Senate Bill 1432c1
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Florida Senate - 1998 CS for SB 1432
By the Committee on Banking and Insurance and Senator
Brown-Waite
311-1854-98
1 A bill to be entitled
2 An act relating to the delivery of health care
3 services; creating s. 624.1291, F.S.; providing
4 an exemption from the Insurance Code for
5 certain health care services; creating s.
6 624.1292, F.S.; providing an exemption from the
7 Insurance Code for certain contracts with
8 self-funded ERISA plans; creating part IV of
9 ch. 641, F.S., the
10 "Provider-Sponsored-Organization Act";
11 providing legislative findings and purposes
12 with respect to certain federal requirements
13 for authorizing provider-sponsored
14 organizations in this state to provide health
15 care coverage to Medicare beneficiaries under
16 the Medicare Choice plan; providing
17 definitions; prohibiting a provider-sponsored
18 organization from transacting insurance
19 business other than the offering of Medicare
20 Choice plans; providing applicability of parts
21 I and III of ch. 641, F.S., to
22 provider-sponsored organizations; providing
23 exceptions; amending s. 641.227, F.S.;
24 providing for deposits into the Rehabilitation
25 Administrative Expense Fund by a
26 provider-sponsored organization; providing for
27 reimbursements; amending s. 641.316, F.S.,
28 relating to fiscal intermediary services;
29 providing for an exemption from s. 455.654,
30 F.S., to provider-sponsored organizations,
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1 relating to financial arrangements; providing
2 an effective date.
3
4 Be It Enacted by the Legislature of the State of Florida:
5
6 Section 1. Section 624.1291, Florida Statutes, is
7 created to read:
8 624.1291 Certain health care services; exemption from
9 code.--Any person who enters into a contract or agreement with
10 an authorized insurer, or with a health maintenance
11 organization or provider sponsored organization that has
12 obtained a certificate of authority pursuant to chapter 641,
13 to provide health care services to persons insured under a
14 health insurance policy, health maintenance organization
15 contract, or provider-sponsored-organization contract shall
16 not be deemed to be an insurer and shall not be subject to the
17 provisions of this code, regardless of any risk assumed under
18 the contract or agreement, provided that:
19 (1) The authorized insurer, health maintenance
20 organization, or provider-sponsored organization remains
21 contractually liable to the insured to the full extent
22 provided in the policy or contract with the insured;
23 (2) The person does not receive any premium payment or
24 per-capita fee from the insured other than fees for services
25 not covered under the insured's policy or contract, such as
26 deductible amounts, co-payments, or charges in excess of
27 policy or contract limits which are otherwise allowed to be
28 collected; and
29 (3) Any person who is an administrator as defined in
30 s. 626.88 must meet the requirements of part VII of chapter
31 626, and any person who is performing fiscal intermediary
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1 services as defined in s. 641.316 must meet the requirements
2 of that section.
3 Section 2. Section 624.1292, Florida Statutes, is
4 created to read:
5 624.1292 Contracts with self-funded ERISA plans;
6 exemption from code.--An insurer, a health maintenance
7 organization, provider-sponsored organization, hospital,
8 licensed health care provider, or any group or combination of
9 such persons or entities shall not be deemed to be an insurer
10 and shall not be subject to the provisions of this code with
11 respect to contracts or agreements with an employer that has
12 established a self-funded employee-benefit plan under the
13 Employee Retirement Income Security Act (ERISA), 29 U.S.C. ss.
14 1001-1461, under which:
15 (1) The employer retains the ultimate obligation to
16 provide health benefits to covered employees or the financial
17 risk relating thereto; and
18 (2) The insurer, health maintenance organization,
19 provider-sponsored organization, hospital, or licensed health
20 care provider does not receive any premium payment or
21 per-capita fee from the covered employees other than fees for
22 services not covered by the plan, such as deductible amounts,
23 co-payments, or charges in excess of plan limits that are
24 otherwise allowed to be collected.
25 Section 3. Part IV of chapter 641, Florida Statutes,
26 consisting of sections 641.801, 641.802, 641.803, 641.804,
27 641.805, and 641.806, Florida Statutes, is created to read:
28 641.801 Short title.--This part may be cited as the
29 "Provider-Sponsored-Organization Act."
