HB 0999, Engrossed 1 2003
1	A bill to be entitled
2	An act relating to health insurance; amending s. 627.411,
3	F.S.; providing conditions for disapproval of health
4	insurance forms by the Office of Insurance Regulation;
5	amending s. 627.6515, F.S.; amending s. 626.9541, F.S.;
6	relating to unfair discrimination; amending s. 627.6515,
7	F.S.; providing for disclosure and exceptions thereto and
8	clarifies applicability to out-of-state group policies;
9	prohibits predatory pricing; authorizes Office of
10	Insurance Regulation to adopt rules; clarifies
11	applicability of group conversion provisions; amending s.
12	641.31, F.S.; specifying nonapplication of certain health
13	maintenance contract filing requirements to certain group
14	health insurance policies, with exceptions; providing an
15	effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1. Paragraph (e) of subsection (1) of section
20	627.411, Florida Statutes, is amended, and subsection (3) is
21	added to said section, to read:
22	627.411 Grounds for disapproval.--
23	(1) The department shall disapprove any form filed under
24	s. 627.410, or withdraw any previous approval thereof, only if
25	the form:
26	(e) Is for health insurance and:
27	1. Provides benefits thatwhichare unreasonable in
28	relation to the premium charged;,
29	2. Contains provisions thatwhichare unfair or
30	inequitable or contrary to the public policy of this state or
31	thatwhich encourage misrepresentation;,or
32	3. Contains provisions thatwhich apply rating practices
33	thatwhich result in premium escalations that are not viable for
34	the policyholder market or result in unfair discrimination
35	pursuant to s. 626.9541(1)(g)2.in sales practices.
36	(3)(a) For health insurance coverage as described in s.
37	627.6561(5)(a)2., the minimum loss ratio standard of incurred
38	claims to earned premium for the form shall be 65 percent.
39	(b) Incurred claims are claims occurring within a fixed
40	period, whether or not paid during the same period, under the
41	terms of the policy period.
42	1. Claims include scheduled benefit payments, or services
43	provided by a provider or through a provider network for dental,
44	vision, disability, and similar health benefits.
45	2. Claims do not include state assessments, taxes,
46	company expenses, or any expense incurred by the company for the
47	cost of adjusting and settling a claim, including the review,
48	qualification, oversight, management, or monitoring of a claim
49	or incentives or compensation to providers for other than the
50	provisions of health care services.
51	3. A company may at its discretion include costs that are
52	demonstrated to reduce claims, such as fraud intervention
53	programs or case management costs, which are identified in each
54	filing, are demonstrated to reduce claims costs, and do not
55	result in increasing the experience period loss ratio by more
56	than 5 percent.
57	4. For scheduled claim payments, such as disability
58	income or long-term care, the incurred claims shall be the
59	present value of the benefit payments discounted for continuance
60	and interest.
61	Section 2. Paragraph (g) of subsection (1) of section
62	626.9541, Florida Statutes, is amended to read:
63	626.9541 Unfair methods of competition and unfair or
64	deceptive acts or practices defined.--
65	(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
66	ACTS.--The following are defined as unfair methods of
67	competition and unfair or deceptive acts or practices:
68	(g) Unfair discrimination.--
69	1. Knowingly making or permitting any unfair
70	discrimination between individuals of the same actuarially
71	supportable class and equal expectation of life, in the rates
72	charged for any life insurance or annuity contract, in the
73	dividends or other benefits payable thereon, or in any other of
74	the terms and conditions of such contract.
75	2. Knowingly making or permitting any unfair
76	discrimination between individuals of the same actuarially
77	supportable class, as determined at the original time of
78	issuance of the coverage,and essentially the same hazard, in
79	the amount of premium, policy fees, or rates charged for any
80	policy or contract of accident, disability, or health insurance,
81	in the benefits payable thereunder, in any of the terms or
82	conditions of such contract, or in any other manner whatever.
