HB 1277

1
A bill to be entitled
2An act relating to risk-based capital requirements for
3health maintenance organizations; creating s. 641.224,
4F.S.; providing definitions; requiring a health
5maintenance organization to file reports of its risk-based
6capital levels, beginning on a certain date; prohibiting
7certain uses of such reports; authorizing the Office of
8Insurance Regulation to use certain documents for certain
9purposes; providing requirements for determining risk-
10based capital; providing legislative findings; authorizing
11the office to adjust or revise risk-based capital reports
12under certain circumstances; requiring notice of any
13adjustments or revisions; providing for challenges to any
14adjustments or revisions; requiring certain health
15maintenance organizations to file copies of risk-based
16capital plans with the insurance department of certain
17states; providing criteria; providing criteria,
18requirements, and procedures for company action level
19events, regulatory action level events, authorized control
20level events, and mandatory control level events relating
21to levels of risk-based capital; providing duties and
22responsibilities of the office relating to such events;
23requiring a risk-based capital plan for certain purposes
24under certain circumstances; specifying plan requirements;
25authorizing the office to take certain corrective actions
26under certain circumstances; authorizing the office to
27retain professional assistance in undertaking certain
28activities relating to a health maintenance organization's
29levels of risk-based capital; authorizing the office to
30place a health maintenance organization under regulatory
31control under certain circumstances; providing for a right
32to a hearing before the office to challenge certain
33actions by the office; providing hearing requirements and
34procedures; specifying absence of liability of and
35prohibiting bringing certain causes of action against the
36Financial Services Commission, the Department of Financial
37Services, the office, and certain related personnel for
38certain activities; providing notification requirements
39for the office; providing construction; limiting
40application to certain health maintenance organizations;
41authorizing the commission to adopt rules; amending s.
42641.31, F.S.; revising provisions authorizing health
43maintenance organizations to include point-of-service
44riders for point-of service benefits under health
45maintenance contracts to include preferred provider
46policies for preferred provider benefits through preferred
47provider networks; revising maximum premium limitations;
48providing reporting requirements; providing additional
49premium requirements and limitations relating to preferred
50provider policies; requiring certain health maintenance
51organizations to file a risk-based capital report with the
52office for informational purposes; providing a limitation;
53providing application; providing effective dates.
54
55Be It Enacted by the Legislature of the State of Florida:
56
57     Section 1.  Section 641.224, Florida Statutes, is created
58to read:
59     641.224  Risk-based capital requirements for health
60maintenance organizations.--
61     (1)  As used in this section:
62     (a)  "Adjusted risk-based capital report" means a risk-
63based capital report that has been adjusted by the office in
64accordance with this section.
65     (b)  "Authorized control level risk-based capital" means
66the number determined under the risk-based capital formula in
67the risk-based capital instructions.
68     (c)  "Company action level risk-based capital" means the
69product of 2.0 and a health maintenance organization's
70authorized control level risk-based capital.
71     (d)  "Corrective order" means an order issued by the office
72specifying corrective actions that the office has determined are
73required.
74     (e)  "Mandatory control level risk-based capital" means the
75product of 0.70 and the authorized control level risk-based
76capital.
77     (f)  "Negative trend" means, with respect to a health
78maintenance organization, a negative trend over a period of
79time, as determined in accordance with the trend test
80calculation included in the risk-based capital instructions.
81     (g)  "Regulatory action level risk-based capital" means the
82product of 1.5 and a health maintenance organization's
83authorized control level risk-based capital.
84     (h)  "Revised risk-based capital plan" means the revision
85of the risk-based capital plan that is prepared by a health
86maintenance organization after the office rejects the original
87plan.
88     (i)  "Risk-based capital instructions" means the
89instructions for preparing a risk-based capital report as
90adopted by the National Association of Insurance Commissioners.
91     (j)  "Risk-based capital level" means a health maintenance
92organization's action level risk-based capital, regulatory
93action level risk-based capital, authorized control level risk-
94based capital, or mandatory control level risk-based capital.
95     (k)  "Risk-based capital plan" means a comprehensive
96financial plan specified in paragraph (4)(b).
