The Florida Senate

641.285  Insolvency protection.--

(1)  Unless otherwise provided in this section, each health maintenance organization shall deposit with the department cash or securities of the type eligible under s. 625.52, which shall have at all times a market value in the amount set forth in this subsection. The amount of the deposit shall be reviewed annually, or more often, as the department deems necessary. The market value of the deposit shall be the greater of:

(a)  Twice its reasonably estimated average monthly uncovered expenditures; or

(b)  $100,000.

(2)  If securities or assets deposited by a health maintenance organization under this part are subject to material fluctuations in market value, the department may, in its discretion, require the organization to deposit and maintain on deposit additional securities or assets in an amount as may be reasonably necessary to assure that the deposit will at all times have a market value of not less than the amount specified under this section.

(a)  If for any reason the market value of assets and securities of a health maintenance organization held on deposit in this state under this code falls below the amount required, the organization shall promptly deposit other or additional assets or securities eligible for deposit sufficient to cure the deficiency. If the health maintenance organization has failed to cure the deficiency within 30 days after receipt of notice thereof by registered or certified mail from the department, the department may revoke the certificate of authority of the health maintenance organization.

(b)  A health maintenance organization may, at its option, deposit assets or securities in an amount exceeding its deposit required or otherwise permitted under this code by not more than 20 percent of the required or permitted deposit, or $20,000, whichever is the larger amount, for the purpose of absorbing fluctuations in the value of securities and assets deposited and to facilitate the exchange and substitution of securities and assets. During the solvency of the health maintenance organization, any excess shall be released to the organization upon its request. During the insolvency of the health maintenance organization, any excess deposit shall be released only as provided in s. 625.62.

(3)  The department shall waive the deposit requirements set forth in subsection (1) whenever it is satisfied that:

(a)  The health maintenance organization has sufficient surplus and an adequate history of generating net income to assure its financial viability for the next year;

(b)  The performance and obligations of the health maintenance organization are guaranteed by a guaranteeing organization of the type and subject to the same provisions as outlined in s. 641.225; or

(c)  The assets of the health maintenance organization or its contracts with any insurer, health care provider, governmental entity, or other person are reasonably sufficient to assure the performance of the obligations of the organization.

(4)  All income from deposits shall belong to the depositing health maintenance organization and shall be paid to it as it becomes available. A health maintenance organization that has made a securities deposit may withdraw that deposit, or any part thereof, after making a substitute deposit of cash or eligible securities or any combination of these or other acceptable measures of equal amount and value.

(5)

(a)  The requirements of this section do not apply to an applying or licensed health maintenance organization which has a plan, approved by the department, for handling insolvency which provides for continuation of benefits and payments to unaffiliated providers for services rendered both prior to and after insolvency for the duration of the contract period for which payment has been made, except that benefits to members who are confined on the date of insolvency in an inpatient facility shall be continued until their discharge. This plan shall include at least one of the following:

1.  Contracts of insurance or reinsurance on file with the department that will protect subscribers in the event the health maintenance organization is unable to meet its obligations. Each agreement between the organization and an insurer shall be subject to the laws of this state regarding reinsurance. Each agreement and any modification thereto shall be filed with and approved by the department. Each agreement shall remain in full force and in effect until replaced or for at least 90 days following written notification to the department by registered mail of cancellation or termination by either party. The department shall be endorsed on the agreement as an additional insured party;

2.  Contractual arrangements with health care providers that include a guarantee by the provider to continue providing health care services to any subscriber of the health maintenance organization, upon insolvency of the organization, until the end of the contract period for which payment by or on behalf of the subscriber has been made or the discharge of the subscriber from an inpatient facility, whichever occurs later; or

3.  Other measures acceptable to the department.

(b)  The department shall reduce the deposit requirements specified in subsection (1) whenever the department has determined that the health maintenance organization has a plan for handling insolvency which partially meets the requirements of this section. The amount of the deposit reduction shall be based on the extent to which the organization meets the requirements of this section.

History.--ss. 791, 809(1st), ch. 82-243; s. 10, ch. 83-198; s. 17, ch. 85-177; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429.