83	3. For a health insurer, life insurer, disability insurer,
84	property and casualty insurer, automobile insurer, or managed
85	care provider to underwrite a policy, or refuse to issue,
86	reissue, or renew a policy, refuse to pay a claim, cancel or
87	otherwise terminate a policy, or increase rates based upon the
88	fact that an insured or applicant who is also the proposed
89	insured has made a claim or sought or should have sought medical
90	or psychological treatment in the past for abuse, protection
91	from abuse, or shelter from abuse, or that a claim was caused in
92	the past by, or might occur as a result of, any future assault,
93	battery, or sexual assault by a family or household member upon
94	another family or household member as defined in s. 741.28. A
95	health insurer, life insurer, disability insurer, or managed
96	care provider may refuse to underwrite, issue, or renew a policy
97	based on the applicant's medical condition, but shall not
98	consider whether such condition was caused by an act of abuse.
99	For purposes of this section, the term "abuse" means the
100	occurrence of one or more of the following acts:
101	a. Attempting or committing assault, battery, sexual
102	assault, or sexual battery;
103	b. Placing another in fear of imminent serious bodily
104	injury by physical menace;
105	c. False imprisonment;
106	d. Physically or sexually abusing a minor child; or
107	e. An act of domestic violence as defined in s. 741.28.
108
109	This subparagraph does not prohibit a property and casualty
110	insurer or an automobile insurer from excluding coverage for
111	intentional acts by the insured if such exclusion does not
112	constitute an act of unfair discrimination as defined in this
113	paragraph.
114	Section 3. Subsection (2) of section 627.6515, Florida
115	Statutes, is amended, and subsections (9) and (10) are added to
116	said section, to read:
117	627.6515 Out-of-state groups.--
118	(2) Except as provided in this part,this part does not
119	apply to a group health insurance policy issued or delivered
120	outside this state under which a resident of this state is
121	provided coverage if:
122	(a) The policy is issued to an employee group the
123	composition of which is substantially as described in s.
124	627.653; a labor union group or association group the
125	composition of which is substantially as described in s.
126	627.654; an additional group the composition of which is
127	substantially as described in s. 627.656; a group insured under
128	a blanket health policy when the composition of the group is
129	substantially in compliance with s. 627.659; a group insured
130	under a franchise health policy when the composition of the
131	group is substantially in compliance with s. 627.663; an
132	association group to cover persons associated in any other
133	common group, which common group is formed primarily for
134	purposes other than providing insurance; a group that is
135	established primarily for the purpose of providing group
136	insurance, provided the benefits are reasonable in relation to
137	the premiums charged thereunder and the issuance of the group
138	policy has resulted, or will result, in economies of
139	administration; or a group of insurance agents of an insurer,
140	which insurer is the policyholder;
141	(b) Certificates evidencing coverage under the policy are
142	issued to residents of this state and contain in contrasting
143	color and not less than 10-point type the following statement:
144	"The benefits of the policy providing your coverage are governed
145	primarily by the law of a state other than Florida"; and
146	(c) The policy provides the benefits specified in ss.
147	627.419, 627.6574, 627.6575, 627.6579, 627.6612, 627.66121,
148	627.66122, 627.6613, 627.667, 627.6675, 627.6691, and 627.66911;
149	and
150	(d) Applications for certificates of coverage offered to
151	residents of this state contain in contrasting color and not
152	less than 12-point type the following statement on the same page
153	as the applicant signature: “This policy is primarily governed
154	by the laws of {insert state where the master policy is filed}.
