Bill Text: FL S1122 | 2010 | Regular Session | Introduced

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Bill Title: Health Insurance [CPSC]

Sponsorship: Partisan Bill (Democrat 1)

Status: (Failed) 2010-04-30 - Died in Committee on Banking and Insurance [S1122 Detail]

Download: Florida-2010-S1122-Introduced.html

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Florida Senate - 2010                                    SB 1122 
 
By Senator Justice 
16-00165-10                                           20101122__ 
1                        A bill to be entitled 
2         An act relating to health insurance; amending s. 
3         627.410, F.S.; establishing a minimum loss ratio for 
4         health insurance forms; amending s. 627.411, F.S.; 
5         revising the loss ratio for certain health insurance 
6         coverage; amending s. 627.6745, F.S.; revising the 
7         loss ratio for Medicare supplement policies issued on 
8         or after a certain date; amending s. 627.9407, F.S.; 
9         establishing a minimum loss ratio for long-term care 
10         insurance policies; providing an effective date. 
11 
12  Be It Enacted by the Legislature of the State of Florida: 
13 
14         Section 1. Paragraph (b) of subsection (6) and subsections 
15  (7) and (8) of section 627.410, Florida Statutes, are amended to 
16  read: 
17         627.410 Filing, approval of forms.— 
18         (6) 
19         (b) The commission may establish by rule:, for each type of 
20  health insurance form, 
21         1. Establish procedures for to be used in ascertaining the 
22  relationship between reasonableness of benefits in relation to 
23  premium rates for each type of health insurance form, including 
24  Medicare supplement policies as defined in s. 627.672, long-term 
25  care policies as defined in s. 627.9404, and other policy forms 
26  where more than 50 percent of the policies are issued to 
27  individuals age 65 and older. and may, by rule, 
28         2. Exempt from any requirement of paragraph (a) any health 
29  insurance policy form or type thereof (as specified in such 
30  rule) to which form or type such requirements may not be 
31  practically applied or to which form or type the application of 
32  such requirements is not desirable or necessary for the 
33  protection of the public. For With respect to any health 
34  insurance policy form or type that thereof which is exempted by 
35  rule from any requirement of paragraph (a), premium rates filed 
36  pursuant to ss. 627.640 and 627.662 shall be for informational 
37  purposes. 
38         (7)(a) Each insurer subject to the requirements of 
39  subsection (6) shall make an annual filing with the office 
40  within no later than 12 months after its previous filing 
41  supporting the, demonstrating the reasonableness of benefits in 
42  relation to premium rates charged in relation to benefits for 
43  each insurance form. Upon The office, after receiving a request 
44  to be exempted from the provisions of this section, the office 
45  may, for good cause due to insignificant numbers of policies in 
46  force or insignificant premium volume, exempt a company, by line 
47  of coverage, from filing rates or rate certification as required 
48  by this section. 
49         (a)(b) The filing is required by this subsection shall be 
50  satisfied by one of the following methods: 
51         1. A rate filing prepared by an actuary which contains 
52  documentation supporting premium rates charged in relation to 
53  benefits demonstrating the reasonableness of benefits in 
54  relation to premiums charged in accordance with the applicable 
55  rating laws and rules adopted promulgated by the commission. 
56         2. If no rate change is proposed, a filing that which 
57  consists of a certification by an actuary supporting premium 
58  rates charged in relation to benefits that benefits are 
59  reasonable in relation to premiums currently charged in 
60  accordance with applicable laws and rules adopted promulgated by 
61  the commission. 
62         (b)(c) As used in this section, “actuary” means an 
63  individual who is a member of the Society of Actuaries or the 
64  American Academy of Actuaries. If an insurer does not employ or 
65  otherwise retain the services of an actuary, the insurer’s 
66  certification must shall be prepared by insurer personnel or 
67  consultants who have with a minimum of 5 years’ experience in 
68  insurance ratemaking. The chief executive officer of the insurer 
69  must shall review and sign the certification indicating his or 
70  her agreement with its conclusions. 
71         (c)(d) If at the time a filing is due required under this 
72  section an insurer is in the process of completing a rate 
73  review, the insurer may apply to the office for an extension of 
74  up to an additional 30 days in which to make the filing. The 
75  request for an extension must be received by the office by no 
76  later than the date the filing is due. 
77         (d)(e) If an insurer fails to meet the filing requirements 
78  of this subsection and does not submit the filing within 60 days 
79  following the date the filing is due, the office may, in 
