CHAPTER 641

641.17 Short title. This part shall be known and may be cited as the “Health Maintenance Organization Act.” History. — s. 1, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 778, 804, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 641.18 Declaration of legislative intent, findings, and purposes. (1) Faced with the continuation of mounting costs of health care, coupled with the state’s interest in high-quality care, the Legislature has determined that there is a need to explore alternative methods for the delivery of health care services, with a view toward achieving greater efficiency and economy in providing these services. (2) Health maintenance organizations, consisting of prepaid health care plans, hereinafter referred to as “plans,” are developing rapidly in many communities. Through these organizations, structured in various forms, health care services are provided directly to a group of people who make regular premium payments. (3) These plans, when properly operated, emphasize effective cost and quality controls. (4) It shall be the policy of this state to: (a) Eliminate legal barriers to the organization, promotion, and expansion of comprehensive prepaid health care plans. (b) Recognize that prepaid comprehensive health care plans shall be exempt from operation of the insurance laws of this state except in the manner and to the extent set forth in this part. (c) Ensure that comprehensive prepaid health care plans deliver high-quality health care. (5) Although it is the intent of this act to provide an opportunity for the development of health maintenance organizations, there is no intent to impair the present system for the delivery of health services. (6) The Legislature has determined that the operation of a health maintenance organization without a subsisting certificate of authority or the renewal, issuance, or delivery of a health maintenance contract without a subsisting certificate of authority constitutes a danger to the citizens of this state and exposes any subscriber to immediate and irreparable injury, loss, or damage. History. — s. 2, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 779, 804, 809(1st), ch. 82-243; s. 5, ch. 85-177; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429. 641.183 Statutory accounting procedures; transition provisions. All health maintenance organizations, authorized to do business under this chapter on January 1, 2001, shall elect a transition method for compliance with statutory accounting principles as follows: (1) Report assets acquired prior to June 30, 2001, in accordance with s. 641.35, Florida Statutes (2000), through December 31, 2005. Assets acquired on or after June 30, 2001, shall be accounted for in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual effective January 1, 2001. A health maintenance organization electing to report assets pursuant to this subsection shall maintain complete and detailed records reflecting such accounting treatment; or (2) Report all assets in accordance with the NAIC Accounting Practices and Procedures Manual effective January 1, 2001. History. — s. 21, ch. 2001-213. 641.185 Health maintenance organization subscriber protections. (1) With respect to the provisions of this part and part III, the principles expressed in the following statements serve as standards to be followed by the commission, the office, the department, and the Agency for Health Care Administration in exercising their powers and duties, in exercising administrative discretion, in administrative interpretations of the law, in enforcing its provisions, and in adopting rules: (a) A health maintenance organization shall ensure that the health care services provided to its subscribers shall be rendered under reasonable standards of quality of care which are at a minimum consistent with the prevailing standards of medical practice in the community pursuant to ss. 641.495(1) and 641.51. (b) A health maintenance organization subscriber should receive quality health care from a broad panel of providers, including referrals, preventive care pursuant to s. 641.402(1), emergency screening and services pursuant to ss. 641.31(12) and 641.513, and second opinions pursuant to s. 641.51. (c) A health maintenance organization subscriber should receive assurance that the health maintenance organization has been independently accredited by a national review organization pursuant to s. 641.512, and is financially secure as determined by the state pursuant to ss. 641.221, 641.225, and 641.228. (d) A health maintenance organization subscriber should receive continuity of health care, even after the provider is no longer with the health maintenance organization pursuant to s. 641.51(8). (e) A health maintenance organization subscriber should receive timely, concise information regarding the health maintenance organization’s reimbursement to providers and services pursuant to ss. 641.31 and 641.31015 and should receive prompt payment from the organization pursuant to s. 641.3155. (f) A health maintenance organization subscriber should receive the flexibility to transfer to another Florida health maintenance organization, regardless of health status, pursuant to ss. 641.228, 641.3104, 641.3107, 641.3111, 641.3921, and 641.3922. (g) A health maintenance organization subscriber should be eligible for coverage without discrimination against individual participants and beneficiaries of group plans based on health status pursuant to s. 641.31073. (h) A health maintenance organization that issues a group health contract must: provide coverage for preexisting conditions pursuant to s. 641.31071; guarantee renewability of coverage pursuant to s. 641.31074; provide notice of cancellation pursuant to s. 641.3108; provide extension of benefits pursuant to s. 641.3111; provide for conversion on termination of eligibility pursuant to s. 641.3921; and provide for conversion contracts and conditions pursuant to s. 641.3922. (i) A health maintenance organization subscriber should receive timely and, if necessary, urgent grievances and appeals within the health maintenance organization pursuant to ss. 641.228, 641.31(5), 641.47, and 641.511. (j) A health maintenance organization subscriber shall be given written notice at least 30 days in advance of a rate change pursuant to s. 641.31(3)(b). In the case of a group member, there may be a contractual agreement with the health maintenance organization to have the employer provide the required notice to the individual members of the group pursuant to s. 641.31(3)(b). (k) A health maintenance organization subscriber shall be given a copy of the applicable health maintenance contract, certificate, or member handbook specifying: all the provisions, disclosure, and limitations required pursuant to s. 641.31(1) and (4); the covered services, including those services, medical conditions, and provider types specified in ss. 641.31, 641.31094, 641.31095, 641.31096, 641.51(11), and 641.513; and where and in what manner services may be obtained pursuant to s. 641.31(4). (2) This section shall not be construed as creating a civil cause of action by any subscriber or provider against any health maintenance organization. History. — s. 44, ch. 2000-256; s. 6, ch. 2001-64; s. 8, ch. 2002-389; s. 1554, ch. 2003-261; s. 110, ch. 2018-24. 