30 641.802 Declaration of legislative findings and
31 purposes.--
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1 (1) The Legislature finds that a major restructuring
2 of health care has taken place which has changed the way in
3 which health care services are paid for and delivered and that
4 today the emphasis is on providing cost-conscious health care
5 services through managed care. The Legislature recognizes that
6 alternative methods for the delivery of health care are needed
7 to promote competition and increase patients' choices.
8 (2) The Legislature finds that the United States
9 Congress has enacted legislation that allows
10 provider-sponsored organizations to provide coordinated-care
11 plans to Medicare enrollees through the Medicare Choice
12 program. The federal legislation requires any organization
13 that offers a Medicare Choice plan to be organized and
14 licensed under state law as a risk-bearing entity eligible to
15 offer health-benefit coverage in the state in which it offers
16 a Medicare Choice plan.
17 (3) The Legislature finds that these plans, when
18 properly operated, emphasize cost and quality controls while
19 ensuring that the provider has control over medical decisions.
20 (4) The Legislature declares that it is the policy of
21 this state:
22 (a) To eliminate legal barriers to the organization,
23 promotion, and expansion of provider-sponsored organizations
24 that offer Medicare Choice plans in order to encourage the
25 development of valuable options for the Medicare beneficiaries
26 of this state.
27 (b) To recognize that comprehensive provider-sponsored
28 organizations are exempt from the insurance laws of this state
29 except in the manner and to the extent set forth in this part.
30 641.803 Definitions.--As used in this part, the term:
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1 (1) "Affiliation" means a relationship between
2 providers in which, through contract, ownership, or otherwise:
3 (a) One provider directly or indirectly controls, is
4 controlled by, or is under common control with the other;
5 (b) Both providers are part of a controlled group of
6 corporations under s. 1563 of the Internal Revenue Code of
7 1986;
8 (c) Each provider is a participant in a lawful
9 combination under which each provider shares substantial
10 financial risk in connection with the organization's
11 operations; or
12 (d) Both providers are part of an affiliated service
13 group under s. 414 of the Internal Revenue Code of 1986.
14 (2) "Comprehensive health care services" means
15 services, medical equipment, and supplies required under the
16 Medicare Choice program.
17 (3) "Copayment" means a specific dollar amount that
18 the subscriber must pay upon receipt of covered health care
19 services as required or authorized under the Medicare Choice
20 program.
21 (4) "Provider-sponsored contract" means any contract
22 entered into by a provider-sponsored organization that serves
23 Medicare Choice beneficiaries.
24 (5) "Provider-sponsored organization" means any
25 organization authorized under this part which:
26 (a) Is established, organized, and operated by a
27 health care provider or group of affiliated health care
28 providers;
29 (b) Provides a substantial proportion of the health
30 care items and services specified in the Medicare Choice
31 contract, as defined by the Secretary of the United States
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1 Department of Health and Human Services, directly through the
2 provider or affiliated group of providers; and
3 (c) Shares, with respect to its affiliated providers,
4 directly or indirectly, substantial financial risk in the
5 provision of such items and services and has at least a
6 majority financial interest in the entity.
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8 As used in this subsection, the term "substantial proportion"
9 has the meaning ascribed by the Secretary of the United States
10 Department of Health and Human Services after having taken
11 into account the need for such an organization to assume
12 responsibility for providing significantly more than the
13 majority of the items and services under the Medicare Choice
14 contract through its own affiliated providers and the
15 remainder of the items and services under such contract
16 through providers with which the organization has an agreement
17 to provide such items and services. Consideration will also be
18 given to the need for the organization to provide a limited
19 proportion of the items and services under the contract
20 through entities that are neither affiliated with nor have an
21 agreement with the organization.
22 (6) "Subscriber" means a Medicare Choice enrollee who
23 is eligible for coverage as a Medicare beneficiary.
24 (7) "Surplus" means total assets in excess of total
25 liabilities as determined by the federal rules on solvency
26 standards established by the Secretary of the United States
27 Department of Health and Human Services pursuant to s. 1856(a)
28 of the Balanced Budget of 1997, for provider-sponsored
29 organizations that offer the Medicare Choice plan.
