HB 1277CS

CHAMBER ACTION



1The Insurance Committee recommends the following:
2
3     Council/Committee Substitute
4     Remove the entire bill and insert:
5
A bill to be entitled
6An act relating to risk-based capital requirements for
7health maintenance organizations; creating s. 641.224,
8F.S.; providing definitions; requiring a health
9maintenance organization to file reports of its risk-based
10capital levels, beginning on a certain date; prohibiting
11certain uses of such reports; authorizing the Office of
12Insurance Regulation to use certain documents for certain
13purposes; providing requirements for determining risk-
14based capital; providing legislative findings; authorizing
15the office to adjust or revise risk-based capital reports
16under certain circumstances; requiring notice of any
17adjustments or revisions; providing for challenges to any
18adjustments or revisions; requiring certain health
19maintenance organizations to file copies of risk-based
20capital plans with the insurance department of certain
21states; providing criteria; providing criteria,
22requirements, and procedures for company action level
23events, regulatory action level events, authorized control
24level events, and mandatory control level events relating
25to levels of risk-based capital; providing duties and
26responsibilities of the office relating to such events;
27requiring a risk-based capital plan for certain purposes
28under certain circumstances; specifying plan requirements;
29authorizing the office to take certain corrective actions
30under certain circumstances; authorizing the office to
31retain professional assistance in undertaking certain
32activities relating to a health maintenance organization's
33levels of risk-based capital; authorizing the office to
34place a health maintenance organization under regulatory
35control under certain circumstances; providing for a right
36to a hearing before the office to challenge certain
37actions by the office; providing hearing requirements and
38procedures; specifying absence of liability of and
39prohibiting bringing certain causes of action against the
40Financial Services Commission, the Department of Financial
41Services, the office, and certain related personnel for
42certain activities; providing notification requirements
43for the office; providing construction; limiting
44application to certain health maintenance organizations;
45authorizing the commission to adopt rules; amending s.
46641.31, F.S.; revising provisions authorizing health
47maintenance organizations to include point-of-service
48riders for point-of service benefits under health
49maintenance contracts to include preferred provider
50policies for preferred provider benefits through preferred
51provider networks; revising maximum premium limitations;
52providing reporting requirements; providing additional
53premium requirements and limitations relating to preferred
54provider policies; requiring certain health maintenance
55organizations to file a risk-based capital report with the
56office for informational purposes; providing a limitation;
57providing application; providing effective dates.
58
59Be It Enacted by the Legislature of the State of Florida:
60
61     Section 1.  Section 641.224, Florida Statutes, is created
62to read:
63     641.224  Risk-based capital requirements for health
64maintenance organizations.--
65     (1)  As used in this section:
66     (a)  "Adjusted risk-based capital report" means a risk-
67based capital report that has been adjusted by the office in
68accordance with this section.
69     (b)  "Authorized control level risk-based capital" means
70the number determined under the risk-based capital formula in
71the risk-based capital instructions.
72     (c)  "Company action level risk-based capital" means the
73product of 2.0 and a health maintenance organization's
74authorized control level risk-based capital.
75     (d)  "Corrective order" means an order issued by the office
76specifying corrective actions that the office has determined are
77required.
78     (e)  "Mandatory control level risk-based capital" means the
79product of 0.70 and the authorized control level risk-based
80capital.
81     (f)  "Negative trend" means, with respect to a health
82maintenance organization, a negative trend over a period of
83time, as determined in accordance with the trend test
84calculation included in the risk-based capital instructions.
85     (g)  "Regulatory action level risk-based capital" means the
86product of 1.5 and a health maintenance organization's
87authorized control level risk-based capital.
88     (h)  "Revised risk-based capital plan" means the revision
89of the risk-based capital plan that is prepared by a health
90maintenance organization after the office rejects the original
91plan.
92     (i)  "Risk-based capital instructions" means the
93instructions for preparing a risk-based capital report as
94adopted by the National Association of Insurance Commissioners.
95     (j)  "Risk-based capital level" means a health maintenance
96organization's action level risk-based capital, regulatory
97action level risk-based capital, authorized control level risk-
98based capital, or mandatory control level risk-based capital.