641.19 Definitions. As used in this part, the term: (1) “Affiliate” means any entity that exercises control over or is controlled by the health maintenance organization, directly or indirectly, through: (a) Equity ownership of voting securities; (b) Common managerial control; or (c) Collusive participation by the management of the health maintenance organization and affiliate in the management of the health maintenance organization or the affiliate. (2) “Agency” means the Agency for Health Care Administration. (3) “Capitation” means the fixed amount paid by an HMO to a health care provider under contract with the health maintenance organization in exchange for the rendering of covered medical services. (4) “Comprehensive health care services” means services, medical equipment, and supplies furnished by a provider, which may include, but which are not limited to, medical, surgical, and dental care; psychological, optometric, optic, chiropractic, podiatric, nursing, physical therapy, and pharmaceutical services; health education, preventive medical, rehabilitative, and home health services; inpatient and outpatient hospital services; extended care; nursing home care; convalescent institutional care; technical and professional clinical pathology laboratory services; laboratory and ambulance services; appliances, drugs, medicines, and supplies; and any other care, service, or treatment of disease, or correction of defects for human beings. (5) “Copayment” means a specific dollar amount, except as otherwise provided for by statute, that the subscriber must pay upon receipt of covered health care services. Copayments may not be established in an amount that will prevent a person from receiving a covered service or benefit as specified in the subscriber contract approved by the office. (6) “Emergency medical condition” means: (a) A medical condition manifesting itself by acute symptoms of sufficient severity, which may include severe pain or other acute symptoms, such that the absence of immediate medical attention could reasonably be expected to result in any of the following: 1. Serious jeopardy to the health of a patient, including a pregnant woman or a fetus. 2. Serious impairment to bodily functions. 3. Serious dysfunction of any bodily organ or part. (b) With respect to a pregnant woman: 1. That there is inadequate time to effect safe transfer to another hospital prior to delivery; 2. That a transfer may pose a threat to the health and safety of the patient or fetus; or 3. That there is evidence of the onset and persistence of uterine contractions or rupture of the membranes. (7) “Emergency services and care” means medical screening, examination, and evaluation by a physician, or, to the extent permitted by applicable law, by other appropriate personnel under the supervision of a physician, to determine if an emergency medical condition exists and, if it does, the care, treatment, or surgery for a covered service by a physician necessary to relieve or eliminate the emergency medical condition, within the service capability of a hospital. (8) “Entity” means any legal entity with continuing existence, including, but not limited to, a corporation, association, trust, or partnership. (9) “Geographic area” means the county or counties, or any portion of a county or counties, within which the health maintenance organization provides or arranges for comprehensive health care services to be available to its subscribers. (10) “Guaranteeing organization” is an organization that is domiciled in the United States; that has authorized service of process against it; and that has appointed the Chief Financial Officer as its agent for service of process issuing upon any cause of action arising in this state, based upon any guarantee entered into under this part. (11) “Health maintenance contract” means any contract entered into by a health maintenance organization with a subscriber or group of subscribers to provide coverage for comprehensive health care services in exchange for a prepaid per capita or prepaid aggregate fixed sum. (12) “Health maintenance organization” means any organization authorized under this part which: (a) Provides, through arrangements with other persons, emergency care, inpatient hospital services, physician care including care provided by physicians licensed under chapters 458, 459, 460, and 461, ambulatory diagnostic treatment, and preventive health care services. (b) Provides, either directly or through arrangements with other persons, health care services to persons enrolled with such organization, on a prepaid per capita or prepaid aggregate fixed-sum basis. (c) Provides, either directly or through arrangements with other persons, comprehensive health care services which subscribers are entitled to receive pursuant to a contract. (d) Provides physician services, by physicians licensed under chapters 458, 459, 460, and 461, directly through physicians who are either employees or partners of such organization or under arrangements with a physician or any group of physicians. (e) If offering services through a managed care system, has a system in which a primary physician licensed under chapter 458, chapter 459, chapter 460, or chapter 461 is designated for each subscriber upon request of a subscriber requesting service by a physician licensed under any of those chapters, and is responsible for coordinating the health care of the