House Bill 3895e1

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                                       CS/HB 3895, First Engrossed



  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 part IV

  6         of ch. 641, F.S.; creating the "Provider

  7         Sponsored Organization Act"; providing

  8         legislative findings and purposes; providing

  9         definitions; prohibiting provider sponsored

10         organizations from transacting insurance

11         business other than the offering of Medicare

12         Choice plans; providing for application of

13         parts I and III of ch. 641, F.S., to provider

14         sponsored organizations; providing exceptions;

15         amending s. 641.227, F.S.; providing for

16         deposits into the Rehabilitation Administrative

17         Expense Fund by a provider sponsored

18         organization; providing for reimbursements;

19         amending s. 641.316, F.S.; providing for an

20         exemption from s. 455.654, F.S., to provider

21         sponsored organizations relating to certain

22         financial arrangements; providing an exemption

23         for group practices from s. 455.654(4), F.S.,

24         relating to certain financial arrangements;

25         amending s. 409.912, F.S., directing the Agency

26         for Health Care Administration to establish an

27         outpatient specialty services pilot project;

28         providing definitions; providing criteria for

29         participation; requiring an evaluation and a

30         report to the Governor and Legislature;

31         providing effective dates.


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                                       CS/HB 3895, First Engrossed



  1  Be It Enacted by the Legislature of the State of Florida:

  2

  3         Section 1.  Section 624.1291, Florida Statutes, is

  4  created to read:

  5         624.1291  Certain health care services; exemption from

  6  code.--Any person who enters into a contract or agreement with

  7  an authorized insurer, or with a health maintenance

  8  organization or provider sponsored organization that has

  9  obtained a certificate of authority pursuant to chapter 641,

10  to provide health care services to persons insured under a

11  health insurance policy, health maintenance organization

12  contract, or provider sponsored organization contract, shall

13  not be deemed to be an insurer and shall not be subject to the

14  provisions of this code, regardless of any risk assumed under

15  the contract or agreement, provided:

16         (1)  The authorized insurer, health maintenance

17  organization, or provider sponsored organization remains

18  contractually liable to the insured to the full extent

19  provided in the policy or contract with the insured.

20         (2)  The person does not receive any premium payment or

21  per-capita fee from the insured other than fees for services

22  not covered under the insured's policy or contract, such as

23  deductible amounts, co-payments, or charges in excess of

24  policy or contract limits which are otherwise allowed to be

25  collected.

26         (3)  Any person who is an "administrator" as defined in

27  s. 626.88 meets the requirements of part VII of chapter 626

28  and any person who is performing "fiscal intermediary

29  services" as defined in s. 641.316 meets the requirements of

30  that section.

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                                       CS/HB 3895, First Engrossed



  1         Section 2.  Part IV of chapter 641, Florida Statutes,

  2  consisting of sections 641.801, 641.802, 641.803, 641.804,

  3  641.805, and 641.806, Florida Statutes, is created to read:

  4         641.801  Short title.--This part may be cited as the

  5  "Provider Sponsored Organization Act."

  6         641.802  Declaration of legislative findings and

  7  purposes.--

  8         (1)  The Legislature finds that a major restructuring

  9  of health care has taken place which has changed the way in

10  which health care services are paid for and delivered and that

11  today, the emphasis is on providing cost-conscious health care

12  services through managed care. The Legislature recognizes that

13  alternative methods for the delivery of health care are needed

14  to promote competition and increase patients' choices.

15         (2)  The Legislature finds that the United States

16  Congress has enacted legislation that allows provider

17  sponsored organizations to provide coordinated-care plans to

18  Medicare enrollees through the Medicare Choice program. The

19  federal legislation requires any organization that offers a

20  Medicare Choice plan to be organized and licensed under state

21  law as a risk-bearing entity eligible to offer health-benefit

22  coverage in the state in which it offers a Medicare Choice

23  plan.

24         (3)  The Legislature finds that these plans, when

25  properly operated, emphasize cost and quality controls, while

26  ensuring that the provider has control over medical decisions.

27         (4)  The Legislature declares the policy of this state

28  is to:

29         (a)  Eliminate legal barriers to the organization,

30  promotion, and expansion of provider sponsored organizations

31  that offer Medicare Choice plans in order to encourage the


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                                       CS/HB 3895, First Engrossed



  1  development of valuable options for the Medicare beneficiaries

  2  of this state.