97     (l)  "Risk-based capital report" means the report required
98in subsection (2).
99     (m)  "Total adjusted capital" means the sum of:
100     1.  A health maintenance organization's statutory capital
101and surplus.
102     2.  Any other item required by the risk-based capital
103instructions.
104     (2)(a)  Beginning January 1, 2011, a health maintenance
105organization that is subject to this section, on or before 90
106days after the end of its calendar year, shall prepare and file
107with the National Association of Insurance Commissioners a
108report of its risk-based capital levels as of the end of the
109preceding calendar year, in a form and containing the
110information required in the risk-based capital instructions. In
111addition, each health maintenance organization shall file a
112printed copy of its risk-based capital report:
113     1.  With the office on or before 3 months after the end of
114its calendar year.
115     2.  With the insurance department in any other state in
116which the health maintenance organization is authorized to do
117business, if that department has notified the health maintenance
118organization of its request in writing, in which case the health
119maintenance organization shall file its risk-based capital
120report not later than the later of:
121     a.  Fifteen days after the receipt of notice to file its
122risk-based capital report with that state; or
123     b.  Three months after the end of its calendar year.
124     (b)  The comparison of a health maintenance organization's
125total adjusted capital to any of its risk-based capital levels
126is intended to be a regulatory tool that may indicate the need
127for possible corrective action with respect to the health
128maintenance organization and may not be used as a means to rank
129health maintenance organizations generally. Therefore, except as
130otherwise required under this section, the making, publishing,
131disseminating, circulating, or placing before the public, or
132causing, directly or indirectly, to be made, published,
133disseminated, circulated, or placed before the public, in a
134newspaper, magazine, or other publication, or in the form of a
135notice, circular, pamphlet, letter, or poster, or over any radio
136or television station, or in any other way, an advertisement,
137announcement, or statement containing an assertion,
138representation, or statement with regard to the risk-based
139capital levels of any health maintenance organization, or of any
140component derived in the calculation, by any health maintenance
141organization engaged in any manner in the health maintenance
142organization business is misleading and is prohibited; however,
143if any materially false statement with respect to the comparison
144regarding a health maintenance organization's total adjusted
145capital to all or any of its risk-based capital levels or an
146inappropriate comparison of any other amount to the health
147maintenance organization's risk-based capital levels is
148published in any written publication and the health maintenance
149organization is able to demonstrate to the office with
150substantial proof the falsity or inappropriateness of the
151statement, the health maintenance organization may publish in a
152written publication an announcement the sole purpose of which is
153to rebut the materially false statement.
154     (c)  The office shall use the risk-based capital
155instructions, risk-based capital reports, adjusted risk-based
156capital reports, risk-based capital plans, and revised risk-
157based capital plans solely for monitoring the solvency of health
158maintenance organizations and assessing the need for corrective
159action with respect to health maintenance organizations. The
160office may not use that information for ratemaking, as evidence
161in any rate proceeding, or for calculating or deriving any
162elements of an appropriate premium level or rate of return for
163which a health maintenance organization or an affiliate of such
164health maintenance organization is authorized to write.
165     (d)  A health maintenance organization's risk-based capital
166shall be determined in accordance with the formula set forth in
167the risk-based capital instructions. The formula shall take the
168following into account, determined in each case by applying the
169factors in the manner set forth in the risk-based capital
170instructions, and may adjust for the covariance between:
171     1.  Asset risk.
172     2.  Credit risk.
173     3.  Underwriting risk.
174     4.  All other business risks and such other relevant risks
175as are set forth in the risk-based capital report.
176     (e)  The Legislature finds that an excess of capital over
177the amount produced by the risk-based capital requirements and
178the formulas, schedules, and instructions specified in this
179section is a desirable goal with respect to the business of a
180health maintenance organization. Accordingly, health maintenance
181organizations should seek to maintain capital above the risk-
182based capital levels required by this section, which additional
183capital may be used to help secure a health maintenance
184organization against various risks inherent in, or affecting,
185the business of insurance and not accounted for or only
186partially measured by the risk-based capital requirements
187contained in this section.