subscriber of the respectively requested service and for referring the subscriber to other providers of the same discipline when necessary. Each female subscriber may select as her primary physician an obstetrician/gynecologist who has agreed to serve as a primary physician and is in the health maintenance organization’s provider network. Except in cases in which the health care provider is an employee of the health maintenance organization, the fact that the health maintenance organization arranges for the provision of health care services under this chapter does not create an actual agency, apparent agency, or employer-employee relationship between the health care provider and the health maintenance organization for purposes of vicarious liability for the medical negligence of the health care provider. (13) “Insolvent” or “insolvency” means that all the statutory assets of the health maintenance organization, if made immediately available, would not be sufficient to discharge all of its liabilities or that the health maintenance organization is unable to pay its debts as they become due in the usual course of business. In the event that all the assets of the health maintenance organization, if made immediately available, would not be sufficient to discharge all of its liabilities, but the organization has a written guarantee of the type and subject to the same provisions as outlined in s. 641.225, the organization shall not be considered insolvent unless it is unable to pay its debts as they become due in the usual course of business. (14) “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. (15) “Reporting period” means the annual calendar year accounting period or any part thereof. (16) “Schedule of reimbursements” means a schedule of fees to be paid by a health maintenance organization to a physician provider for reimbursement for specific services pursuant to the terms of a contract. The physician provider’s net reimbursement may vary after consideration of other factors, including, but not limited to, bundling codes together into another code and member cost-sharing responsibility, as long as these factors are disclosed and included in the terms of the contract between the health maintenance organization and provider. The reimbursement schedule may be stated as: (a) A percentage of the Medicare fee schedule for specific relative-value services; (b) A listing of the reimbursements to be paid by Current Procedural Terminology codes for physicians that pertain to each physician’s practice; or (c) Any other method agreed upon by the parties. Specific nonrelative-value services shall be stated separately from relative-value services, and reimbursement for unclassified services shall be on a reasonable basis. (17) “Statutory accounting principles” means accounting principles as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual as of 2002. (18) “Subscriber” means an entity or individual who has contracted, or on whose behalf a contract has been entered into, with a health maintenance organization for health care coverage or other persons who also receive health care coverage as a result of the contract. (19) “Surplus” means total statutory assets in excess of total liabilities, except that assets pledged to secure debts not reflected on the books of the health maintenance organization shall not be included in surplus. Surplus includes capital stock, capital in excess of par, other contributed capital, retained earnings, and surplus notes. (20) “Uncovered expenditures” means the cost of health care services that are covered by a health maintenance organization, for which a subscriber would also be liable in the event of the insolvency of the organization. (21) “Health care risk contract” means a contract under which an individual or entity receives consideration or other compensation in an amount greater than 1 percent of the health maintenance organization’s annual gross written premium in exchange for providing to the health maintenance organization a provider network or other services, which may include administrative services. The 1-percent threshold shall be calculated on a contract-by-contract basis for each such individual or entity and not in the aggregate for all health care risk contracts. (22) “Provider service network” means a network authorized under s. 409.912(1), reimbursed on a prepaid basis, operated by a health care provider or group of affiliated health care providers, and which directly provides health care services under a Medicare, Medicaid, or Healthy Kids contract. History. — s. 3, ch. 72-264; s. 1, ch. 76-33; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 780, 804, 809(1st), ch. 82-243; s. 1, ch. 83-198; s. 137, ch. 83-216; s. 2, ch. 84-313; s. 6, ch. 85-177; s. 1, ch. 87-236; s. 1, ch. 87-273; s. 2, ch. 88-126; s. 2, ch. 88-388; s. 2, ch. 89-357; s. 74, ch. 89-360; ss. 111, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 2, ch. 95-281; s. 13, ch. 96-199; s. 3, ch. 96-223; s. 22, ch. 2001-213; s. 10, ch. 2002-247; s. 1555, ch. 2003-261; s. 46, ch. 2003-416; s. 1, ch. 2004-321; s. 33, ch. 2011-135; s. 30, ch. 2015-3; s. 18, ch. 2017-4; s. 14, ch. 2022-42. 641.201 Applicability of other laws. Except as provided in this part, health maintenance organizations shall be governed by the provisions of this part and part III of this chapter and shall be exempt from all other provisions of the Florida Insurance Code except those provisions of the Florida Insurance Code that are explicitly made applicable to health maintenance organizations. History. — ss. 25, 50, ch. 85-321; s. 3, ch. 87-236; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 40, ch. 95-211; s. 71, ch. 2000-318. 641.2011 Insurance holding companies. Part IV of chapter 628 applies to health maintenance organizations licensed under this part. History. — s. 76, ch. 2000-318. 