30 641.804 Applicability of other laws.--Except as
31 provided in this part, provider-sponsored organizations shall
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1 be governed by this part and are exempt from all other
2 provisions of the Florida Insurance Code.
3 641.805 Insurance business not authorized.--Neither
4 the Florida Insurance Code nor this part authorize any
5 provider-sponsored organization to transact any insurance
6 business other than to offer Medicare Choice plans pursuant to
7 s. 1855 of the Balanced Budget Act of 1997.
8 641.806 Applicability of parts I and III;
9 exceptions.--The provisions of parts I and III of this chapter
10 apply to provider-sponsored organizations to the same extent
11 that such sections apply to health maintenance organizations,
12 except that:
13 (1) The definitions used in this part control to the
14 extent of any conflict with the definitions used in s. 641.19.
15 (2) The certificate of authority, application for
16 certificate, and all other forms issued or prescribed by the
17 department pursuant to this part shall refer to a
18 "provider-sponsored organization" rather than a "health
19 maintenance organization."
20 (3) Such provisions do not apply to the extent of any
21 conflict with ss. 1855 and 1856 of the Balanced Budget Act of
22 1997 and rules and regulations adopted by the Secretary of the
23 United States Department of Health and Human Services
24 including, but not limited to, requirements related to
25 surplus, net worth, assets, liabilities, investments,
26 provider-sponsored-organization contracts, payment of
27 benefits, and procedures for grievances and appeals.
28 (4) Such provisions do not apply to the extent of any
29 waiver granted by the Secretary of the United States
30 Department of Health and Human Services under s. 1856(a)(2) of
31 the Balanced Budget Act of 1997.
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1 (5) Such provisions do not apply to the extent that
2 they are unrelated to, or inconsistent with, the limited
3 authority of provider-sponsored organizations to offer only
4 Medicare Choice plans.
5 (6) Section 641.228, related to the Florida Health
6 Maintenance Organization Consumer Assistance Plan, does not
7 apply.
8 Section 4. Section 641.227, Florida Statutes, is
9 amended to read:
10 641.227 Rehabilitation Administrative Expense Fund.--
11 (1) The department may shall not issue or permit to
12 exist a certificate of authority to operate a health
13 maintenance organization or provider-sponsored organization in
14 this state unless the organization has deposited with the
15 department $10,000 in cash for use in the Rehabilitation
16 Administrative Expense Fund as established in subsection (2).
17 (2) The department shall maintain all deposits
18 received under this section and all income from such deposits
19 in trust in an account titled "Rehabilitation Administrative
20 Expense Fund." The fund shall be administered by the
21 department and shall be used for the purpose of payment of the
22 administrative expenses of the department during any
23 rehabilitation of a health maintenance organization or
24 provider-sponsored organization, when rehabilitation is
25 ordered by a court of competent jurisdiction.
26 (3) Upon successful rehabilitation of a health
27 maintenance organization or provider-sponsored organization,
28 the organization shall reimburse the fund for the amount of
29 expenses incurred by the department during the court-ordered
30 rehabilitation period.
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1 (4) If a court of competent jurisdiction orders
2 liquidation of a health maintenance organization or
3 provider-sponsored organization, the fund shall be reimbursed
4 for expenses incurred by the department as provided for in
5 chapter 631.
6 (5) Each deposit made under this section shall be
7 allowed as an asset for purposes of determination of the
8 financial condition of the health maintenance organization or
9 provider-sponsored organization. The deposit shall be
10 refunded to the organization only when the organization both
11 ceases operation as a health maintenance organization or
12 provider-sponsored organization and no longer holds a
13 subsisting certificate of authority.
14 Section 5. Paragraph (b) of subsection (2) and
15 subsection (5) of section 641.316, Florida Statutes, are
16 amended to read:
17 641.316 Fiscal intermediary services.--
18 (1) It is the intent of the Legislature, through the
19 adoption of this section, to ensure the financial soundness of
20 fiscal intermediary services organizations established to
21 develop, manage, and administer the business affairs of health
22 care professional providers such as medical doctors, doctors
23 of osteopathy, doctors of chiropractic, doctors of podiatric
24 medicine, doctors of dentistry, or other health professionals
25 regulated by the Department of Health.