188     (f)  If a health maintenance organization files a risk-
189based capital report that the office finds is inaccurate, the
190office shall adjust the risk-based capital report to correct the
191inaccuracy and shall notify the health maintenance organization
192of the adjustment. The notice must state the reason for the
193adjustment. A risk-based capital report that is so adjusted is
194referred to as the "adjusted risk-based capital report." The
195adjusted risk-based capital report must also be filed by the
196health maintenance organization with the National Association of
197Insurance Commissioners.
198     (3)(a)  For purposes of this section, a company action
199level event includes:
200     1.  The filing of a risk-based capital report by a health
201maintenance organization that indicates that the health
202maintenance organization's total adjusted capital is greater
203than or equal to its regulatory action level risk-based capital
204but less than its company action level risk-based capital;
205     2.  The notification by the office to the health
206maintenance organization of an adjusted risk-based capital
207report that indicates an event described in subparagraph 1.,
208unless the health maintenance organization challenges the
209adjusted risk-based capital report under subsection (7); or
210     3.  If, under subsection (7), a health maintenance
211organization challenges an adjusted risk-based capital report
212that indicates an event in subparagraph 1., the notification by
213the office to the health maintenance organization that the
214office, after a hearing, has rejected the health maintenance
215organization's challenge.
216     (b)  If a company action level event occurs, the health
217maintenance organization shall prepare and submit to the office
218a risk-based capital plan, which must:
219     1.  Identify the conditions that contribute to the company
220action level event.
221     2.  Contain proposals of corrective actions that the health
222maintenance organization intends to take and that are reasonably
223expected to result in the elimination of the company action
224level event.
225     3.  Provide projections of the health maintenance
226organization's financial results in the current year and at
227least the 2 succeeding years, both in the absence of proposed
228corrective actions and giving effect to the proposed corrective
229actions, including projections of statutory operating income,
230net income, capital, surplus, and risk-based capital levels. The
231projections for both new and renewal business may include
232separate projections for each major line of business and, if
233separate projections are provided, must separately identify each
234significant income, expense, and benefit component.
235     4.  Identify the key assumptions affecting the health
236maintenance organization's projections and the sensitivity of
237the projections to the assumptions.
238     5.  Identify the quality of, and problems associated with,
239the health maintenance organization's business, including, but
240not limited to, its assets, anticipated business growth and
241associated surplus strain, extraordinary exposure to risk, mix
242of business, and any use of reinsurance.
243     (c)  The risk-based capital plan must be submitted:
244     1.  Within 45 days after the company action level event; or
245     2.  If the health maintenance organization challenges an
246adjusted risk-based capital report under subsection (7), within
24745 days after notification to the health maintenance
248organization that the office, after a hearing, has rejected the
249health maintenance organization's challenge.
250     (d)  Within 60 days after the submission by a health
251maintenance organization of a risk-based capital plan to the
252office, the office shall notify the health maintenance
253organization whether the risk-based capital plan must be
254implemented or, in the judgment of the office, is
255unsatisfactory. If the office determines that the risk-based
256capital plan is unsatisfactory, the notification to the health
257maintenance organization must set forth the reasons for the
258determination and may set forth proposed revisions. Upon
259notification from the office, the health maintenance
260organization shall prepare a revised risk-based capital plan
261which may incorporate by reference any revisions proposed by the
262office and shall submit the revised risk-based capital plan to
263the office:
264     1.  Within 45 days after the notification from the office;
265or
266     2.  If the health maintenance organization challenges the
267notification from the office under subsection (7), within 45
268days after a notification to the health maintenance organization
269that the office, after a hearing, has rejected the health
270maintenance organization's challenge.
271     (e)  If the office notifies a health maintenance
272organization that the health maintenance organization's risk-
273based capital plan or revised risk-based capital plan is
274unsatisfactory, the office, at its discretion and subject to the
275health maintenance organization's right to a hearing under
276subsection (7), may specify in the notification that the
277notification is a regulatory action level event.