80  addition to any other penalty authorized by law, order the 
81  insurer to discontinue issuing the issuance of policies subject 
82  to the filing for which the required filing was not made, until 
83  such time as the office determines that the required filing is 
84  properly submitted. 
85         (8)(a) For the purposes of subsections (6) and (7), 
86  benefits of an individual accident and health insurance policy 
87  form, including Medicare supplement policies as defined in s. 
88  627.672, when authorized by rules adopted by the commission, and 
89  excluding long-term care insurance policies as defined in s. 
90  627.9404, and other policy forms under which more than 50 
91  percent of the policies are issued to individuals age 65 and 
92  over, are deemed to be reasonable in relation to premium rates 
93  if the rates are filed pursuant to a loss ratio guarantee of at 
94  least 85 percent and both the initial rates and the durational 
95  and lifetime loss ratios have been approved by the office., and 
96  Such benefits shall also continue to be deemed reasonable for 
97  renewal rates if while the insurer complies with the loss ratio 
98  such guarantee and, provided the currently expected lifetime 
99  loss ratio is not more than 5 percent less than the filed 
100  lifetime loss ratio as certified to by an actuary. 
101         (a) The office may shall have the right to bring an 
102  administrative action if it determines should it deem that the 
103  lifetime loss ratio will not be met. For Medicare supplement 
104  filings, the office may withdraw a previously approved filing 
105  which was made pursuant to a loss ratio guarantee if it 
106  determines that the filing is not in compliance with ss. 
107  627.671-627.675 or the currently expected lifetime loss ratio is 
108  less than the filed lifetime loss ratio as certified by an 
109  actuary in the initial guaranteed loss ratio filing. If this 
110  section conflicts with ss. 627.671-627.675, ss. 627.671-627.675 
111  shall control. 
112         (b) The renewal premium rates shall be deemed to be 
113  approved upon filing with the office if the filing is 
114  accompanied by a the most current approved loss ratio guarantee 
115  of at least 85 percent. The loss ratio guarantee must shall be 
116  in writing, shall be signed by an officer of the insurer, and 
117  shall contain at least: 
118         1. A recitation of the anticipated lifetime and durational 
119  target loss ratios contained in the actuarial memorandum filed 
120  with the policy form when it was originally approved. The 
121  durational target loss ratios shall be calculated for 1-year 
122  experience periods. If statutory changes have rendered any 
123  portion of the such actuarial memorandum obsolete, the loss 
124  ratio guarantee shall also include an amendment to the actuarial 
125  memorandum reflecting current law and containing new lifetime 
126  and durational loss ratio targets. 
127         2. A guarantee that the applicable loss ratios for the 
128  experience period in which the new rates will take effect, and 
129  for each experience period thereafter until new rates are filed, 
130  will meet the loss ratios referred to in subparagraph 1. 
131         3. A guarantee that the applicable loss ratio results for 
132  the experience period will be independently audited at the 
133  insurer’s expense. The audit must shall be performed in the 
134  second calendar quarter of the year following the end of the 
135  experience period, and the audited results must shall be 
136  reported to the office by no later than the end of such quarter. 
137  The commission shall establish by rule the minimum information 
138  reasonably necessary to be included in the report. The audit 
139  must shall be done in accordance with accepted accounting and 
140  actuarial principles. 
141         4. A guarantee that affected policyholders in this state 
142  shall be issued a proportional refund, based on the premium 
143  earned, of the amount necessary to bring the applicable 
144  experience period loss ratio up to the durational target loss 
145  ratio referred to in subparagraph 1. The refund shall be made to 
146  all policyholders in this state who are insured under the 
147  applicable policy form as of the last day of the experience 
148  period, except that no refund need be made to a policyholder in 
149  an amount less than $10. Refunds less than $10 shall be 
150  aggregated and paid pro rata to the policyholders receiving 
151  refunds. The refund shall include interest at the then-current 
152  variable loan interest rate for life insurance policies 
153  established by the National Association of Insurance 
154  Commissioners, calculated from the end of the experience period 
155  until the date of payment. Payments must shall be made during 
156  the third calendar quarter of the year following the experience 
157  period for which a refund is determined to be due. However, no 
158  refunds shall be made until 60 days after the filing of the 
159  audit report in order for that the office to have has adequate 
160  time to review the report. 