  3         (b)  Recognize comprehensive provider sponsored

  4  organizations as exempt from the insurance laws of this state

  5  except in the manner and to the extent set forth in this part.

  6         641.803  Definitions.--As used in this part:

  7         (1)  "Affiliation" means a relationship between

  8  providers in which, through contract, ownership, or otherwise:

  9         (a)  One provider, directly or indirectly, controls, is

10  controlled by, or is under common control with the other;

11         (b)  Both providers are part of a controlled group of

12  corporations under s. 1563 of the Internal Revenue Code of

13  1986;

14         (c)  Each provider is a participant in a lawful

15  combination under which each provider shares substantial

16  financial risk in connection with the organization's

17  operations; or

18         (d)  Both providers are part of an affiliated service

19  group under s. 414 of the Internal Revenue Code of 1986.

20         (2)  "Comprehensive health care services" means

21  services, medical equipment, and supplies required under the

22  Medicare Choice program.

23         (3)  "Copayment" means a specific dollar amount that

24  the subscriber must pay upon receipt of covered health care

25  services as required or authorized under the Medicare Choice

26  program.

27         (4)  "Provider sponsored contract" means any contract

28  entered into by a provider sponsored organization that serves

29  Medicare Choice beneficiaries.

30         (5)  "Provider sponsored organization" means any

31  organization authorized under this part which:


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                                       CS/HB 3895, First Engrossed



  1         (a)  Is established, organized, and operated by a

  2  health care provider or group of affiliated health care

  3  providers.

  4         (b)  Provides a substantial proportion of the health

  5  care items and services specified in the Medicare Choice

  6  contract, as defined by the Secretary of the United States

  7  Department of Health and Human Services, directly through the

  8  provider or affiliated group of providers.

  9         (c)  Shares, with respect to its affiliated providers,

10  directly or indirectly, substantial financial risk in the

11  provision of such items and services and has at least a

12  majority financial interest in the entity.

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14  The term "substantial proportion" shall be defined by the

15  Secretary of the United States Department of Health and Human

16  Services after having taken into account the need for such an

17  organization to assume responsibility for providing

18  significantly more than the majority of the items and services

19  under the Medicare Choice contract through its own affiliated

20  providers and the remainder of the items and services under

21  such contract through providers with which the organization

22  has an agreement to provide such items and services.

23  Consideration shall also be given to the need for the

24  organization to provide a limited proportion of the items and

25  services under the contract through entities that are neither

26  affiliated with nor have an agreement with the organization.

27         (6)  "Subscriber" means a Medicare Choice enrollee who

28  is eligible for coverage as a Medicare beneficiary.

29         (7)  "Surplus" means total assets in excess of total

30  liabilities as determined by the federal rules on solvency

31  standards established by the Secretary of the United States


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                                       CS/HB 3895, First Engrossed



  1  Department of Health and Human Services pursuant to s. 1856(a)

  2  of the Balanced Budget of 1997, for provider sponsored

  3  organizations that offer the Medicare Choice plan.

  4         641.804  Applicability of other laws.--Except as

  5  provided in this part, provider sponsored organizations shall

  6  be governed by this part and are exempt from all other

  7  provisions of the Florida Insurance Code.

  8         641.805  Insurance business not authorized.--The

  9  provisions of the Florida Insurance Code or this part do not

10  authorize any provider sponsored organization to transact any

11  insurance business other than to offer Medicare Choice plans

12  pursuant to s. 1855 of the Balanced Budget Act of 1997.

13         641.806  Applicability of parts I and III;

14  exceptions.--The provisions of parts I and III of this chapter

15  apply to provider sponsored organizations to the same extent

16  such sections apply to health maintenance organizations,

17  except:

18         (1)  The definitions used in this part shall control to

19  the extent of any conflict with the definitions used in s.

20  641.19.

21         (2)  The certificate of authority, application for

22  certificate, and all other forms issued or prescribed by the

23  department pursuant to this part shall refer to a "provider

24  sponsored organization" rather than a "health maintenance

25  organization."