278     (f)  Each health maintenance organization in this state
279that files with the office a risk-based capital plan or a
280revised risk-based capital plan shall also file a copy of the
281risk-based capital plan or the revised risk-based capital plan
282with the insurance department in any other state in which the
283insurer is authorized to do business if:
284     1.  That state has a risk-based capital law that is
285substantially similar to this section; and
286     2.  The insurance department of that state has notified the
287health maintenance organization in writing of its request for
288the filing, in which case the health maintenance organization
289shall file a copy of the risk-based capital plan or the revised
290risk-based capital plan in that state no later than the later
291of:
292     a.  Fifteen days after the receipt of notice to file a copy
293of its risk-based capital plan or revised risk-based capital
294plan with the state; or
295     b.  The date on which the risk-based capital plan or the
296revised risk-based capital plan is filed under paragraph (c) or
297paragraph (d).
298     (4)(a)  For purposes of this section, a regulatory action
299level event includes:
300     1.  The filing of a risk-based capital report by the health
301maintenance organization that indicates that the health
302maintenance organization's total adjusted capital is greater
303than or equal to its authorized control level risk-based capital
304but is less than its regulatory action level risk-based capital;
305     2.  The notification by the office to the health
306maintenance organization of an adjusted risk-based capital
307report that indicates the event described in subparagraph 1.,
308unless the health maintenance organization challenges the
309adjusted risk-based capital report under subsection (7);
310     3.  If, under subsection (7), the health maintenance
311organization challenges an adjusted risk-based capital report
312that indicates the event described in subparagraph 1., the
313notification by the office to the health maintenance
314organization that the office, after a hearing, has rejected the
315health maintenance organization's challenge;
316     4.  The failure of the health maintenance organization to
317file a risk-based capital report by the filing date, unless the
318health maintenance organization provides an explanation for such
319failure that is satisfactory to the office and cures the failure
320within 10 days after the filing date;
321     5.  The failure of the health maintenance organization to
322submit a risk-based capital plan to the office within the time
323period set forth in paragraph (3)(c);
324     6.  Notification by the office to the health maintenance
325organization that:
326     a.  The risk-based capital plan or the revised risk-based
327capital plan submitted by the health maintenance organization,
328in the judgment of the office, is unsatisfactory; and
329     b.  The notification constitutes a regulatory action level
330event with respect to the health maintenance organization,
331unless the health maintenance organization challenges the
332determination under subsection (7);
333     7.  If, under subsection (7), the health maintenance
334organization challenges a determination by the office under
335subparagraph 6., the notification by the office to the health
336maintenance organization that the office, after a hearing, has
337rejected the challenge;
338     8.  Notification by the office to the health maintenance
339organization that the health maintenance organization has failed
340to adhere to its risk-based capital plan or revised risk-based
341capital plan but only if such failure has a substantial adverse
342effect on the ability of the health maintenance organization to
343eliminate the company action level event in accordance with its
344risk-based capital plan or revised risk-based capital plan and
345the office has so stated in the notification, unless the health
346maintenance organization challenges the determination under
347subsection (7); or
348     9.  If, under subsection (7), the health maintenance
349organization challenges a determination by the office under
350subparagraph 8., the notification by the office to the health
351maintenance organization that the office, after a hearing, has
352rejected the challenge.
353     (b)  If a regulatory action level event occurs, the office
354shall:
355     1.  Require the health maintenance organization to prepare
356and submit a risk-based capital plan or, if applicable, a
357revised risk-based capital plan.
358     2.  Perform an examination pursuant to s. 641.27 or an
359analysis, as the office considers necessary, of the assets,
360liabilities, and operations of the health maintenance
361organization, including a review of the risk-based capital plan
362or the revised risk-based capital plan.
363     3.  After the examination or analysis, issue a corrective
364order specifying such corrective actions as the office
365determines are required.
