(1) LEGISLATIVE INTENT.—
(a) The Legislature recognizes that to secure a more stable and orderly health insurance market, the establishment of a plan to assume risks deemed uninsurable by the private marketplace is required.
(b) The Florida Health Insurance Plan is to make coverage available to individuals who have no other option for similar coverage, at a premium that is commensurate with the risk and benefits provided, and with benefit designs that are reasonable in relation to the general market. While plan operations may include supplementary funding, the plan shall fundamentally operate on sound actuarial principles, using basic insurance management techniques to ensure that the plan is run in an economical, cost-efficient, and sound manner, conserving plan resources to serve the maximum number of people possible in a sustainable fashion.
(2) DEFINITIONS.—As used in this section:
(a) “Board” means the board of directors of the plan.
(b) “Dependent” means a resident spouse or resident unmarried child under the age of 19 years, a child who is a student under the age of 25 years and who is financially dependent upon the parent, or a child of any age who is disabled and dependent upon the parent.
(c) “Director” means the Director of the Office of Insurance Regulation.
(d) “Health insurance” means any hospital or medical expense incurred policy or health maintenance organization subscriber contract pursuant to chapter 641. The term does not include short-term, accident, dental-only, vision-only, fixed-indemnity, limited-benefit, or credit insurance; disability income insurance; coverage for onsite medical clinics; insurance coverage specified in federal regulations issued pursuant to Pub. L. No. 104-191, under which benefits for medical care are secondary or incidental to other insurance benefits; benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof, or other similar, limited benefits specified in federal regulations issued pursuant to Pub. L. No. 104-191; benefits provided under a separate policy, certificate, or contract of insurance, under which there is no coordination between the provision of the benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor and the benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor, such as for coverage only for a specified disease or illness; hospital indemnity or other fixed indemnity insurance; coverage offered as a separate policy, certificate, or contract of insurance, such as Medicare supplemental health insurance as defined under s. 1882(g)(1) of the Social Security Act; coverage supplemental to the coverage provided under chapter 55 of Title 10, U.S.C., the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); similar supplemental coverage provided to coverage under a group health plan; coverage issued as a supplement to liability insurance; insurance arising out of a workers’ compensation or similar law; automobile medical payment insurance; or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(e) “Implementation” means the effective date after the first meeting of the board when legal authority and administrative ability exists for the board to subsume the transfer of all statutory powers, duties, functions, assets, records, personnel, and property of the Florida Comprehensive Health Association as specified in s. 627.6488. (f) “Insurer” means any entity that provides health insurance in this state. For purposes of this section, insurer includes an insurance company with a valid certificate in accordance with chapter 624, a health maintenance organization with a valid certificate of authority in accordance with part I or part III of chapter 641, a prepaid health clinic authorized to transact business in this state pursuant to part II of chapter 641, multiple employer welfare arrangements authorized to transact business in this state pursuant to ss. 624.436-624.45, or a fraternal benefit society providing health benefits to its members as authorized pursuant to chapter 632.
(g) “Medicare” means coverage under both Parts A and B of Title XVIII of the Social Security Act, 42 U.S.C. ss. 1395 et seq., as amended.
(h) “Medicaid” means coverage under Title XIX of the Social Security Act.
(i) “Office” means the Office of Insurance Regulation of the Financial Services Commission.
(j) “Participating insurer” means any insurer providing health insurance to citizens of this state.
(k) “Provider” means any physician, hospital, or other institution, organization, or person that furnishes health care services and is licensed or otherwise authorized to practice in the state.
(l) “Plan” means the Florida Health Insurance Plan created in subsection (1).
(m) “Plan of operation” means the articles, bylaws, and operating rules and procedures adopted by the board pursuant to this section.
(n) “Resident” means an individual who has been legally domiciled in this state for a period of at least 6 months.
(3) BOARD OF DIRECTORS.—
(a) The plan shall operate subject to the supervision and control of the board. The board shall consist of the director or his or her designated representative, who shall serve as a member of the board and shall be its chair, and an additional eight members, five of whom shall be appointed by the Governor, at least two of whom shall be individuals not representative of insurers or health care providers, one of whom shall be appointed by the President of the Senate, one of whom shall be appointed by the Speaker of the House of Representatives, and one of whom shall be appointed by the Chief Financial Officer.
(b) The term to be served on the board by the Director of the Office of Insurance Regulation shall be determined by continued employment in such position. The remaining initial board members shall serve for a period of time as follows: two members appointed by the Governor and the members appointed by the President of the Senate and the Speaker of the House of Representatives shall serve a term of 2 years; and three members appointed by the Governor and the Chief Financial Officer shall serve a term of 4 years. Subsequent board members shall serve for a term of 3 years. A board member’s term shall continue until his or her successor is appointed.