99     (k)  "Risk-based capital plan" means a comprehensive
100financial plan specified in paragraph (4)(b).
101     (l)  "Risk-based capital report" means the report required
102in subsection (2).
103     (m)  "Total adjusted capital" means the sum of:
104     1.  A health maintenance organization's statutory capital
105and surplus.
106     2.  Any other item required by the risk-based capital
107instructions.
108     (2)(a)  Beginning January 1, 2011, a health maintenance
109organization that is subject to this section, on or before 90
110days after the end of its calendar year, shall prepare and file
111with the National Association of Insurance Commissioners a
112report of its risk-based capital levels as of the end of the
113preceding calendar year, in a form and containing the
114information required in the risk-based capital instructions. In
115addition, each health maintenance organization shall file a
116printed copy of its risk-based capital report:
117     1.  With the office on or before 3 months after the end of
118its calendar year.
119     2.  With the insurance department in any other state in
120which the health maintenance organization is authorized to do
121business, if that department has notified the health maintenance
122organization of its request in writing, in which case the health
123maintenance organization shall file its risk-based capital
124report not later than the later of:
125     a.  Fifteen days after the receipt of notice to file its
126risk-based capital report with that state; or
127     b.  Three months after the end of its calendar year.
128     (b)  The comparison of a health maintenance organization's
129total adjusted capital to any of its risk-based capital levels
130is intended to be a regulatory tool that may indicate the need
131for possible corrective action with respect to the health
132maintenance organization and may not be used as a means to rank
133health maintenance organizations generally. Therefore, except as
134otherwise required under this section, the making, publishing,
135disseminating, circulating, or placing before the public, or
136causing, directly or indirectly, to be made, published,
137disseminated, circulated, or placed before the public, in a
138newspaper, magazine, or other publication, or in the form of a
139notice, circular, pamphlet, letter, or poster, or over any radio
140or television station, or in any other way, an advertisement,
141announcement, or statement containing an assertion,
142representation, or statement with regard to the risk-based
143capital levels of any health maintenance organization, or of any
144component derived in the calculation, by any health maintenance
145organization engaged in any manner in the health maintenance
146organization business is misleading and is prohibited; however,
147if any materially false statement with respect to the comparison
148regarding a health maintenance organization's total adjusted
149capital to all or any of its risk-based capital levels or an
150inappropriate comparison of any other amount to the health
151maintenance organization's risk-based capital levels is
152published in any written publication and the health maintenance
153organization is able to demonstrate to the office with
154substantial proof the falsity or inappropriateness of the
155statement, the health maintenance organization may publish in a
156written publication an announcement the sole purpose of which is
157to rebut the materially false statement.
158     (c)  The office shall use the risk-based capital
159instructions, risk-based capital reports, adjusted risk-based
160capital reports, risk-based capital plans, and revised risk-
161based capital plans solely for monitoring the solvency of health
162maintenance organizations and assessing the need for corrective
163action with respect to health maintenance organizations. The
164office may not use that information for ratemaking, as evidence
165in any rate proceeding, or for calculating or deriving any
166elements of an appropriate premium level or rate of return for
167which a health maintenance organization or an affiliate of such
168health maintenance organization is authorized to write.
169     (d)  A health maintenance organization's risk-based capital
170shall be determined in accordance with the formula set forth in
171the risk-based capital instructions. The formula shall take the
172following into account, determined in each case by applying the
173factors in the manner set forth in the risk-based capital
174instructions, and may adjust for the covariance between:
175     1.  Asset risk.
176     2.  Credit risk.
177     3.  Underwriting risk.
178     4.  All other business risks and such other relevant risks
179as are set forth in the risk-based capital report.
180     (e)  The Legislature finds that an excess of capital over
181the amount produced by the risk-based capital requirements and
182the formulas, schedules, and instructions specified in this
183section is a desirable goal with respect to the business of a
184health maintenance organization. Accordingly, health maintenance
185organizations should seek to maintain capital above the risk-
186based capital levels required by this section, which additional
187capital may be used to help secure a health maintenance
188organization against various risks inherent in, or affecting,
189the business of insurance and not accounted for or only
190partially measured by the risk-based capital requirements
191contained in this section.