366     (c)  In determining corrective actions, the office shall
367consider any factor relevant to the health maintenance
368organization based upon the office's examination or analysis of
369the assets, liabilities, and operations of the health
370maintenance organization, including, but not limited to, the
371results of any sensitivity tests undertaken as provided in the
372risk-based capital instructions. The risk-based capital plan or
373the revised risk-based capital plan shall be submitted:
374     1.  Within 45 days after the occurrence of the regulatory
375action level event;
376     2.  If the health maintenance organization challenges an
377adjusted risk-based capital report under subsection (7), within
37845 days after the notification to the health maintenance
379organization that the office, after a hearing, has rejected the
380health maintenance organization's challenge; or
381     3.  If the health maintenance organization challenges a
382revised risk-based capital plan under subsection (7), within 45
383days after the notification to the health maintenance
384organization that the office, after a hearing, has rejected the
385health maintenance organization's challenge.
386     (d)  The office may retain actuaries, investment experts,
387and other consultants to review a health maintenance
388organization's risk-based capital plan or revised risk-based
389capital plan, examine or analyze the assets, liabilities, and
390operations of a health maintenance organization, including
391contractual relationships, and formulate the corrective order
392with respect to the health maintenance organization. The fees,
393costs, and expenses relating to consultants shall be borne by
394the affected health maintenance organization or by any other
395party as directed by the office.
396     (5)(a)  For purposes of this section, an authorized control
397level event includes:
398     1.  The filing of a risk-based capital report by the health
399maintenance organization that indicates that the health
400maintenance organization's total adjusted capital is greater
401than or equal to its mandatory control level risk-based capital
402but is less than its authorized control level risk-based
403capital;
404     2.  The notification by the office to the health
405maintenance organization of an adjusted risk-based capital
406report that indicates the event described in subparagraph 1.,
407unless the health maintenance organization challenges the
408adjusted risk-based capital report under subsection (7);
409     3.  If, under subsection (7), the health maintenance
410organization challenges an adjusted risk-based capital report
411that indicates the event described in subparagraph 1.,
412notification by the office to the health maintenance
413organization that the office, after a hearing, has rejected the
414health maintenance organization's challenge;
415     4.  The failure of the health maintenance organization to
416respond, in a manner satisfactory to the office, to a corrective
417order, unless the health maintenance organization challenges the
418corrective order under subsection (7); or
419     5.  If the health maintenance organization challenges a
420corrective order under subsection (7) and the office, after a
421hearing, rejects the challenge or modifies the corrective order,
422the failure of the health maintenance organization to respond in
423a manner satisfactory to the office to the corrective order
424after rejection or modification by the office.
425     (b)  If an authorized control level event occurs, the
426office shall:
427     1.  Take any action required under subsection (4) regarding
428the health maintenance organization with respect to which a
429regulatory action level event has occurred; or
430     2.  If the office considers it to be in the best interests
431of the subscribers and creditors of the health maintenance
432organization and of the public, take any action as necessary to
433cause the health maintenance organization to be placed under
434regulatory control under chapter 631. An authorized control
435level event is a sufficient ground for the department to be
436appointed as receiver as provided in chapter 631.
437     (6)(a)  For purposes of this section, a mandatory control
438level event includes:
439     1.  The filing of a risk-based capital report that
440indicates that the health maintenance organization's total
441adjusted capital is less than its mandatory control level risk-
442based capital;
443     2.  Notification by the office to the health maintenance
444organization of an adjusted risk-based capital report that
445indicates the event described in subparagraph 1., unless the
446health maintenance organization challenges the adjusted risk-
447based capital report under subsection (7); or
448     3.  If, under subsection (7), the health maintenance
449organization challenges an adjusted risk-based capital report
450that indicates the event described in subparagraph 1.,
451notification by the office to the health maintenance
452organization that the office, after a hearing, has rejected the
453health maintenance organization's challenge.
454     (b)  If a mandatory control level event occurs, the office,
455after due consideration of s. 641.225, shall take any action
456necessary to place the health maintenance organization under
457regulatory control, including any remedy available under chapter
458631. A mandatory control level event is a sufficient ground for
459the department to be appointed as receiver as provided in
460chapter 631. The office may forego taking action for up to 90
461days after the mandatory control level event if the office finds
462there is a reasonable expectation that the mandatory control
463level event may be eliminated within the 90-day period.