(c) Vacancies on the board shall be filled by the appointing authority, such authority being the Governor, the President of the Senate, the Speaker of the House of Representatives, or the Chief Financial Officer. The appointing authority may remove board members for cause.
(d) The director, or his or her recognized representative, shall be responsible for any organizational requirements necessary for the initial meeting of the board which shall take place no later than September 1, 2004.
(e) Members shall not be compensated in their capacity as board members but shall be reimbursed for reasonable expenses incurred in the necessary performance of their duties in accordance with s. 112.061.
(f) The board shall submit to the Financial Services Commission a plan of operation for the plan and any amendments thereto necessary or suitable to ensure the fair, reasonable, and equitable administration of the plan. The plan of operation shall ensure that the plan qualifies to apply for any available funding from the Federal Government that adds to the financial viability of the plan. The plan of operation shall become effective upon approval in writing by the Financial Services Commission consistent with the date on which the coverage under this section must be made available. If the board fails to submit a suitable plan of operation within 1 year after the appointment of the board of directors, or at any time thereafter fails to submit suitable amendments to the plan of operation, the Financial Services Commission shall adopt such rules as are necessary or advisable to effectuate the provisions of this section. Such rules shall continue in force until modified by the office or superseded by a plan of operation submitted by the board and approved by the Financial Services Commission.
(4) PLAN OF OPERATION.—The plan of operation shall:
(a) Establish procedures for operation of the plan.
(b) Establish procedures for selecting an administrator in accordance with subsection (11).
(c) Establish procedures to create a fund, under management of the board, for administrative expenses.
(d) Establish procedures for the handling, accounting, and auditing of assets, moneys, and claims of the plan and the plan administrator.
(e) Develop and implement a program to publicize the existence of the plan, plan eligibility requirements, and procedures for enrollment and maintain public awareness of the plan.
(f) Establish procedures under which applicants and participants may have grievances reviewed by a grievance committee appointed by the board. The grievances shall be reported to the board after completion of the review, with the committee’s recommendation for grievance resolution. The board shall retain all written grievances regarding the plan for at least 3 years.
(g) Provide for other matters as may be necessary and proper for the execution of the board’s powers, duties, and obligations under this section.
(5) POWERS OF THE PLAN.—The plan shall have the general powers and authority granted under the laws of this state to health insurers and, in addition thereto, the specific authority to:
(a) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this section, including the authority, with the approval of the Chief Financial Officer, to enter into contracts with similar plans of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions.
(b) Take any legal actions necessary or proper to recover or collect assessments due the plan.
(c) Take such legal action as is necessary to:
1. Avoid payment of improper claims against the plan or the coverage provided by or through the plan;
2. Recover any amounts erroneously or improperly paid by the plan;
3. Recover any amounts paid by the plan as a result of mistake of fact or law; or
4. Recover other amounts due the plan.
(d) Establish, and modify as appropriate, rates, rate schedules, rate adjustments, expense allowances, agents’ commissions, claims reserve formulas, and any other actuarial functions appropriate to the operation of the plan. Rates and rate schedules may be adjusted for appropriate factors such as age, sex, and geographic variation in claim cost and shall take into consideration appropriate factors in accordance with established actuarial and underwriting practices. For purposes of this paragraph, usual and customary agent’s commissions shall be paid for the initial placement of coverage with the plan and for one renewal only.
(e) Issue policies of insurance in accordance with the requirements of this section.
(f) Appoint appropriate legal, actuarial, investment, and other committees as necessary to provide technical assistance in the operation of the plan and develop and educate its policyholders regarding health savings accounts, policy and contract design, and any other function within the authority of the plan.
(g) Borrow money to effectuate the purposes of the plan. Any notes or other evidence of indebtedness of the plan not in default shall be legal investments for insurers and may be carried as admitted assets.
(h) Employ and fix the compensation of employees.
(i) Prepare and distribute certificate of eligibility forms and enrollment instruction forms to insurance producers and to the general public.
(j) Provide for reinsurance of risks incurred by the plan.
(k) Provide for and employ cost-containment measures and requirements, including, but not limited to, preadmission screening, second surgical opinion, concurrent utilization review, and individual case management for the purpose of making the plan more cost-effective.
(l) Design, use, contract, or otherwise arrange for the delivery of cost-effective health care services, including, but not limited to, establishing or contracting with preferred provider organizations, health maintenance organizations, and other limited network provider arrangements.