161         5. A guarantee that if the applicable loss ratio exceeds 
162  the durational target loss ratio for that experience period by 
163  more than 20 percent and, provided there are at least 2,000 
164  policyholders on the form nationwide or, if not, then 
165  accumulated each calendar year until 2,000 policyholder years is 
166  reached, the insurer, if directed by the office, shall withdraw 
167  the policy form for the purposes of issuing new policies. 
168         (c) As used in this subsection: 
169         1. “Loss ratio” means the ratio of incurred claims to 
170  earned premium. 
171         2. “Applicable loss ratio” means the loss ratio 
172  attributable solely to this state if there are 2,000 or more 
173  policyholders in the state. If there are 500 or more 
174  policyholders in this state but fewer less than 2,000, it is the 
175  linear interpolation of the nationwide loss ratio and the loss 
176  ratio for this state. If there are fewer less than 500 
177  policyholders in this state, it is the nationwide loss ratio. 
178         3. “Experience period” means the period, ordinarily a 
179  calendar year, for which a loss ratio guarantee is calculated. 
180         Section 2. Subsection (3) of section 627.411, Florida 
181  Statutes, is amended to read: 
182         627.411 Grounds for disapproval.— 
183         (3)(a) For health insurance coverage as described in s. 
184  627.6561(5)(a)2., the minimum loss ratio standard of incurred 
185  claims to earned premium for the form shall be 85 65 percent. 
186         (b) Incurred claims are claims occurring within a fixed 
187  period, whether or not paid during the same period, under the 
188  terms of the policy period. 
189         (a)1. Claims include scheduled benefit payments or services 
190  provided by a provider or through a provider network for dental, 
191  vision, disability, and similar health benefits. 
192         (b)2. Claims do not include state assessments, taxes, 
193  company expenses, or any expense incurred by the company for the 
194  cost of adjusting and settling a claim, including the review, 
195  qualification, oversight, management, or monitoring of a claim 
196  or incentives or compensation to providers for other than the 
197  provisions of health care services. 
198         (c)3. A company may at its discretion include costs that 
199  are demonstrated to reduce claims, such as fraud intervention 
200  programs or case management costs, which are identified in each 
201  filing, are demonstrated to reduce claims costs, and do not 
202  result in increasing the experience period loss ratio by more 
203  than 5 percent. 
204         (d)4. For scheduled claim payments, such as disability 
205  income or long-term care, the incurred claims shall be the 
206  present value of the benefit payments discounted for continuance 
207  and interest. 
208         Section 3. Subsection (1) of section 627.6745, Florida 
209  Statutes, is amended to read: 
210         627.6745 Loss ratio standards; public rate hearings.— 
211         (1) Medicare supplement policies shall return the following 
212  to policyholders in the form of aggregate benefits under the 
213  policy, with respect to the lifetime of the policy, on the basis 
214  of earned premiums and on the basis of incurred claims 
215  experience or, if coverage is provided by a health maintenance 
216  organization based on service rather than reimbursement, 
217  incurred health care expenses, and in accordance with accepted 
218  actuarial principles and practices: 
219         (a) At least 85 75 percent of the aggregate amount of 
220  premiums earned in the case of group policies. 
221         (b) For individual policies issued or renewed before prior 
222  to July 1, 1989, at least 60 percent of the aggregate amount of 
223  premiums earned; and for individual policies issued or renewed 
224  on or after July 1, 1989, but before October 1, 2010, at least 
225  65 percent of the aggregate amount of premiums earned; and for 
226  policies issued on or after October 1, 2010, at least 85 percent 
227  of the aggregate amount of premiums earned. For the purposes of 
228  this section, policies issued as a result of soliciting 
229  solicitations of individuals through the mail or by mass media 
230  advertising are shall be deemed to be individual policies. 
231         Section 4. Subsection (6) of section 627.9407, Florida 
232  Statutes, is amended to read: 
233         627.9407 Disclosure, advertising, and performance standards 
234  for long-term care insurance.— 
235         (6) LOSS RATIO AND RESERVE STANDARDS.—The commission shall 
236  adopt rules establishing loss ratio and reserve standards for 
237  long-term care insurance policies. Such loss ratios may not be 
238  less than 85 percent. The rules must contain a specific 
239  reference to long-term care insurance policies. Such loss ratio 
240  and reserve standards shall be established at levels at which 
241  benefits are reasonable in relation to premiums and which that 
242  provide for adequate reserving of the long-term care insurance 
243  risk. 
244         Section 5. This act shall take effect July 1, 2010.