192     (f)  If a health maintenance organization files a risk-
193based capital report that the office finds is inaccurate, the
194office shall adjust the risk-based capital report to correct the
195inaccuracy and shall notify the health maintenance organization
196of the adjustment. The notice must state the reason for the
197adjustment. A risk-based capital report that is so adjusted is
198referred to as the "adjusted risk-based capital report." The
199adjusted risk-based capital report must also be filed by the
200health maintenance organization with the National Association of
201Insurance Commissioners.
202     (3)(a)  For purposes of this section, a company action
203level event includes:
204     1.  The filing of a risk-based capital report by a health
205maintenance organization that indicates that the health
206maintenance organization's total adjusted capital is greater
207than or equal to its regulatory action level risk-based capital
208but less than its company action level risk-based capital;
209     2.  The notification by the office to the health
210maintenance organization of an adjusted risk-based capital
211report that indicates an event described in subparagraph 1.,
212unless the health maintenance organization challenges the
213adjusted risk-based capital report under subsection (7); or
214     3.  If, under subsection (7), a health maintenance
215organization challenges an adjusted risk-based capital report
216that indicates an event in subparagraph 1., the notification by
217the office to the health maintenance organization that the
218office, after a hearing, has rejected the health maintenance
219organization's challenge.
220     (b)  If a company action level event occurs, the health
221maintenance organization shall prepare and submit to the office
222a risk-based capital plan, which must:
223     1.  Identify the conditions that contribute to the company
224action level event.
225     2.  Contain proposals of corrective actions that the health
226maintenance organization intends to take and that are reasonably
227expected to result in the elimination of the company action
228level event.
229     3.  Provide projections of the health maintenance
230organization's financial results in the current year and at
231least the 2 succeeding years, both in the absence of proposed
232corrective actions and giving effect to the proposed corrective
233actions, including projections of statutory operating income,
234net income, capital, surplus, and risk-based capital levels. The
235projections for both new and renewal business may include
236separate projections for each major line of business and, if
237separate projections are provided, must separately identify each
238significant income, expense, and benefit component.
239     4.  Identify the key assumptions affecting the health
240maintenance organization's projections and the sensitivity of
241the projections to the assumptions.
242     5.  Identify the quality of, and problems associated with,
243the health maintenance organization's business, including, but
244not limited to, its assets, anticipated business growth and
245associated surplus strain, extraordinary exposure to risk, mix
246of business, and any use of reinsurance.
247     (c)  The risk-based capital plan must be submitted:
248     1.  Within 45 days after the company action level event; or
249     2.  If the health maintenance organization challenges an
250adjusted risk-based capital report under subsection (7), within
25145 days after notification to the health maintenance
252organization that the office, after a hearing, has rejected the
253health maintenance organization's challenge.
254     (d)  Within 60 days after the submission by a health
255maintenance organization of a risk-based capital plan to the
256office, the office shall notify the health maintenance
257organization whether the risk-based capital plan must be
258implemented or, in the judgment of the office, is
259unsatisfactory. If the office determines that the risk-based
260capital plan is unsatisfactory, the notification to the health
261maintenance organization must set forth the reasons for the
262determination and may set forth proposed revisions. Upon
263notification from the office, the health maintenance
264organization shall prepare a revised risk-based capital plan
265which may incorporate by reference any revisions proposed by the
266office and shall submit the revised risk-based capital plan to
267the office:
268     1.  Within 45 days after the notification from the office;
269or
270     2.  If the health maintenance organization challenges the
271notification from the office under subsection (7), within 45
272days after a notification to the health maintenance organization
273that the office, after a hearing, has rejected the health
274maintenance organization's challenge.
275     (e)  If the office notifies a health maintenance
276organization that the health maintenance organization's risk-
277based capital plan or revised risk-based capital plan is
278unsatisfactory, the office, at its discretion and subject to the
279health maintenance organization's right to a hearing under
280subsection (7), may specify in the notification that the
281notification is a regulatory action level event.