641.2015 Incorporation required. On or after October 1, 1985, any entity that has not yet obtained a certificate of authority to operate a health maintenance organization in this state shall be incorporated or shall be a division of a corporation formed under the provisions of either part I of chapter 607 or chapter 617 or shall be a public entity that is organized as a political subdivision. In the case of a division of a corporation, the financial requirements of this part shall apply to the entire corporation. Incorporation shall not be required of any entity which has already been issued an initial certificate of authority prior to this date and which is not a corporation on October 1, 1985, or which is incorporated in any other state on October 1, 1985; nor shall incorporation be required on renewal of any certificate of authority by such an organization or be required of a public entity that is organized as a political subdivision. History. — ss. 7, 47, ch. 85-177; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 14, ch. 96-199; s. 58, ch. 2014-209. 641.2017 Insurance business not authorized. Nothing in the Florida Insurance Code or this part shall be deemed to authorize any health maintenance organization to transact any insurance business other than that of health maintenance organization type insurance or otherwise to engage in any other type of insurance unless it is authorized under a certificate of authority issued by the office under the provisions of the Florida Insurance Code. However, a health maintenance organization may by contract: (1) Enter into arrangements whereby the expected cost of health care services provided directly or through arrangements with other persons by the health maintenance organization is self-funded by the person contracting with the health maintenance organization, but the health maintenance organization assumes the risks that costs will exceed that amount on a prepaid per capita or prepaid aggregate fixed-sum basis; or (2) Enter into arrangements whereby the cost of health care services provided directly or through arrangements with other persons by the health maintenance organization is self-funded by the person contracting with the health maintenance organization. History. — ss. 26, 50, ch. 85-321; s. 9, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1556, ch. 2003-261. 641.2018 Limited coverage for home health care authorized. (1) Notwithstanding other provisions of this chapter, a health maintenance organization may issue a contract that limits coverage to home health care services only. The organization and the contract shall be subject to all of the requirements of this part that do not require or otherwise apply to specific benefits other than home care services. To this extent, all of the requirements of this part apply to any organization or contract that limits coverage to home care services, except the requirements for providing comprehensive health care services as provided in ss. 641.19(4), (11), and (12), and 641.31(1), except ss. 641.31(9), (12), (17), (18), (19), (20), (21), and (24) and 641.31095. (2) Notwithstanding the other provisions of this chapter, a health maintenance organization may apply for and obtain a certificate of authority from the office pursuant to this part and a health care provider certificate pursuant to part III, which certificate limits the authority of the organization to the issuance of contracts that limit coverage to home health care services pursuant to subsection (1). In addition to all applicable requirements of this part, as specified in subsection (1), all of the requirements of part III apply to an organization applying for such a limited certificate, except to the extent that such requirements directly conflict with the limited nature of the coverage provided. (3) Any contract that limits coverage to home health care benefits as provided in this section must also meet all of the requirements of ss. 627.9403-627.9408 of the Long-Term Care Insurance Act, except s. 627.9407(3)(c) and (9). History. — s. 6, ch. 96-275; s. 51, ch. 99-3; s. 1557, ch. 2003-261; s. 10, ch. 2006-254. 641.20185 High-deductible contracts for medical savings accounts. Notwithstanding the provisions of this part and part III related to the requirement for providing comprehensive coverage, a health maintenance organization may offer a high-deductible contract to employers that establish medical savings accounts, as defined in s. 220(d) of the Internal Revenue Code. History. — s. 22, ch. 97-179; s. 52, ch. 99-3. 641.2019 Provider service network certificate of authority. A prepaid provider service network that applies for and obtains a health care provider certificate pursuant to part III of this chapter, meets the surplus requirements of s. 641.225, and meets all other applicable requirements of this part may obtain a certificate of authority under s. 641.21. A certified provider service network has the same rights and responsibilities as a health maintenance organization certified under this part. History. — s. 34, ch. 2011-135. 641.21 Application for certificate. (1) Before any entity may operate a health maintenance organization, it shall obtain a certificate of authority from the office. The office shall accept and shall begin its review of an application for a certificate of authority anytime after an organization has filed an application for a health care provider certificate pursuant to part III of this chapter. However, the office may not issue a certificate of authority to any applicant which does not possess a valid health care provider certificate issued by the agency. Each application for a certificate shall be on such form as the commission shall prescribe, shall be verified by the oath of two officers of the corporation and properly notarized, and shall be accompanied by the following: (a) A copy of the articles of incorporation and all amendments thereto; (b) A copy of the bylaws, rules and regulations, or similar form of document, if any, regulating the conduct of the affairs of the applicant; (c) A list of the names, addresses, and official capacities with the organization of the persons who are to be responsible for the conduct of the affairs of the health maintenance organization, including all officers, directors, and owners of in excess of 5 percent of the common stock of the corporation. Such persons shall fully disclose to the office and the directors of the health maintenance organization the extent and nature of any contracts or arrangements between them and the health maintenance organization, including any possible conflicts of interest; (d) A complete biographical statement on forms prescribed by the commission, and an independent investigation report and fingerprints obtained pursuant to chapter 624, of all of the individuals referred to in paragraph (c); (e) A statement generally describing