464     (7)(a)  A health maintenance organization has a right to a
465hearing before the office upon:
466     1.  Notification to a health maintenance organization by
467the office of an adjusted risk-based capital report;
468     2.  Notification to a health maintenance organization by
469the office that the health maintenance organization's risk-based
470capital plan or revised risk-based capital plan is
471unsatisfactory and that the notification constitutes a
472regulatory action level event with respect to such health
473maintenance organization;
474     3.  Notification to any health maintenance organization by
475the office that the health maintenance organization has failed
476to adhere to its risk-based capital plan or revised risk-based
477capital plan and that the failure has a substantial adverse
478effect on the ability of the health maintenance organization to
479eliminate the company action level event in accordance with its
480risk-based capital plan or its revised risk-based capital plan;
481or
482     4.  Notification to a health maintenance organization by
483the office of a corrective order with respect to the health
484maintenance organization.
485     (b)  At such hearing, the health maintenance organization
486may challenge any determination or action by the office. The
487health maintenance organization shall notify the office of its
488request for a hearing within 5 days after receipt of the
489notification by the office under this subsection. Upon receipt
490of the request for a hearing, the office shall set a date for
491the hearing, which date must be no fewer than 10 or more than 30
492days after the date the office receives the health maintenance
493organization's request. The hearing must be conducted as
494provided in s. 624.324, with the right to appellate review as
495provided in s. 120.68.
496     (8)  There is no liability on the part of, and a cause of
497action may not be brought against, the commission, department,
498or office, or their employees or agents, for any action taken by
499the commission, department, office, employees, or agents in the
500performance of their powers and duties under this section.
501     (9)  The office shall transmit any notice that may result
502in regulatory action by registered mail, certified mail, or any
503other method of transmission. Notice is effective when the
504health maintenance organization receives the notice.
505     (10)  This section is supplemental to the other laws of
506this state and does not preclude or limit any power or duty of
507the department or office under those laws or under the rules
508adopted under those laws.
509     (11)  This section does not apply to a health maintenance
510organization that writes direct annual premiums of $2 million or
511less.
512     (12)  The commission may adopt rules to administer this
513section, including, but not limited to, those regarding risk-
514based capital reports, adjusted risk-based capital reports,
515risk-based capital plans, and corrective orders and procedures
516to be followed in the event of a triggering of a company action
517level event, a regulatory action level event, an authorized
518control level event, or a mandatory control level event.
519     Section 2.  Effective upon this act becoming a law,
520subsection (38) of section 641.31, Florida Statutes, is amended
521to read:
522     641.31  Health maintenance contracts.--
523     (38)(a)  Notwithstanding any other provision of this part,
524a health maintenance organization that meets the requirements of
525paragraph (b) may offer, through a point-of-service rider to its
526contract providing comprehensive health care services or through
527a policy that provides coverage for benefits through a preferred
528provider network pursuant to s. 627.6471, include a point-of-
529service or preferred provider benefit. Under such a rider or
530policy, a subscriber or other covered person of the health
531maintenance organization may choose, at the time of covered
532service, a provider with whom the health maintenance
533organization does not have a health maintenance organization
534provider contract. The rider or policy may not require a
535referral from the health maintenance organization for the point-
536of-service or preferred provider benefits.
537     (b)  A health maintenance organization offering a point-of-
538service or preferred provider benefits rider under this
539subsection must have a valid certificate of authority issued
540under the provisions of the chapter, must have been licensed
541under this chapter for a minimum of 3 years, and must at all
542times that it has point of service riders or preferred provider
543policies in effect maintain a minimum surplus of $5 million. A
544health maintenance organization offering a point-of-service
545rider to its contract or a preferred provider policy providing
546comprehensive health care services may offer the rider or policy
547to employers who have employees living and working outside the
548health maintenance organization's approved geographic service
549area without having to obtain a health care provider
550certificate, as long as the master group contract is issued to
551an employer that maintains its primary place of business within
552the health maintenance organization's approved service area. Any
553member or subscriber that lives and works outside the health
554maintenance organization's service area and elects coverage
555under the health maintenance organization's point-of-service
556rider or preferred provider policy must provide a statement to
557the health maintenance organization that indicates the member or
558subscriber understands the limitations of his or her policy and
559that only those benefits under the point-of-service rider or
560preferred provider policy will be covered when services are
561provided outside the service area.
