Senate Bill sb2264c1
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Florida Senate - 2003 CS for SB 2264
By the Committee on Banking and Insurance; and Senator Atwater
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1 A bill to be entitled
2 An act relating to health insurance; amending
3 s. 627.411, F.S.; revising grounds for
4 disapproval of health insurance policy forms
5 that apply certain rating practices, or that
6 result in actuarially justified rate increases
7 under certain circumstances; requiring health
8 insurance policies to meet a minimum loss ratio
9 of a specified amount; amending s. 627.6515,
10 F.S.; amending conditions that must be met to
11 exempt from part VII of ch. 627, F.S., a group
12 health insurance policy issued or delivered
13 outside this state under which a resident of
14 this state is provided coverage; providing
15 rulemaking authority; providing an effective
16 date.
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18 Be It Enacted by the Legislature of the State of Florida:
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20 Section 1. Section 627.411, Florida Statutes, is
21 amended to read:
22 627.411 Grounds for disapproval.--
23 (1) The department shall disapprove any form filed
24 under s. 627.410, or withdraw any previous approval thereof,
25 only if the form:
26 (a) Is in any respect in violation of, or does not
27 comply with, this code.
28 (b) Contains or incorporates by reference, where such
29 incorporation is otherwise permissible, any inconsistent,
30 ambiguous, or misleading clauses, or exceptions and conditions
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1 which deceptively affect the risk purported to be assumed in
2 the general coverage of the contract.
3 (c) Has any title, heading, or other indication of its
4 provisions which is misleading.
5 (d) Is printed or otherwise reproduced in such manner
6 as to render any material provision of the form substantially
7 illegible.
8 (e) Is for health insurance, and:
9 1. Provides benefits that which are unreasonable in
10 relation to the premium charged;,
11 2. Contains provisions that which are unfair or
12 inequitable or contrary to the public policy of this state or
13 that which encourage misrepresentation;, or
14 3. Contains provisions that which apply rating
15 practices that which result in premium escalations that are
16 not viable for the policyholder market or result in unfair
17 discrimination pursuant to s. 626.9541(1)(g)2.; in sales
18 practices.
19 4. Results in actuarially justified rate increases on
20 an annual basis:
21 a. Attributed to the insurer reducing the portion of
22 the premium used to pay claims from the loss ratio standard
23 certified in the last actuarial certification filed by the
24 insurer, in excess of the greater of 50 percent of annual
25 medical trend or 5 percent. At its option, the insurer may
26 file for approval of an actuarially justified new business
27 rate schedule for new insureds and a rate increase for
28 existing insureds that is equal to the greater of 150 percent
29 of annual medical trend or 10 percent. Future annual rate
30 increases for existing insureds shall be limited to the
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Florida Senate - 2003 CS for SB 2264
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1 greater of 150 percent of the rate increase approved for new
2 insureds or 10 percent until the two rate schedules converge;
3 b. In excess of the greater of 150 percent of annual
4 medical trend or 10 percent and the company did not comply
5 with the annual filing requirements of s. 627.410(7) or
6 commission rule for health maintenance organizations pursuant
7 to s. 641.31. At its option the insurer may file for approval
8 of an actuarially justified new business rate schedule for new
9 insureds and a rate increase for existing insureds that is
10 equal to the rate increase allowed by the preceding sentence.
11 Future annual rate increases for existing insureds shall be
12 limited to the greater of 150 percent of the rate increase
13 approved for new insureds or 10 percent until the two rate
14 schedules converge; or
15 c. In excess of the greater of 150 percent of annual
16 medical trend or 10 percent on a form or block of pooled forms
17 in which no form is currently available for sale. This
18 sub-subparagraph does not apply to pre-standardized Medicare
19 supplement forms.
20 (f) Excludes coverage for human immunodeficiency virus
21 infection or acquired immune deficiency syndrome or contains
22 limitations in the benefits payable, or in the terms or
23 conditions of such contract, for human immunodeficiency virus
24 infection or acquired immune deficiency syndrome which are
25 different than those which apply to any other sickness or
26 medical condition.
27 (2) In determining whether the benefits are reasonable
28 in relation to the premium charged, the department, in
29 accordance with reasonable actuarial techniques, shall
30 consider:
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1 (a) Past loss experience and prospective loss
2 experience within and without this state.
3 (b) Allocation of expenses.
4 (c) Risk and contingency margins, along with
5 justification of such margins.
6 (d) Acquisition costs.
7 (3)(a) For health insurance coverage as described in
8 s. 627.6561(5)(a)2., the minimum loss ratio standard of
9 incurred claims to earned premium for the form shall be 65
10 percent.
11 (b) Incurred claims are claims occurring within a
12 fixed period, whether or not paid during the same period,
13 under the terms of the policy period.
14 1. Claims include scheduled benefit payments, or
15 services provided by a provider or through a provider network
16 for dental, vision, disability, and similar health benefits.
17 2. Claims do not include state assessments, taxes,
18 company expenses, or any expense incurred by the company for
19 the cost of adjusting and settling a claim, including the
20 review, qualification, oversight, management, or monitoring of
21 a claim or incentives or compensation to providers for other
22 than the provisions of health care services.
23 3. A company may at its discretion include costs that
24 are demonstrated to reduce claims, such as fraud intervention
25 programs or case management costs, which are identified in
26 each filing, are demonstrated to reduce claims costs, and do
27 not result in increasing the experience period loss ratio by
28 more than 5 percent.