282     (f)  Each health maintenance organization in this state
283that files with the office a risk-based capital plan or a
284revised risk-based capital plan shall also file a copy of the
285risk-based capital plan or the revised risk-based capital plan
286with the insurance department in any other state in which the
287health maintenance organization is authorized to do business if:
288     1.  That state has a risk-based capital law that is
289substantially similar to this section; and
290     2.  The insurance department of that state has notified the
291health maintenance organization in writing of its request for
292the filing, in which case the health maintenance organization
293shall file a copy of the risk-based capital plan or the revised
294risk-based capital plan in that state no later than the later
295of:
296     a.  Fifteen days after the receipt of notice to file a copy
297of its risk-based capital plan or revised risk-based capital
298plan with the state; or
299     b.  The date on which the risk-based capital plan or the
300revised risk-based capital plan is filed under paragraph (c) or
301paragraph (d).
302     (4)(a)  For purposes of this section, a regulatory action
303level event includes:
304     1.  The filing of a risk-based capital report by the health
305maintenance organization that indicates that the health
306maintenance organization's total adjusted capital is greater
307than or equal to its authorized control level risk-based capital
308but is less than its regulatory action level risk-based capital;
309     2.  The notification by the office to the health
310maintenance organization of an adjusted risk-based capital
311report that indicates the event described in subparagraph 1.,
312unless the health maintenance organization challenges the
313adjusted risk-based capital report under subsection (7);
314     3.  If, under subsection (7), the health maintenance
315organization challenges an adjusted risk-based capital report
316that indicates the event described in subparagraph 1., the
317notification by the office to the health maintenance
318organization that the office, after a hearing, has rejected the
319health maintenance organization's challenge;
320     4.  The failure of the health maintenance organization to
321file a risk-based capital report by the filing date, unless the
322health maintenance organization provides an explanation for such
323failure that is satisfactory to the office and cures the failure
324within 10 days after the filing date;
325     5.  The failure of the health maintenance organization to
326submit a risk-based capital plan to the office within the time
327period set forth in paragraph (3)(c);
328     6.  Notification by the office to the health maintenance
329organization that:
330     a.  The risk-based capital plan or the revised risk-based
331capital plan submitted by the health maintenance organization,
332in the judgment of the office, is unsatisfactory; and
333     b.  The notification constitutes a regulatory action level
334event with respect to the health maintenance organization,
335unless the health maintenance organization challenges the
336determination under subsection (7);
337     7.  If, under subsection (7), the health maintenance
338organization challenges a determination by the office under
339subparagraph 6., the notification by the office to the health
340maintenance organization that the office, after a hearing, has
341rejected the challenge;
342     8.  Notification by the office to the health maintenance
343organization that the health maintenance organization has failed
344to adhere to its risk-based capital plan or revised risk-based
345capital plan but only if such failure has a substantial adverse
346effect on the ability of the health maintenance organization to
347eliminate the company action level event in accordance with its
348risk-based capital plan or revised risk-based capital plan and
349the office has so stated in the notification, unless the health
350maintenance organization challenges the determination under
351subsection (7); or
352     9.  If, under subsection (7), the health maintenance
353organization challenges a determination by the office under
354subparagraph 8., the notification by the office to the health
355maintenance organization that the office, after a hearing, has
356rejected the challenge.
357     (b)  If a regulatory action level event occurs, the office
358shall:
359     1.  Require the health maintenance organization to prepare
360and submit a risk-based capital plan or, if applicable, a
361revised risk-based capital plan.
362     2.  Perform an examination pursuant to s. 641.27 or an
363analysis, as the office considers necessary, of the assets,
364liabilities, and operations of the health maintenance
365organization, including a review of the risk-based capital plan
366or the revised risk-based capital plan.
367     3.  After the examination or analysis, issue a corrective
368order specifying such corrective actions as the office
369determines are required.