the health maintenance organization, its operations, and its grievance procedures; (f) Forms of all health maintenance contracts, certificates, and member handbooks the applicant proposes to offer the subscribers, showing the benefits to which they are entitled, together with a table of the rates charged, or proposed to be charged, for each form of such contract. A certified actuary shall: 1. Certify that the rates are neither inadequate nor excessive nor unfairly discriminatory; 2. Certify that the rates are appropriate for the classes of risks for which they have been computed; and 3. File an adequate description of the rating methodology showing that such methodology follows consistent and equitable actuarial principles; (g) A statement describing with reasonable certainty the geographic area or areas to be served by the health maintenance organization; (h) As to any applicant whose business plan indicates that it will receive Medicaid funds, a list of all contracts and agreements and any information relative to any payment or agreement to pay, directly or indirectly, a consultant fee, a broker fee, a commission, or other fee or charge related in any way to the application for a certificate of authority or the issuance of a certificate of authority, including, but not limited to, the name of the person or entity paying the fee; the name of the person or entity receiving the fee; the date of payment; and a brief description of the work performed. The contract, agreement, and related information shall, if requested, be provided to the office. (i) An audited financial statement prepared on the basis of statutory accounting principles and certified by an independent certified public accountant, except that surplus notes acceptable to the office and meeting the requirements of this act shall be included in the calculation of surplus; and (j) Such additional reasonable data, financial statements, and other pertinent information as the commission or office requires with respect to the determination that the applicant can provide the services to be offered. (2) After submission of the application for a certificate of authority, the entity may engage in initial group marketing activities solely with respect to employers, representatives of labor unions, professional associations, and trade associations, so long as it does not enter into, issue, deliver, or otherwise effectuate health maintenance contracts, effectuate or bind coverage or benefits, provide health care services, or collect premiums or charges until it has been issued a certificate of authority by the office. Any such activities, oral or written, shall include a statement that the entity does not possess a valid certificate of authority and cannot enter into health maintenance contracts until such time as it has been issued a certificate of authority by the office. (3) A comprehensive feasibility study, performed by a certified actuary in conjunction with a certified public accountant. The study shall be for the greater of 3 years or until the health maintenance organization has been projected to be profitable for 12 consecutive months. The study must show that the health maintenance organization would not, at the end of any month of the projection period, have less than the minimum surplus as required by s. 641.225. History. — s. 5, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 782, 804, 809(1st), ch. 82-243; s. 2, ch. 83-198; s. 8, ch. 85-177; s. 4, ch. 87-236; s. 3, ch. 88-388; ss. 112, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 41, ch. 95-211; s. 15, ch. 96-199; s. 1558, ch. 2003-261; s. 133, ch. 2004-5. 641.215 Conditions precedent to issuance or maintenance of certificate of authority; effect of bankruptcy proceedings. (1) As a condition precedent to the issuance or maintenance of a certificate of authority, a health maintenance organization insurer must file or have on file with the office: (a) An acknowledgment that a delinquency proceeding pursuant to part I of chapter 631, or supervision by the department pursuant to ss. 624.80-624.87, constitutes the sole and exclusive method for the liquidation, rehabilitation, reorganization, or conservation of a health maintenance organization. (b) A waiver of any right to file or be subject to a bankruptcy proceeding. (2) The commencement of a bankruptcy proceeding either by or against a health maintenance organization shall, by operation of law: (a) Terminate the health maintenance organization’s certificate of authority. (b) Vest in the office for the use and benefit of the subscribers of the health maintenance organization the title to any deposits of the insurer held by the department. If the proceeding is initiated by a party other than the health maintenance organization, the operation of subsection (2) shall be stayed for a period of 60 days following the date of commencement of the proceeding. History. — ss. 113, 188, ch. 91-108; s. 4, ch. 91-429; s. 1559, ch. 2003-261. 641.217 Minority recruitment and retention plans required. (1) Any entity contracting with the Agency for Health Care Administration to provide health care services to Medicaid recipients or state employees on a prepaid or fixed-sum basis must submit to the Agency for Health Care Administration the entity’s plan for recruitment and retention of health care practitioners who are minority persons as defined in s. 288.703. The plan must demonstrate an ability to recruit and retain minority persons which shall include, but is not limited to, the following efforts: (a) Establishing and maintaining contacts with various organizations representing the interests and concerns of minority constituencies to seek advice and assistance. (b) Identifying and recruiting at colleges and universities which primarily serve minority students. (c) Reviewing and analyzing the organization’s workforce as to minority representation. (d) Other factors identified by the Agency for Health Care Administration by rule. (2) The Agency for Health Care Administration may not contract with such an entity until the agency has received and approved the entity’s plan required in subsection (1). Failure to implement the plan as approved shall constitute grounds for the suspension or termination of the entity’s contract with the agency. History. — s. 16, ch. 96-199; s. 434, ch. 2011-142. 