(m) Adopt such bylaws, policies, and procedures as may be necessary or convenient for the implementation of this section and the operation of the plan.
(n) Subsume the transfer of statutory powers, duties, functions, assets, records, personnel, and property of the Florida Comprehensive Health Association as specified in ss. 627.6488, 627.6489, 627.649, 627.6492, 627.6496, 627.6498, and 627.6499, unless otherwise specified by law. (6) ANNUAL REPORT.—The board shall annually submit to the Governor, the President of the Senate, and the Speaker of the House of Representatives a report that includes an independent actuarial study to determine, without limitation, the following:
(a) The effect the creation of the plan has on the small group and individual insurance market, specifically on the premiums paid by insureds, including an estimate of the total anticipated aggregate savings for all small employers in the state.
(b) The actual number of individuals covered at the current funding and benefit level, the projected number of individuals that may seek coverage in the forthcoming fiscal year, and the projected funding needed to cover anticipated increase or decrease in plan participation.
(c) A recommendation as to the best source of funding for the anticipated deficits of the pool.
(d) A summary of the activities of the plan in the preceding calendar year, including the net written and earned premiums, plan enrollment, the expense of administration, and the paid and incurred losses.
(e) A review of the operation of the plan as to whether the plan has met the intent of this section.
The board may not implement the Florida Health Insurance Plan until funds are appropriated for startup costs and any projected deficits; however, the board may complete the actuarial study authorized in this subsection.
(7) LIABILITY OF THE PLAN.—Neither the board nor its employees shall be liable for any obligations of the plan. No member or employee of the board shall be liable, and no cause of action of any nature may arise against a member or employee of the board, for any act or omission related to the performance of any powers and duties under this section, unless such act or omission constitutes willful or wanton misconduct. The board may provide in its bylaws or rules for indemnification of, and legal representation for, its members and employees.
(8) AUDITED FINANCIAL STATEMENT.—No later than June 1 following the close of each calendar year, the plan shall submit to the Financial Services Commission an audited financial statement prepared in accordance with statutory accounting principles as adopted by the National Association of Insurance Commissioners.
(9) ELIGIBILITY.— (a) Any individual person who is and continues to be a resident of this state shall be eligible for coverage under the plan if:
1. Evidence is provided that the person received notices of rejection or refusal to issue substantially similar coverage for health reasons from at least two health insurers or health maintenance organizations. A rejection or refusal by an insurer offering only stop-loss, excess of loss, or reinsurance coverage with respect to the applicant shall not be sufficient evidence under this paragraph.
2. The person is enrolled in the Florida Comprehensive Health Association as of the date the plan is implemented.
(b) Each resident dependent of a person who is eligible for coverage under the plan shall also be eligible for such coverage.
(c) A person shall not be eligible for coverage under the plan if:
1. The person has or obtains health insurance coverage substantially similar to or more comprehensive than a plan policy, or would be eligible to obtain such coverage, unless a person may maintain other coverage for the period of time the person is satisfying any preexisting condition waiting period under a plan policy or may maintain plan coverage for the period of time the person is satisfying a preexisting condition waiting period under another health insurance policy intended to replace the plan policy.
2. The person is determined to be eligible for health care benefits under Medicaid, Medicare, the state’s children’s health insurance program, or any other federal, state, or local government program that provides health benefits;
3. The person voluntarily terminated plan coverage unless 12 months have elapsed since such termination;
4. The person is an inmate or resident of a public institution; or
5. The person’s premiums are paid for or reimbursed under any government-sponsored program or by any government agency or health care provider.
(d) Coverage shall cease:
1. On the date a person is no longer a resident of this state;
2. On the date a person requests coverage to end;
3. Upon the death of the covered person;
4. On the date state law requires cancellation or nonrenewal of the policy; or
5. At the option of the plan, 30 days after the plan makes any inquiry concerning the person’s eligibility or place of residence to which the person does not reply.
6. Upon failure of the insured to pay for continued coverage.
(e) Except under the circumstances described in this subsection, coverage of a person who ceases to meet the eligibility requirements of this subsection shall be terminated at the end of the policy period for which the necessary premiums have been paid.
(10) UNFAIR REFERRAL TO PLAN.—It is an unfair trade practice for the purposes of part IX of chapter 626 or s. 641.3901 for an insurer, health maintenance organization insurance agent, insurance broker, or third-party administrator to refer an individual employee to the plan, or arrange for an individual employee to apply to the plan, for the purpose of separating that employee from group health insurance coverage provided in connection with the employee’s employment. (11) PLAN ADMINISTRATOR.—The board shall select through a competitive bidding process a plan administrator to administer the plan. The board shall evaluate bids submitted based on criteria established by the board, which shall include:
(a) The plan administrator’s proven ability to handle health insurance coverage to individuals.
