.
29 4. For scheduled claim payments, such as disability
30 income or long-term care, the incurred claims shall be the
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1 present value of the benefit payments discounted for
2 continuance and interest.
3 Section 2. Subsection (2) of section 627.6515, Florida
4 Statutes, is amended, and subsections (9) and (10) are added
5 to that section, to read:
6 627.6515 Out-of-state groups.--
7 (2) Except as provided in this part, this part does
8 not apply to a group health insurance policy issued or
9 delivered outside this state under which a resident of this
10 state is provided coverage if:
11 (a) The policy is issued to an employee group the
12 composition of which is substantially as described in s.
13 627.653; a labor union group or association group the
14 composition of which is substantially as described in s.
15 627.654; an additional group the composition of which is
16 substantially as described in s. 627.656; a group insured
17 under a blanket health policy when the composition of the
18 group is substantially in compliance with s. 627.659; a group
19 insured under a franchise health policy when the composition
20 of the group is substantially in compliance with s. 627.663
21 and the policy was issued prior to January 1, 2003; an
22 association group to cover persons associated in any other
23 common group, which common group is formed primarily for
24 purposes other than providing insurance; a group that is
25 established primarily for the purpose of providing group
26 insurance, provided the benefits are reasonable in relation to
27 the premiums charged thereunder and the issuance of the group
28 policy has resulted, or will result, in economies of
29 administration; or a group of insurance agents of an insurer,
30 which insurer is the policyholder;
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1 (b) Certificates evidencing coverage under the policy
2 are issued to residents of this state and contain in
3 contrasting color and not less than 10-point type the
4 following statement: "The benefits of the policy providing
5 your coverage are governed primarily by the law of a state
6 other than Florida"; and
7 (c) The policy provides the benefits specified in ss.
8 627.419, 627.6574, 627.6575, 627.6579, 627.6612, 627.66121,
9 627.66122, 627.6613, 627.667, 627.6675, 627.6691, and
10 627.66911;.
11 (d) For policies or contracts issued on or after
12 October 1, 2003, regardless of the type of group described in
13 this subsection to which the policy is issued, except for
14 policies issued to provide coverage to groups of persons all
15 of whom are in the same or functionally related licensed
16 professions, and providing coverage only to such licensed
17 professionals, their employees or their dependents, the policy
18 complies with the antidiscrimination provisions set forth in
19 s. 627.65625, regarding rating and eligibility for enrollment
20 and for any benefit under the policy, and with s. 627.6571;
21 and
22 (e) The policy is not issued to a group, other than an
23 employer group for the benefit of its employees, that directly
24 or indirectly uses any health status related factor, as
25 described in s. 627.65625, in determining eligibility for
26 initial or continued membership in the group or initial or
27 continued eligibility of any group member to participate in
28 any aspect of the group insurance program.
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30 For purposes of paragraphs (d) and (e), group health insurance
31 policy means any hospital or medical policy, hospital or
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1 medical service plan contract, or health maintenance
2 organization subscriber contract. The term does not include
3 accidental death, accidental death and dismemberment,
4 accident-only, vision-only, dental-only, hospital indemnity,
5 hospital accident, cancer, specified disease, Medicare
6 Supplement, products that supplement Medicare, long-term care,
7 or disability income insurance, similar supplemental plans
8 provided under a separate policy, certificate, or contract of
9 insurance, which cannot duplicate coverage under an underlying
10 health plan and are specifically designed to fill gaps in the
11 underlying health plan, coinsurance, or deductibles; coverage
12 issued as a supplement to liability insurance; workers'
13 compensation or similar insurance; or automobile
14 medical-payment insurance. The provisions of paragraphs (d)
15 and (e) shall not apply to policies providing coverage to
16 small employers as defined by s. 627.6699. Such policies shall
17 be subject to, and governed by, the provisions of s. 627.6699.
18 The provisions of paragraphs (d) and (e) shall not apply to a
19 policy issued to a bona fide association, as defined by s.
20 627.6571(5), provided that there is a person or board acting
21 as a fiduciary for the benefit of the members; such
22 association is not owned, controlled by, or otherwise
23 associated with the insurance company; and the renewal rate
24 changes are the same uniform percentage adjustment for all
25 covered members.
26 (9) The Financial Services Commission shall adopt
27 rules necessary to administer this section.
28 (10) The Financial Services Commission may adopt rules
29 to establish standards for exempting certain groups from the
30 provisions of paragraphs (2)(d) and (e). Such rules shall
31 establish standards for determining that the members of the
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1 group policy are provided protection from rate escalations
2 from the segregation of risks and that members are provided
3 protection by an individual or board that is not owned or
4 controlled by the carrier or affiliate of the carrier and acts
5 in a fiduciary capacity for the protection of its members. The
6 office must provide, upon request of an insurer, a 90-day
7 exemption from the October 1, 2003, effective date of
8 paragraphs (2)(d) and (e) to any insurer:
9 (a) Having an approved filing for individual business
10 by October 1, 2003; and
11 (b) Certifying that each individual issued a policy or
12 certificate after October 1, 2003, will be offered the
13 opportunity to switch his or her policy to the new form at the
14 end of the exemption period.
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16 The provisions of paragraphs (2)(d) and (e) do not apply to
17 policies or certificates issued prior to October 1, 2003.
18 Section 3. This act shall take effect July 1, 2003.
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20 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
21 CS/SB 2264
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23 The Committee Substitute clarifies that policies providing
coverage to small employers which are governed under s.
24 627.6699, F.S., and a policy issued by a bona fide association
as defined by s. 627.6571(5), F.S., provided it meets
25 requirements specified in the bill, are exempt from the
provisions of Part VII of ch. 627, F.S.
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