641.22 Issuance of certificate of authority. The office shall issue a certificate of authority to any entity filing a completed application in conformity with s. 641.21, upon payment of the prescribed fees and upon the office’s being satisfied that: (1) As a condition precedent to the issuance of any certificate, the entity has obtained a health care provider certificate from the Agency for Health Care Administration pursuant to part III of this chapter. (2) The health maintenance organization is actuarially sound. (3) The entity has met the applicable requirements specified in s. 641.225. (4) The procedures for offering comprehensive health care services and offering and terminating contracts to subscribers will not unfairly discriminate on the basis of age, sex, race, health, or economic status. However, this section does not prohibit reasonable underwriting classifications for the purposes of establishing contract rates, nor does it prohibit experience rating. (5) The entity furnishes evidence of adequate insurance coverage or an adequate plan for self-insurance to respond to claims for injuries arising out of the furnishing of comprehensive health care. (6) The ownership, control, and management of the entity is competent and trustworthy and possesses managerial experience that would make the proposed health maintenance organization operation beneficial to the subscribers. The office shall not grant or continue authority to transact the business of a health maintenance organization in this state at any time during which the office has good reason to believe that: (a) The ownership, control, or management of the organization includes any person: 1. Who is incompetent or untrustworthy; 2. Who is so lacking in health maintenance organization expertise as to make the operation of the health maintenance organization hazardous to potential and existing subscribers; 3. Who is so lacking in health maintenance organization experience, ability, and standing as to jeopardize the reasonable promise of successful operation; 4. Who is affiliated, directly or indirectly, through ownership, control, reinsurance transactions, or other business relations, with any person whose business operations are or have been marked by business practices or conduct that is to the detriment of the public, stockholders, investors, or creditors; or 5. Whose business operations are or have been marked by business practices or conduct that is to the detriment of the public, stockholders, investors, or creditors; (b) Any person, including any stock subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the organization, or who influences or has the ability to influence the transaction of the business of the health maintenance organization, does not possess the financial standing and business experience for the successful operation of the health maintenance organization; (c) Any person, including any stock subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the organization, or who influences or has the ability to influence the transaction of the business of the health maintenance organization, has been found guilty of, or has pled guilty or no contest to, any felony or crime punishable by imprisonment of 1 year or more under the laws of the United States or any state thereof or under the laws of any other country, which involves moral turpitude, without regard to whether a judgment or conviction has been entered by the court having jurisdiction in such case. However, in the case of a health maintenance organization operating under a subsisting certificate of authority, the health maintenance organization shall remove any such person immediately upon discovery of the conditions set forth in this paragraph when applicable to such person or under the order of the office, and the failure to so act by the organization is grounds for revocation or suspension of the health maintenance organization’s certificate of authority; or (d) Any person, including any stock subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the organization, or who influences or has the ability to influence the transaction of the business of the health maintenance organization, is now or was in the past affiliated, directly or indirectly, through ownership interest of 10 percent or more, control, or reinsurance transactions, with any business, corporation, or other entity that has been found guilty of or has pleaded guilty or nolo contendere to any felony or crime punishable by imprisonment for 1 year or more under the laws of the United States, any state, or any other country, regardless of adjudication. In the case of a health maintenance organization operating under a subsisting certificate of authority, the health maintenance organization shall immediately remove such person or immediately notify the office of such person upon discovery of the conditions set forth in this paragraph, either when applicable to such person or upon order of the office. The failure to remove such person, provide such notice, or comply with such order constitutes grounds for suspension or revocation of the health maintenance organization’s certificate of authority. (7) The entity has a blanket fidelity bond in the amount of $100,000, issued by a licensed insurance carrier in this state, that will reimburse the entity in the event that anyone handling the funds of the entity either misappropriates or absconds with the funds. All employees handling the funds shall be covered by the blanket fidelity bond. An agent licensed under the provisions of the Florida Insurance Code may either directly or indirectly represent the health maintenance organization in the solicitation, negotiation, effectuation, procurement, receipt, delivery, or forwarding of any health maintenance organization subscriber’s contract or collect or forward any consideration paid by the subscriber to the health maintenance organization; and the licensed agent shall not be required to post the bond required by this subsection. (8) The entity has filed with the office, and obtained approval from the office of, all reinsurance contracts as provided in s. 641.285. (9) The health maintenance organization has a grievance procedure that will facilitate the resolution of subscriber grievances and that includes both formal and informal steps available within the organization. History. — s. 6, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 783, 804, 809(1st), ch. 82-243; s. 3, ch. 83-198; s. 3, ch. 84-313; s. 9, ch. 85-177; s. 5, ch. 87-236; s. 4, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 42, ch. 95-211; s. 17, ch. 96-199; s. 21, ch. 97-93; s. 264, ch. 99-8; s. 1560, ch. 2003-261. 