370     (c)  In determining corrective actions, the office shall
371consider any factor relevant to the health maintenance
372organization based upon the office's examination or analysis of
373the assets, liabilities, and operations of the health
374maintenance organization, including, but not limited to, the
375results of any sensitivity tests undertaken as provided in the
376risk-based capital instructions. The risk-based capital plan or
377the revised risk-based capital plan shall be submitted:
378     1.  Within 45 days after the occurrence of the regulatory
379action level event;
380     2.  If the health maintenance organization challenges an
381adjusted risk-based capital report under subsection (7), within
38245 days after the notification to the health maintenance
383organization that the office, after a hearing, has rejected the
384health maintenance organization's challenge; or
385     3.  If the health maintenance organization challenges a
386revised risk-based capital plan under subsection (7), within 45
387days after the notification to the health maintenance
388organization that the office, after a hearing, has rejected the
389health maintenance organization's challenge.
390     (d)  The office may retain actuaries, investment experts,
391and other consultants to review a health maintenance
392organization's risk-based capital plan or revised risk-based
393capital plan, examine or analyze the assets, liabilities, and
394operations of a health maintenance organization, including
395contractual relationships, and formulate the corrective order
396with respect to the health maintenance organization. The fees,
397costs, and expenses relating to consultants shall be borne by
398the affected health maintenance organization or by any other
399party as directed by the office.
400     (5)(a)  For purposes of this section, an authorized control
401level event includes:
402     1.  The filing of a risk-based capital report by the health
403maintenance organization that indicates that the health
404maintenance organization's total adjusted capital is greater
405than or equal to its mandatory control level risk-based capital
406but is less than its authorized control level risk-based
407capital;
408     2.  The notification by the office to the health
409maintenance organization of an adjusted risk-based capital
410report that indicates the event described in subparagraph 1.,
411unless the health maintenance organization challenges the
412adjusted risk-based capital report under subsection (7);
413     3.  If, under subsection (7), the health maintenance
414organization challenges an adjusted risk-based capital report
415that indicates the event described in subparagraph 1.,
416notification by the office to the health maintenance
417organization that the office, after a hearing, has rejected the
418health maintenance organization's challenge;
419     4.  The failure of the health maintenance organization to
420respond, in a manner satisfactory to the office, to a corrective
421order, unless the health maintenance organization challenges the
422corrective order under subsection (7); or
423     5.  If the health maintenance organization challenges a
424corrective order under subsection (7) and the office, after a
425hearing, rejects the challenge or modifies the corrective order,
426the failure of the health maintenance organization to respond in
427a manner satisfactory to the office to the corrective order
428after rejection or modification by the office.
429     (b)  If an authorized control level event occurs, the
430office shall:
431     1.  Take any action required under subsection (4) regarding
432the health maintenance organization with respect to which a
433regulatory action level event has occurred; or
434     2.  If the office considers it to be in the best interests
435of the subscribers and creditors of the health maintenance
436organization and of the public, take any action as necessary to
437cause the health maintenance organization to be placed under
438regulatory control under chapter 631. An authorized control
439level event is a sufficient ground for the department to be
440appointed as receiver as provided in chapter 631.
441     (6)(a)  For purposes of this section, a mandatory control
442level event includes:
443     1.  The filing of a risk-based capital report that
444indicates that the health maintenance organization's total
445adjusted capital is less than its mandatory control level risk-
446based capital;
447     2.  Notification by the office to the health maintenance
448organization of an adjusted risk-based capital report that
449indicates the event described in subparagraph 1., unless the
450health maintenance organization challenges the adjusted risk-
451based capital report under subsection (7); or
452     3.  If, under subsection (7), the health maintenance
453organization challenges an adjusted risk-based capital report
454that indicates the event described in subparagraph 1.,
455notification by the office to the health maintenance
456organization that the office, after a hearing, has rejected the
457health maintenance organization's challenge.
458     (b)  If a mandatory control level event occurs, the office,
459after due consideration of s. 641.225, shall take any action
460necessary to place the health maintenance organization under
461regulatory control, including any remedy available under chapter
462631. A mandatory control level event is a sufficient ground for
463the department to be appointed as receiver as provided in
464chapter 631. The office may forego taking action for up to 90
465days after the mandatory control level event if the office finds
466there is a reasonable expectation that the mandatory control
467level event may be eliminated within the 90-day period.