(b) The efficiency and timeliness of the plan administrator’s claim processing procedures.
(c) An estimate of total charges for administering the plan.
(d) The plan administrator’s ability to apply effective cost-containment programs and procedures and to administer the plan in a cost-efficient manner.
(e) The financial condition and stability of the plan administrator.
The administrator shall be an insurer, a health maintenance organization, or a third-party administrator, or another organization duly authorized to provide insurance pursuant to the Florida Insurance Code.
(12) ADMINISTRATOR TERM LIMITS.—The plan administrator shall serve for a period specified in the contract between the plan and the plan administrator subject to removal for cause and subject to any terms, conditions, and limitations of the contract between the plan and the plan administrator. At least 1 year prior to the expiration of each period of service by a plan administrator, the board shall invite eligible entities, including the current plan administrator, to submit bids to serve as the plan administrator. Selection of the plan administrator for each succeeding period shall be made at least 6 months prior to the end of the current period.
(13) DUTIES OF THE PLAN ADMINISTRATOR.— (a) The plan administrator shall perform such functions relating to the plan as may be assigned to it, including, but not limited to:
1. Determination of eligibility.
2. Payment of claims.
3. Establishment of a premium billing procedure for collection of premiums from persons covered under the plan.
4. Other necessary functions to ensure timely payment of benefits to covered persons under the plan.
(b) The plan administrator shall submit regular reports to the board regarding the operation of the plan. The frequency, content, and form of the reports shall be specified in the contract between the board and the plan administrator.
(c) On March 1 following the close of each calendar year, the plan administrator shall determine net written and earned premiums, the expense of administration, and the paid and incurred losses for the year and report this information to the board and the Governor on a form prescribed by the Governor.
(14) PAYMENT OF THE PLAN ADMINISTRATOR.—The plan administrator shall be paid as provided in the contract between the plan and the plan administrator.
(15) FUNDING OF THE PLAN.— (a) Premiums.—
1. The plan shall establish premium rates for plan coverage as provided in this section. Separate schedules of premium rates based on age, sex, and geographical location may apply for individual risks. Premium rates and schedules shall be submitted to the office for approval prior to use.
2. Initial rates for plan coverage shall be limited to no more than 300 percent of rates established for individual standard risks as specified in s. 627.6675(3)(c). Subject to the limits provided in this paragraph, subsequent rates shall be established to provide fully for the expected costs of claims, including recovery of prior losses, expenses of operation, investment income of claim reserves, and any other cost factors subject to the limitations described herein, but in no event shall premiums exceed the 300-percent rate limitation provided in this section. Notwithstanding the 300-percent rate limitation, sliding scale premium surcharges based upon the insured’s income may apply to all enrollees.
(b) Sources of additional revenue.—Any deficit incurred by the plan shall be primarily funded through amounts appropriated by the Legislature from general revenue sources, including, but not limited to, a portion of the annual growth in existing net insurance premium taxes. The board shall operate the plan in such a manner that the estimated cost of providing health insurance during any fiscal year will not exceed total income the plan expects to receive from policy premiums and funds appropriated by the Legislature, including any interest on investments. After determining the amount of funds appropriated to the board for a fiscal year, the board shall estimate the number of new policies it believes the plan has the financial capacity to insure during that year so that costs do not exceed income. The board shall take steps necessary to ensure that plan enrollment does not exceed the number of residents it has estimated it has the financial capacity to insure.
(16) BENEFITS.— (a) The benefits provided shall be the same as the standard and basic plans for small employers as outlined in s. 627.6699. The board shall also establish an option of alternative coverage such as catastrophic coverage that includes a minimum level of primary care coverage and a high deductible plan that meets the federal requirements of a health savings account.
(b) In establishing the plan coverage, the board shall take into consideration the levels of health insurance provided in the state and such medical economic factors as may be deemed appropriate and adopt benefit levels, deductibles, copayments, coinsurance factors, exclusions, and limitations determined to be generally reflective of and commensurate with health insurance provided through a representative number of large employers in the state.
(c) The board may adjust any deductibles and coinsurance factors annually according to the medical component of the Consumer Price Index.
(d)1. Plan coverage shall exclude charges or expenses incurred during the first 6 months following the effective date of coverage for any condition for which medical advice, care, or treatment was recommended or received for such condition during the 6-month period immediately preceding the effective date of coverage.