641.221 Continued eligibility for certificate of authority. (1) In order to maintain its eligibility for a certificate of authority, a health maintenance organization shall continue to meet all conditions required to be met under this part and the rules promulgated thereunder for the initial application for and issuance of its certificate of authority under s. 641.22. (2) In order to maintain eligibility for a certificate of authority, a health maintenance organization authorized under the Florida Insurance Code to exclusively market, sell, or offer to sell Medicare Advantage plans in this state shall be actively engaged in managed care within 24 months after licensure, shall designate and maintain at least one primary anti-fraud employee, and shall adopt an anti-fraud plan. The Office of Insurance Regulation may extend the period of eligibility upon written request. History. — ss. 10, 47, ch. 85-177; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 3, ch. 2017-178. 641.225 Surplus requirements. (1) Each health maintenance organization shall at all times maintain a minimum surplus in an amount that is the greater of $1,500,000, or 10 percent of total liabilities, or 2 percent of total annualized premium. (2) The office shall not issue a certificate of authority unless the health maintenance organization has a minimum surplus in an amount which is the greater of: (a) Ten percent of their total liabilities based on their startup projection as set forth in this part; (b) Two percent of their total projected premiums based on their startup projection as set forth in this part; or (c) $1,500,000, plus all startup losses, excluding profits, projected to be incurred on their startup projection until the projection reflects statutory net profits for 12 consecutive months. (3) The commission may adopt rules to set uniform standards and criteria for the early warning that the continued operation of any health maintenance organization might be hazardous to its subscribers, creditors, or the general public, and to set standards for evaluating the financial condition of any health maintenance organization. (4) A surplus note shall not be used to initially capitalize a health maintenance organization. (5) In lieu of having any minimum surplus, the health maintenance organization may provide a written guarantee to assure payment of covered subscriber claims and all other liabilities of the health maintenance organization, provided that the written guarantee is made by a guaranteeing organization which: (a) Has been in operation for 5 years or more and has a surplus, not including land, buildings, and equipment, of the greater of $2 million or 2 times the minimum surplus requirements of the health maintenance organization. In any determination of the financial condition of the guaranteeing organization, the definitions of assets, liabilities, and surplus set forth in this part shall apply, except that investments in or loans to any organizations guaranteed by the guaranteeing organization shall be excluded from surplus. If the guaranteeing organization is sponsoring more than one organization, the surplus requirement shall be increased by a multiple equal to the number of such organizations. (b) Submits a guarantee that is approved by the office as meeting the requirements of this part, provided that the written guarantee contains a provision which requires that the guarantee be irrevocable unless the guaranteeing organization can demonstrate to the office that the cancellation of the guarantee will not result in the insolvency of the health maintenance organization and the office approves cancellation of the guarantee. (c) Initially submits its audited financial statements, certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles, covering its two most current annual accounting periods. (d) Submits annually, within 3 months after the end of its fiscal year, an audited financial statement certified by an independent certified public accountant, prepared in accordance with generally accepted accounting principles. The office may, as it deems necessary, require quarterly financial statements from the guaranteeing organization. (6) A health maintenance organization that is authorized in this state and one or more other states, jurisdictions, or countries is subject to ss. 624.4085 and 624.40851. History. — s. 4, ch. 83-198; s. 4, ch. 84-313; s. 28, ch. 85-62; s. 11, ch. 85-177; s. 1, ch. 86-286; s. 5, ch. 88-388; s. 24, ch. 90-295; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 18, ch. 96-199; s. 20, ch. 98-159; s. 7, ch. 2001-64; s. 1561, ch. 2003-261; s. 134, ch. 2004-5; s. 27, ch. 2004-344; s. 16, ch. 2014-101; s. 31, ch. 2015-3; s. 81, ch. 2016-10. 641.2261 Application of solvency requirements to provider-sponsored organizations and Medicaid provider service networks. (1) The solvency requirements of ss. 1855 and 1856 of the Balanced Budget Act of 1997 and 42 C.F.R. s. 422.350, subpart H, apply to a health maintenance organization that is a provider-sponsored organization rather than the solvency requirements of this part. However, if the provider-sponsored organization does not meet the solvency requirements of this part, the organization is limited to the issuance of Medicare+Choice plans to eligible individuals. For the purposes of this section, the terms “Medicare+Choice plans,” “provider-sponsored organizations,” and “solvency requirements” have the same meaning as defined in the federal act and federal rules and regulations. (2) Except for a provider service network seeking to obtain a certificate of authority under s. 641.2019, the solvency requirements in 42 C.F.R. s. 422.350, subpart H, and the solvency requirements established in approved federal waivers pursuant to chapter 409 apply to a Medicaid provider service network rather than the solvency requirements of this part. History. — s. 74, ch. 2000-318; s. 5, ch. 2005-358; s. 35, ch. 2011-135. 