468     (7)(a)  A health maintenance organization has a right to a
469hearing before the office upon:
470     1.  Notification to a health maintenance organization by
471the office of an adjusted risk-based capital report;
472     2.  Notification to a health maintenance organization by
473the office that the health maintenance organization's risk-based
474capital plan or revised risk-based capital plan is
475unsatisfactory and that the notification constitutes a
476regulatory action level event with respect to such health
477maintenance organization;
478     3.  Notification to any health maintenance organization by
479the office that the health maintenance organization has failed
480to adhere to its risk-based capital plan or revised risk-based
481capital plan and that the failure has a substantial adverse
482effect on the ability of the health maintenance organization to
483eliminate the company action level event in accordance with its
484risk-based capital plan or its revised risk-based capital plan;
485or
486     4.  Notification to a health maintenance organization by
487the office of a corrective order with respect to the health
488maintenance organization.
489     (b)  At such hearing, the health maintenance organization
490may challenge any determination or action by the office. The
491health maintenance organization shall notify the office of its
492request for a hearing within 5 days after receipt of the
493notification by the office under this subsection. Upon receipt
494of the request for a hearing, the office shall set a date for
495the hearing, which date must be no fewer than 10 or more than 30
496days after the date the office receives the health maintenance
497organization's request. The hearing must be conducted as
498provided in s. 624.324, with the right to appellate review as
499provided in s. 120.68.
500     (8)  There is no liability on the part of, and a cause of
501action may not be brought against, the commission, department,
502or office, or their employees or agents, for any action taken by
503the commission, department, office, employees, or agents in the
504performance of their powers and duties under this section.
505     (9)  The office shall transmit any notice that may result
506in regulatory action by registered mail, certified mail, or any
507other method of transmission that provides proof of receipt.
508Notice is effective when the health maintenance organization
509receives the notice.
510     (10)  This section is supplemental to the other laws of
511this state and does not preclude or limit any power or duty of
512the department or office under those laws or under the rules
513adopted under those laws.
514     (11)  This section does not apply to a health maintenance
515organization that writes direct annual premiums of $2 million or
516less.
517     (12)  The commission may adopt rules to administer this
518section, including, but not limited to, those regarding risk-
519based capital reports, adjusted risk-based capital reports,
520risk-based capital plans, and corrective orders and procedures
521to be followed in the event of a triggering of a company action
522level event, a regulatory action level event, an authorized
523control level event, or a mandatory control level event.
524     Section 2.  Effective upon this act becoming a law,
525subsection (38) of section 641.31, Florida Statutes, is amended
526to read:
527     641.31  Health maintenance contracts.--
528     (38)(a)  Notwithstanding any other provision of this part,
529a health maintenance organization that meets the requirements of
530paragraph (b) may offer, through a point-of-service rider to its
531contract providing comprehensive health care services or through
532a policy that provides coverage for benefits through a preferred
533provider network pursuant to s. 627.6471, include a point-of-
534service or preferred provider benefit. Under such a rider or
535policy, a subscriber or other covered person of the health
536maintenance organization may choose, at the time of covered
537service, a provider with whom the health maintenance
538organization does not have a health maintenance organization
539provider contract. The rider or policy may not require a
540referral from the health maintenance organization for the point-
541of-service or preferred provider benefits.
542     (b)  A health maintenance organization offering a point-of-
543service or preferred provider benefits rider under this
544subsection must have a valid certificate of authority issued
545under the provisions of the chapter, must have been licensed
546under this chapter for a minimum of 3 years, and must at all
547times that it has point of service riders or preferred provider
548policies in effect maintain a minimum surplus of $5 million. A
549health maintenance organization offering a point-of-service
550rider to its contract or a preferred provider policy providing
551comprehensive health care services may offer the rider or policy
552to employers who have employees living and working outside the
553health maintenance organization's approved geographic service
554area without having to obtain a health care provider
555certificate, as long as the master group contract is issued to
556an employer that maintains its primary place of business within
557the health maintenance organization's approved service area. Any
558member or subscriber that lives and works outside the health
559maintenance organization's service area and elects coverage
560under the health maintenance organization's point-of-service
561rider or preferred provider policy must provide a statement to
562the health maintenance organization that indicates the member or
563subscriber understands the limitations of his or her policy and
564that only those benefits under the point-of-service rider or
565preferred provider policy will be covered when services are
566provided outside the service area.