2. Such preexisting condition exclusions shall be waived to the extent that similar exclusions, if any, have been satisfied under any prior health insurance coverage which was involuntarily terminated, provided application for pool coverage is made not later than 63 days following such involuntary termination. In such case, coverage under the plan shall be effective from the date on which such prior coverage was terminated and the applicant is not eligible for continuation or conversion rights that would provide coverage substantially similar to plan coverage.
(17) NONDUPLICATION OF BENEFITS.—
(a) The plan shall be payor of last resort of benefits whenever any other benefit or source of third-party payment is available. Benefits otherwise payable under plan coverage shall be reduced by all amounts paid or payable through any other health insurance, by all hospital and medical expense benefits paid or payable under any workers’ compensation coverage, automobile medical payment, or liability insurance, whether provided on the basis of fault or nonfault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program.
(b) The plan shall have a cause of action against an eligible person for the recovery of the amount of benefits paid that are not for covered expenses. Benefits due from the plan may be reduced or refused as a setoff against any amount recoverable under this paragraph.
(18) ANNUAL AND MAXIMUM BENEFITS.—Maximum benefits under the plan shall be determined by the board.
(19) TAXATION.—The plan is exempt from any tax imposed by this state. The plan shall apply for federal tax exemption status.
(20) COMBINING MEMBERSHIP OF THE FLORIDA COMPREHENSIVE HEALTH ASSOCIATION; ASSESSMENT.— (a)1. Upon implementation of the Florida Health Insurance Plan, the Florida Comprehensive Health Association, as specified in s. 627.6488, is abolished as a separate nonprofit entity and shall be subsumed under the board of directors of the Florida Health Insurance Plan. All individuals actively enrolled in the Florida Comprehensive Health Association shall be enrolled in the plan subject to its rules and requirements, except as otherwise specified in this section. Maximum lifetime benefits paid to an individual in the plan shall not exceed the amount established under subsection (16), and benefits previously paid for any individual by the Florida Comprehensive Health Association shall be used in the determination of total lifetime benefits paid under the plan.
2. All persons enrolled in the Florida Comprehensive Health Association upon implementation of the Florida Health Insurance Plan are only eligible for the benefits authorized under subsection (16). Persons identified by this section shall convert to the benefits authorized under subsection (16) no later than January 1, 2005.
3. Except as otherwise provided in this section, the administration of the coverage of persons actively enrolled in the Florida Comprehensive Health Association shall operate under the existing plan of operation without modification until the adoption of the new plan of operation for the Florida Health Insurance Plan.
(b)1. As a condition of doing business in this state, an insurer shall pay an assessment to the board in the amount prescribed by this section. For operating losses incurred on or after July 1, 2004, by persons enrolled in the Florida Comprehensive Health Association, each insurer shall annually be assessed by the board in the following calendar year a portion of such incurred operating losses of the plan. Such portion shall be determined by multiplying such operating losses by a fraction, the numerator of which equals the insurer’s earned premium pertaining to direct writings of health insurance in the state during the calendar year preceding that for which the assessment is levied, and the denominator of which equals the total of all such premiums earned by insurers in the state during such calendar year.
2. The total of all assessments under this paragraph upon an insurer shall not exceed 1 percent of such insurer’s health insurance premium earned in this state during the calendar year preceding the year for which the assessments were levied.
3. All rights, title, and interest in the assessment funds collected under this paragraph shall vest in this state. However, all of such funds and interest earned shall be used by the plan to pay claims and administrative expenses.
(c) If assessments and other receipts by the plan, board, or plan administrator exceed the actual losses and administrative expenses of the plan, the excess shall be held in interest and used by the board to offset future losses. As used in this subsection, the term “future losses” includes reserves for claims incurred but not reported.
(d) Each insurer’s assessment shall be determined annually by the board or plan administrator based on annual statements and other reports deemed necessary by the board or plan administrator and filed with the board or plan administrator by the insurer. Any deficit incurred under the plan by persons previously enrolled in the Florida Comprehensive Health Association shall be recouped by the assessments against insurers by the board or plan administrator in the manner provided in paragraph (b), and the insurers may recover the assessment in the normal course of their respective businesses without time limitation.
(e) If a person actively enrolled in the Florida Comprehensive Health Association after implementation of the plan loses eligibility for participation in the Florida Comprehensive Health Association, such person shall not be included in the calculation of the assessment if the person later regains eligibility for participation in the plan.
(f) When all persons actively enrolled in the Florida Comprehensive Health Association as of the date of implementation of the plan are no longer eligible for participation in the Florida Comprehensive Health Association, the board of directors and plan administrator shall no longer be allowed to assess insurers in this state for incurred losses in the Florida Comprehensive Health Association.