155	As a result, all of the rating laws applicable to policies filed
156	in Florida do not apply to this coverage, which may result in
157	increases in your premium at renewal that would not be
158	permissible under a Florida-approved policy. Any purchase of
159	individual health insurance should be considered carefully, as
160	future medical conditions may make it impossible to qualify for
161	another individual health policy. For information concerning
162	individual health coverage under a Florida-approved policy,
163	consult your agent or the Florida Department of Financial
164	Services”. The provisions of this paragraph only apply to group
165	certificates providing health insurance coverage which require
166	individual underwriting to determine coverage eligibility for an
167	individual or premium rates to be charged to an individual
168	except for the following:
169	1. Policies issued to provide coverage to groups of
170	persons all of whom are in the same or functionally related
171	licensed professions, and providing coverage only to such
172	licensed professionals, their employees or their dependents;
173	2. Policies providing coverage to small employers as
174	defined by s. 627.6699. Such policies shall be subject to, and
175	governed by, the provisions of s. %_%2%_%;
176	3. Policies issued to a bona fide association, as defined
177	by s.%_%3%_%(5), provided that there is a person or board acting
178	as a fiduciary for the benefit of the members; such association
179	is not owned, controlled by, or otherwiseassociated with the
180	insurance company; or
181	4. Any accidental death, accidental death and
182	dismemberment, accident-only, vision-only, dental-only, hospital
183	indemnity-only, hospital accident-only, cancer, specified
184	disease, Medicare supplement, products that supplement Medicare,
185	long-term care, or disability income insurance, similar
186	supplemental plans provided under a separate policy,
187	certificate, or contract of insurance, which cannot duplicate
188	coverage under an underlying health plan, coinsurance, or
189	deductibles; coverage issued as a supplement to workers’
190	compensation or similar insurance; or automobile medical-payment
191	insurance.
192	(9) Any insured shall be able to terminate membership or
193	affiliation with the group to whom the master policy is issued.
194	An insured that elects to terminate his membership or
195	affiliation with the group, shall provide written notice to the
196	insurer. Upon providing such notice, the member shall be
197	entitled to the rights and options provided by s. 627.6675.
198	(10) Any pricing structure that results or is reasonably
199	expected to result in rate escalations resulting in a death
200	spiral, which is a rate escalation caused by segmenting healthy
201	and unhealthy lives resulting in an ultimate pool of primarily
202	less healthy insureds is considered a predatory pricing
203	structure and constitutes unfair discrimination as provided in
204	s. 626.9541(1)(g). The Financial Services Commission may, by
205	rule, define other unfairly discriminatory or predatory health
206	insurance rating practices.
207	Section 4. Subsection (2) and paragraph (d) of subsection
208	(3) of section 641.31, Florida Statutes, are amended to read:
209	641.31 Health maintenance contracts.--
210	(2) The rates charged by any health maintenance
211	organization to its subscribers shall not be excessive,
212	inadequate, or unfairly discriminatory or follow a rating
213	methodology that is inconsistent, indeterminate, or ambiguous or
214	encourages misrepresentation or misunderstanding. A law
215	restricting or limiting deductibles, coinsurance, copayments, or
216	annual or lifetime maximum payments shall not apply to any
217	health maintenance organization contract offered or delivered to
218	an individual or a group of 51 or more persons that provides
219	coverage as described in s.641.31071(5)(a)2.department, in
220	accordance with generally accepted actuarial practice as applied
221	to health maintenance organizations, may define by rule what
222	constitutes excessive, inadequate, or unfairly discriminatory
223	rates and may require whatever information it deems necessary to
224	determine that a rate or proposed rate meets the requirements of
225	this subsection.
226	(3)
227	(d) Any change in rates charged for the contract must be
228	filed with the department not less than 30 days in advance of
229	the effective date. At the expiration of such 30 days, the rate
230	filing shall be deemed approved unless prior to such time the
231	filing has been affirmatively approved or disapproved by order
232	of the department. The approval of the filing by the department
233	constitutes a waiver of any unexpired portion of such waiting
234	period. The department may extend by not more than an additional
235	15 days the period within which it may so affirmatively approve
236	or disapprove any such filing, by giving notice of such
237	extension before expiration of the initial 30-day period. At the
238	expiration of any such period as so extended, and in the absence
239	of such prior affirmative approval or disapproval, any such
240	filing shall be deemed approved. This paragraph does not apply
241	to group health contracts effectuated and delivered in this
242	state insuring groups of 51 or more persons, except for Medicare
243	supplement insurance, long-term care insurance, and any coverage
244	under which the increase in claims costs over the lifetime of
245	the contract due to advancing age or duration is refunded in the
246	premium.
247	Section 5. This act shall take effect July 1, 2003.