567     (c)  Premiums paid in for the point-of-service riders or
568preferred provider policies may not exceed 15 percent of total
569premiums for all health plan products sold by the health
570maintenance organization offering the rider or preferred
571provider policy unless the health maintenance organization
572complies with the provisions of s. 624.4095 as if the health
573maintenance organization were a health insurer. To determine the
574available surplus to provide point-of-service riders or
575preferred provider policies under the provisions of s.
576624.4095(6), surplus shall be calculated by subtracting from
577actual or projected surplus the surplus required to be
578maintained under s. 641.225. In no event shall the total gross
579premiums for point-of-service riders and preferred provider
580policies exceed 49 percent of the gross premiums written on an
581actual or projected basis for health maintenance organization
582contracts. If the premiums written for point-of-service riders
583and preferred provider policies exceed 15 percent of total
584premiums for all health plan products sold by the health
585maintenance organization, the health maintenance organization
586shall file with the annual and quarterly financial reports
587required by s. 641.26 a report, on a form prescribed by the
588commission, reporting direct total premiums written, direct
589premiums earned, direct losses paid, and direct losses incurred
590for point-of-service riders and preferred provider policies. If
591the premiums paid for point-of-service riders or preferred
592provider policies exceed or are projected to exceed 49 15
593percent, the health maintenance organization must notify the
594office and, once this fact is known, must immediately cease
595offering such a rider and preferred provider policy until it is
596in compliance with the rider and preferred provider policy
597premium cap.
598     (d)  Notwithstanding the limitations of deductibles and
599copayment provisions in this part, a point-of-service rider or
600preferred provider policy may require the subscriber to pay a
601reasonable copayment for each visit for services provided by a
602noncontracted provider chosen at the time of the service. The
603copayment by the subscriber may either be a specific dollar
604amount or a percentage of the reimbursable provider charges
605covered by the contract and must be paid by the subscriber to
606the noncontracted provider upon receipt of covered services. The
607point-of-service rider or preferred provider policy may require
608that a reasonable annual deductible for the expenses associated
609with the point-of-service rider or preferred provider policy be
610met and may include a lifetime maximum benefit amount. The rider
611or preferred provider policy must include the language required
612by s. 627.6044 and must comply with copayment limits described
613in s. 627.6471. Section 641.3154 does not apply to a point-of-
614service rider or preferred provider policy authorized under this
615subsection.
616     (e)  The point-of-service rider or preferred provider
617policy must contain provisions that comply with s. 627.6044.
618     (f)  The term "point of service" may not be used by a
619health maintenance organization except with riders permitted
620under this section or with forms approved by the office in which
621a point-of-service product is offered with an indemnity carrier.
622     (g)  A point-of-service rider or preferred provider policy
623must be filed and approved under ss. 627.410 and 627.411.
624     (h)  The premium for preferred provider policies earned by
625health maintenance organizations shall not be included in the
626health maintenance organization's assessment base provided in s.
627631.819.
628     (i)  A health maintenance organization issuing preferred
629provider policies is subject to part III of chapter 631 as to
630preferred provider policies. Assessments based on premiums
631pursuant to part III of chapter 631 apply only to the premiums
632earned on the preferred provider contracts.
633     (j)  Preferred provider policies written by a health
634maintenance organization are subject to premium tax on the same
635basis as if the premiums were written by an authorized health
636insurer pursuant to chapter 624.
637     Section 3.  Beginning January 1, 2007, a health maintenance
638organization subject to s. 641.224, Florida Statutes, shall file
639with the Office of Insurance Regulation for the preceding
640calendar year by April 1, 2007, and annually thereafter, the
641risk-based capital report identified in s. 641.224(2), Florida
642Statutes, for informational purposes only. The information-only
643filing requirement expires upon the filing of the informational
644report due April 2, 2011. Section 641.2241, Florida Statutes,
645applies to any risk-based capital report filed pursuant to this
646section.
647     Section 4.  Except as otherwise expressly provided in this
648act, this act shall take effect January 1, 2007.


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