562     (c)  Premiums paid in for the point-of-service riders or
563preferred provider policies may not exceed 49 15 percent of
564total premiums for all health plan products sold by the health
565maintenance organization offering the rider or preferred
566provider policy unless the health maintenance organization
567complies with the provisions of s. 624.4095 as if the health
568maintenance organization were a health insurer. To determine the
569available surplus to provide point-of-service riders or
570preferred provider policies under the provisions of s.
571624.4095(6), surplus shall be calculated by subtracting from
572actual or projected surplus the surplus required to be
573maintained under s. 641.225. In no event shall the total gross
574premiums for point-of-service riders and preferred provider
575policies exceed 49 percent of the gross premiums written on an
576actual or projected basis for health maintenance organization
577contracts. If the premiums written for point-of-service riders
578and preferred provider policies exceed 49 percent of total
579premiums for all health plan products sold by the health
580maintenance organization, the health maintenance organization
581shall file with the annual and quarterly financial reports
582required by s. 641.26 a report, on a form prescribed by the
583commission, reporting direct total premiums written, direct
584premiums earned, direct losses paid, and direct losses incurred
585for point-of-service riders and preferred provider policies. If
586the premiums paid for point-of-service riders or preferred
587provider policies exceed or are projected to exceed 49 15
588percent, the health maintenance organization must notify the
589office and, once this fact is known, must immediately cease
590offering such a rider and preferred provider policy until it is
591in compliance with the rider and preferred provider policy
592premium cap.
593     (d)  Notwithstanding the limitations of deductibles and
594copayment provisions in this part, a point-of-service rider or
595preferred provider policy may require the subscriber to pay a
596reasonable copayment for each visit for services provided by a
597noncontracted provider chosen at the time of the service. The
598copayment by the subscriber may either be a specific dollar
599amount or a percentage of the reimbursable provider charges
600covered by the contract and must be paid by the subscriber to
601the noncontracted provider upon receipt of covered services. The
602point-of-service rider or preferred provider policy may require
603that a reasonable annual deductible for the expenses associated
604with the point-of-service rider or preferred provider policy be
605met and may include a lifetime maximum benefit amount. The rider
606or preferred provider policy must include the language required
607by s. 627.6044 and must comply with copayment limits described
608in s. 627.6471. Section 641.3154 does not apply to a point-of-
609service rider or preferred provider policy authorized under this
610subsection.
611     (e)  The point-of-service rider or preferred provider
612policy must contain provisions that comply with s. 627.6044.
613     (f)  The term "point of service" may not be used by a
614health maintenance organization except with riders permitted
615under this section or with forms approved by the office in which
616a point-of-service product is offered with an indemnity carrier.
617     (g)  A point-of-service rider or preferred provider policy
618must be filed and approved under ss. 627.410 and 627.411.
619     (h)  The premium for preferred provider policies earned by
620health maintenance organizations shall not be included in the
621health maintenance organization's assessment base provided in s.
622631.819.
623     (i)  A health maintenance organization issuing preferred
624provider policies is subject to part III of chapter 631 as to
625preferred provider policies. Assessments based on premiums
626pursuant to part III of chapter 631 apply only to the premiums
627earned on the preferred provider contracts.
628     (j)  Preferred provider policies written by a health
629maintenance organization are subject to premium tax on the same
630basis as if the premiums were written by an authorized health
631insurer pursuant to chapter 624.
632     Section 3.  Beginning January 1, 2007, a health maintenance
633organization subject to s. 641.224, Florida Statutes, shall file
634with the Office of Insurance Regulation for the preceding
635calendar year by April 1, 2007, and annually thereafter, the
636risk-based capital report identified in s. 641.224(2), Florida
637Statutes, for informational purposes only. The information-only
638filing requirement expires upon the filing of the informational
639report due April 2, 2011. Section 641.224, Florida Statutes,
640applies to any risk-based capital report filed pursuant to this
641section.
642     Section 4.  Except as otherwise expressly provided in this
643act, this act shall take effect January 1, 2007.


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