29 4. For scheduled claim payments, such as disability
30 income or long-term care, the incurred claims shall be the
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1 present value of the benefit payments discounted for
2 continuance and interest.
3 Section 2. Subsection (2) of section 627.6515, Florida
4 Statutes, is amended, and subsections (9) and (10) are added
5 to that section, to read:
6 627.6515 Out-of-state groups.--
7 (2) Except as provided in this part, this part does
8 not apply to a group health insurance policy issued or
9 delivered outside this state under which a resident of this
10 state is provided coverage if:
11 (a) The policy is issued to an employee group the
12 composition of which is substantially as described in s.
13 627.653; a labor union group or association group the
14 composition of which is substantially as described in s.
15 627.654; an additional group the composition of which is
16 substantially as described in s. 627.656; a group insured
17 under a blanket health policy when the composition of the
18 group is substantially in compliance with s. 627.659; a group
19 insured under a franchise health policy when the composition
20 of the group is substantially in compliance with s. 627.663
21 and the policy was issued prior to January 1, 2003; an
22 association group to cover persons associated in any other
23 common group, which common group is formed primarily for
24 purposes other than providing insurance; a group that is
25 established primarily for the purpose of providing group
26 insurance, provided the benefits are reasonable in relation to
27 the premiums charged thereunder and the issuance of the group
28 policy has resulted, or will result, in economies of
29 administration; or a group of insurance agents of an insurer,
30 which insurer is the policyholder;
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1 (b) Certificates evidencing coverage under the policy
2 are issued to residents of this state and contain in
3 contrasting color and not less than 10-point type the
4 following statement: "The benefits of the policy providing
5 your coverage are governed primarily by the law of a state
6 other than Florida"; and
7 (c) The policy provides the benefits specified in ss.
8 627.419, 627.6574, 627.6575, 627.6579, 627.6612, 627.66121,
9 627.66122, 627.6613, 627.667, 627.6675, 627.6691, and
10 627.66911;
11 (d) For policies or contracts issued on or after
12 October 1, 2003, regardless of the type of group described in
13 this subsection to which the policy is issued, except for
14 policies issued to provide coverage to groups of persons all
15 of whom are in the same or functionally related licensed
16 professions, and providing coverage only to such licensed
17 professionals, their employees or their dependents, the policy
18 complies with the antidiscrimination provisions set forth in
19 s. 627.65625, regarding rating and eligibility for enrollment
20 and for any benefit under the policy, and with s. 627.6571;
21 (e) The policy is not issued to a group, other than an
22 employer group for the benefit of its employees, that directly
23 or indirectly uses any health status related factor, as
24 described in s. 627.65625, in determining eligibility for
25 initial or continued membership in the group or initial or
26 continued eligibility of any group member to participate in
27 any aspect of the group insurance program; and
28 (f) For purposes of paragraphs (d) and (e), group
29 health insurance policy means any hospital or medical policy,
30 hospital or medical service plan contract, or health
31 maintenance organization subscriber contract. The term does
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1 not include accidental death, accidental death and
2 dismemberment, accident-only, vision-only, dental-only,
3 hospital indemnity, hospital accident, cancer, specified
4 disease, Medicare Supplement, products that supplement
5 Medicare, long-term care, or disability income insurance,
6 similar supplemental plans provided under a separate policy,
7 certificate, or contract of insurance, which cannot duplicate
8 coverage under an underlying health plan and are specifically
9 designed to fill gaps in the underlying health plan,
10 coinsurance, or deductibles; coverage issued as a supplement
11 to liability insurance; workers' compensation or similar
12 insurance; or automobile medical-payment insurance.
13 (9) The Financial Services Commission shall adopt
14 rules necessary to administer this section.
15 (10) The Financial Services Commission may adopt rules
16 to establish standards for exempting certain groups from the
17 provisions of paragraphs (2)(d) and (e). Such rules shall
18 establish standards for determining that the members of the
19 group policy are provided protection from rate escalations
20 from the segregation of risks and that members are provided
21 protection by an individual or board that is not owned or
22 controlled by the carrier or affiliate of the carrier and acts
23 in a fiduciary capacity for the protection of its members. The
24 office must provide, upon request of an insurer, a 90-day
25 exemption from the October 1, 2003, effective date of
26 paragraphs (2)(d) and (e) to any insurer:
27 (a) Having an approved filing for individual business
28 by October 1, 2003; and
29 (b) Certifying that each individual issued a policy or
30 certificate after October 1, 2003, will be offered the
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1 opportunity to switch his or her policy to the new form at the
2 end of the exemption period.
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4 The provisions of paragraphs (2)(d) and (e) do not apply to
5 policies or certificates issued prior to October 1, 2003.
6 Section 3. This act shall take effect July 1, 2003.
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8 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
9 Senate Bill 2264
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11 The committee substitute does the following:
12 - Revises the criteria in s. 627.6515, F.S., for a policy
issued to a group outside of Florida, but which covers
13 Florida residents, to be exempt from the requirements of
part VII of chapter 627, F.S., that apply to group health
14 insurance policies issued in Florida.
15 - Amends s. 627.411, F.S., to revise the standards for
disapproval of health insurance rate filings. The changes
16 require that health insurance policies meet a minimum
loss ratio of at least 65 percent and provide more
17 specific grounds for disapproval of certain rate
increases.
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