26         (3)  Such provisions shall not apply to the extent of

27  any conflict with ss. 1855 and 1856 of the Balanced Budget Act

28  of 1997 and rules and regulations adopted by the Secretary of

29  the United States Department of Health and Human Services,

30  including, but not limited to, requirements related to

31  surplus, net worth, assets, liabilities, investments, provider


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                                       CS/HB 3895, First Engrossed



  1  sponsored organization contracts, payment of benefits, and

  2  procedures for grievances and appeals.

  3         (4)  Such provisions shall not apply to the extent of

  4  any waiver granted by the Secretary of the United States

  5  Department of Health and Human Services under s. 1856(a)(2) of

  6  the Balanced Budget Act of 1997.

  7         (5)  Such provisions shall not apply to the extent that

  8  they are unrelated to, or inconsistent with, the limited

  9  authority of provider sponsored organizations to offer only

10  Medicare Choice plans.

11         (6)  Section 641.228, relating to the Florida Health

12  Maintenance Organization Consumer Assistance Plan, shall not

13  apply.

14         (7)  Such provisions shall not preclude a

15  provider-sponsored organization from contracting with one or

16  more companies to provide all necessary administrative and

17  management services.

18         Section 3.  Section 641.227, Florida Statutes, is

19  amended to read:

20         641.227  Rehabilitation Administrative Expense Fund.--

21         (1)  The department may shall not issue or permit to

22  exist a certificate of authority to operate a health

23  maintenance organization or provider sponsored organization in

24  this state unless the organization has deposited with the

25  department $10,000 in cash for use in the Rehabilitation

26  Administrative Expense Fund as established in subsection (2).

27         (2)  The department shall maintain all deposits

28  received under this section and all income from such deposits

29  in trust in an account titled "Rehabilitation Administrative

30  Expense Fund."  The fund shall be administered by the

31  department and shall be used for the purpose of payment of the


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                                       CS/HB 3895, First Engrossed



  1  administrative expenses of the department during any

  2  rehabilitation of a health maintenance organization or

  3  provider sponsored organization, when rehabilitation is

  4  ordered by a court of competent jurisdiction.

  5         (3)  Upon successful rehabilitation of a health

  6  maintenance organization or provider sponsored organization,

  7  the organization shall reimburse the fund for the amount of

  8  expenses incurred by the department during the court-ordered

  9  rehabilitation period.

10         (4)  If a court of competent jurisdiction orders

11  liquidation of a health maintenance organization or provider

12  sponsored organization, the fund shall be reimbursed for

13  expenses incurred by the department as provided for in chapter

14  631.

15         (5)  Each deposit made under this section shall be

16  allowed as an asset for purposes of determination of the

17  financial condition of the health maintenance organization or

18  provider sponsored organization.  The deposit shall be

19  refunded to the organization only when the organization both

20  ceases operation as a health maintenance organization or

21  provider sponsored organization and no longer holds a

22  subsisting certificate of authority.

23         Section 4.  Paragraph (b) of subsection (2) and

24  subsection (5) of section 641.315, Florida Statutes, are

25  amended to read:

26         641.316  Fiscal intermediary services.--

27         (2)

28         (b)  The term "fiscal intermediary services

29  organization" means a person or entity that which performs

30  fiduciary or fiscal intermediary services to health care

31  professionals who contract with health maintenance


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                                       CS/HB 3895, First Engrossed



  1  organizations or provider sponsored organizations other than a

  2  fiscal intermediary services organization owned, operated, or

  3  controlled by a hospital licensed under chapter 395, an

  4  insurer licensed under chapter 624, a third-party

  5  administrator licensed under chapter 626, a prepaid limited

  6  health organization licensed under chapter 636, a health

  7  maintenance organization or provider sponsored organization

  8  licensed under this chapter, or physician group practices as

  9  defined in s. 455.236(3)(f).

10         (5)  Any fiscal intermediary services organization,

11  other than a fiscal intermediary services organization owned,

12  operated, or controlled by a hospital licensed under chapter

13  395, an insurer licensed under chapter 624, a third-party

14  administrator licensed under chapter 626, a prepaid limited

15  health organization licensed under chapter 636, a health

16  maintenance organization or provider sponsored organization

17  licensed under this chapter, or physician group practices as

18  defined in s. 455.236(3)(f), must register with the department

19  and meet the requirements of this section. In order to

20  register as a fiscal intermediary services organization, the

21  organization must comply with ss. 641.21(1)(c) and (d) and

22  641.22(6). Should the department determine that the fiscal

23  intermediary services organization does not meet the

24  requirements of this section, the registration shall be

25  denied. In the event that the registrant fails to maintain

26  compliance with the provisions of this section, the department

27  may revoke or suspend the registration. In lieu of revocation

28  or suspension of the registration, the department may levy an

29  administrative penalty in accordance with s. 641.25.