26 (2)(a) The term "fiduciary" or "fiscal intermediary
27 services" means reimbursements received or collected on behalf
28 of health care professionals for services rendered, patient
29 and provider accounting, financial reporting and auditing,
30 receipts and collections management, compensation and
31 reimbursement disbursement services, or other related
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1 fiduciary services pursuant to health care professional
2 contracts with health maintenance organizations.
3 (b) The term "fiscal intermediary services
4 organization" means a person or entity that which performs
5 fiduciary or fiscal intermediary services to health care
6 professionals who contract with health maintenance
7 organizations or provider-sponsored organizations other than a
8 fiscal intermediary services organization owned, operated, or
9 controlled by a hospital licensed under chapter 395, an
10 insurer licensed under chapter 624, a third-party
11 administrator licensed under chapter 626, a prepaid limited
12 health organization licensed under chapter 636, a health
13 maintenance organization licensed under this chapter, a
14 provider-sponsored organization licensed under this chapter,
15 or physician group practices as defined in s. 455.236(3)(f).
16 (3) A fiscal intermediary services organization which
17 is operated for the purpose of acquiring and administering
18 provider contracts with managed care plans for professional
19 health care services, including, but not limited to, medical,
20 surgical, chiropractic, dental, and podiatric care, and which
21 performs fiduciary or fiscal intermediary services shall be
22 required to secure and maintain a fidelity bond in the minimum
23 amount of $10 million. This requirement shall apply to all
24 persons or entities engaged in the business of providing
25 fiduciary or fiscal intermediary services to any contracted
26 provider or provider panel. The fidelity bond shall provide
27 coverage against misappropriation of funds by the fiscal
28 intermediary or its officers, agents, or employees; must be
29 posted with the department for the benefit of managed care
30 plans, subscribers, and providers; and must be on a form
31 approved by the department. The fidelity bond must be
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1 maintained and remain unimpaired as long as the fiscal
2 intermediary services organization continues in business in
3 this state and until the termination of its registration.
4 (4) A fiscal intermediary services organization may
5 not collect from the subscriber any payment other than the
6 copayment or deductible specified in the subscriber agreement.
7 (5) Any fiscal intermediary services organization,
8 other than a fiscal intermediary services organization owned,
9 operated, or controlled by a hospital licensed under chapter
10 395, an insurer licensed under chapter 624, a third-party
11 administrator licensed under chapter 626, a prepaid limited
12 health organization licensed under chapter 636, a health
13 maintenance organization licensed under this chapter, a
14 provider-sponsored organization licensed under this chapter,
15 or physician group practices as defined in s. 455.236(3)(f),
16 must register with the department and meet the requirements of
17 this section. In order to register as a fiscal intermediary
18 services organization, the organization must comply with ss.
19 641.21(1)(c) and (d) and 641.22(6). Should the department
20 determine that the fiscal intermediary services organization
21 does not meet the requirements of this section, the
22 registration shall be denied. In the event that the registrant
23 fails to maintain compliance with the provisions of this
24 section, the department may revoke or suspend the
25 registration. In lieu of revocation or suspension of the
26 registration, the department may levy an administrative
27 penalty in accordance with s. 641.25.
28 (6) The department shall promulgate rules necessary to
29 implement the provisions of this section.
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1 Section 6. A provider-sponsored organization is exempt
2 from section 455.654, Florida Statutes, for the provision of
3 health care services to enrollees of a Medicare Choice plan.
4 Section 7. This act shall take effect October 1, 1998.
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6 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
7 Senate Bill 1432
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9 The committee substitute provides the following changes:
10 1. Revises the exemption from the Insurance Code for persons
providing health care services under a contract with an
11 insurer, HMO, or PSO ("downstream risk" providers);
12 2. Revises the exemption from the Insurance Code for certain
persons who contract with an employer that has
13 established a self-funded plan under ERISA;
14 3. Creates a new part IV of chapter 641,F.S., for the
regulation and licensure of provider-sponsored
15 organizations; and
16 4. Replaces the bill's specific requirements for PSOs with
general applicability of parts I and III of chapter
17 641,F.S., subject to specified exceptions.
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