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                                       CS/HB 3895, First Engrossed



  1         Section 5.  A provider sponsored organization is exempt

  2  from s. 455.654, Florida Statutes, for the provision of health

  3  care services to enrollees of a Medicare Choice plan.

  4         Section 6.  Group practices, as defined in s.

  5  455.654(3)(f), Florida Statutes, are exempt from the

  6  provisions of s. 455.654(4), Florida Statutes, when providing

  7  designated health services.  This exemption is forfeited if

  8  the group practice accepts a referral from a physician who is

  9  not a member of the group practice but who has an investment

10  interest in or is an investor in the group practice.

11         Section 7.  New subsection (33) is added to section

12  409.912, Florida Statutes, to read:

13         409.912  Cost-effective purchasing of health care.--The

14  agency shall purchase goods and services for Medicaid

15  recipients in the most cost-effective manner consistent with

16  the delivery of quality medical care.  The agency shall

17  maximize the use of prepaid per capita and prepaid aggregate

18  fixed-sum basis services when appropriate and other

19  alternative service delivery and reimbursement methodologies,

20  including competitive bidding pursuant to s. 287.057, designed

21  to facilitate the cost-effective purchase of a case-managed

22  continuum of care. The agency shall also require providers to

23  minimize the exposure of recipients to the need for acute

24  inpatient, custodial, and other institutional care and the

25  inappropriate or unnecessary use of high-cost services.

26         (33)  The Agency for Health Care Administration is

27  directed to issue a request for proposal or intent to

28  negotiate to implement on a demonstration basis an outpatient

29  specialty services pilot project in a rural and urban county

30  in the state.  As used in this subsection, the term

31  "outpatient specialty services" means clinical laboratory,


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                                       CS/HB 3895, First Engrossed



  1  diagnostic imaging, and specified home medical services to

  2  include durable medical equipment, prosthetics and orthotics,

  3  and infusion therapy.

  4         (a)  The entity that is awarded the contract to provide

  5  Medicaid managed care outpatient specialty services shall, at

  6  a minimum, meet the following criteria:

  7         1.  The entity shall be licensed by the Department of

  8  Insurance under part II of chapter 641.

  9         2.  The entity shall be experienced in providing

10  outpatient specialty services.

11         3.  The entity shall demonstrate to the satisfaction of

12  the agency that it provides high-quality services to its

13  patients.

14         4.  The entity shall demonstrate that it has in place a

15  complaints and grievance process to assist Medicaid recipients

16  enrolled in the pilot managed care program to resolve

17  complaints and grievances.

18         (b)  The pilot managed care program shall operate for a

19  period of three years.  The objective of the pilot program

20  shall be to determine the cost-effectiveness and effects on

21  utilization, access, and quality of providing outpatient

22  specialty services to Medicaid recipients on a prepaid,

23  capitated basis.

24         (c)  The agency shall conduct a quality-assurance

25  review of the prepaid limited health service organization each

26  year that the demonstration program is in effect.  The prepaid

27  limited health service organization is responsible for all

28  expenses incurred by the agency in conducting a quality

29  assurance review.

30         (d)  The entity that is awarded the contract to provide

31  outpatient specialty services to Medicaid recipients shall


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                                       CS/HB 3895, First Engrossed



  1  report data required by the agency in a format specified by

  2  the agency, for the purpose of conducting the evaluation

  3  required in paragraph (e).

  4         (e)  The agency shall conduct an evaluation of the

  5  pilot managed care program and report its findings to the

  6  Governor and the Legislature by no later than January 1, 2001.

  7         (f)  Nothing in this subsection is intended to conflict

  8  with the provision of the 1997-98 General Appropriations Act

  9  which authorizes competitive bidding for Medicaid home health,

10  clinical laboratory, or x-ray services.

11         Section 8.  Except as otherwise provided herein, this

12  act shall take effect October 1 of the year in which enacted.

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