641.227 Rehabilitation Administrative Expense Fund. (1) The office shall not issue or permit to exist a certificate of authority to operate a health maintenance organization in this state unless the organization has deposited with the department $10,000 in cash for use in the Rehabilitation Administrative Expense Fund as established in subsection (2). (2) The department shall maintain all deposits received under this section and all income from such deposits in trust in an account titled “Rehabilitation Administrative Expense Fund.” The fund shall be administered by the department and shall be used for the purpose of payment of the administrative expenses of the department during any rehabilitation of a health maintenance organization, when rehabilitation is ordered by a court of competent jurisdiction. (3) Upon successful rehabilitation of a health maintenance organization, the organization shall reimburse the fund for the amount of expenses incurred by the department during the court-ordered rehabilitation period. (4) If a court of competent jurisdiction orders liquidation of a health maintenance organization, the fund shall be reimbursed for expenses incurred by the department as provided for in chapter 631. (5) Each deposit made under this section shall be allowed as an asset for purposes of determination of the financial condition of the health maintenance organization. The deposit shall be refunded to the organization only when the organization both ceases operation as a health maintenance organization and no longer holds a subsisting certificate of authority. History. — ss. 12, 47, ch. 85-177; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1562, ch. 2003-261. 641.228 Florida Health Maintenance Organization Consumer Assistance Plan. (1) The office shall not issue a certificate to any health maintenance organization after July 1, 1989, until the applicant health maintenance organization has paid in full its special assessment as set forth in s. 631.819(2)(a). (2) No assessment paid to the Florida Health Maintenance Organization Consumer Assistance Plan shall be allowed as an asset of any health maintenance organization. (3) The office may suspend or revoke the certificate of authority of any health maintenance organization which does not timely pay its assessment to the Florida Health Maintenance Organization Consumer Assistance Plan. History. — ss. 6, 24, ch. 88-388; ss. 114, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1563, ch. 2003-261. 641.23 Revocation or cancellation of certificate of authority; suspension of enrollment of new subscribers; terms of suspension. (1) The maintenance of a valid and current health care provider certificate issued pursuant to part III of this chapter is a condition of the maintenance of a valid and current certificate of authority issued by the office to operate a health maintenance organization. Denial or revocation of a health care provider certificate shall be deemed to be an automatic and immediate cancellation of a health maintenance organization’s certificate of authority. At the discretion of the office, nonrenewal of a health care provider certificate may be deemed to be an automatic and immediate cancellation of a health maintenance organization’s certificate of authority if the Agency for Health Care Administration notifies the office, in writing, that the health care provider certificate will not be renewed. (2) The office may suspend the authority of a health maintenance organization to enroll new subscribers or revoke any certificate issued to a health maintenance organization, or order compliance within 30 days, if it finds that any of the following conditions exists: (a) The organization is not operating in compliance with this part; (b) The plan is no longer actuarially sound or the organization does not have the minimum surplus as required by this part; (c) The existing contract rates are excessive, inadequate, or unfairly discriminatory; (d) The organization has advertised, merchandised, or attempted to merchandise its services in such a manner as to misrepresent its services or capacity for service or has engaged in deceptive, misleading, or unfair practices with respect to advertising or merchandising; or (e) The organization is insolvent. (3) Whenever the financial condition of the health maintenance organization is such that, if not modified or corrected, its continued operation would result in impairment or insolvency, the office may order the health maintenance organization to file with the office and implement a corrective action plan designed to do one or more of the following: (a) Reduce the total amount of present potential liability for benefits by reinsurance or other means. (b) Reduce the volume of new business being accepted. (c) Reduce the expenses of the health maintenance organization by specified methods. (d) Suspend or limit the writing of new business for a period of time. (e) Require an increase in the health maintenance organization’s net worth. If the health maintenance organization fails to submit a plan within 30 days of the office’s order or submits a plan which is insufficient to correct the health maintenance organization’s financial condition, the office may order the health maintenance organization to implement one or more of the corrective actions listed in this subsection. (4) The office shall, in its order suspending the authority of a health maintenance organization to enroll new subscribers, specify the period during which the suspension is to be in effect and the conditions, if any, which must be met by the health maintenance organization prior to reinstatement of its authority to enroll new subscribers. The order of suspension is subject to rescission or modification by further order of the office prior to the expiration of the suspension period. Reinstatement shall not be made unless requested by the health maintenance organization; however, the office shall not grant reinstatement if it finds that the circumstances for which the suspension occurred still exist or are likely to recur. (5) The commission shall adopt rules establishing an actuarially sound medical loss ratio for Medicaid. In determining the appropriate medical loss ratio, the commission shall consider factors, including but not limited to, plan age, plan structure, geographic service area, product mix, provider network, medical inflation, provider services, other professional services, out of network referrals and expenditures, in and out of network emergency room expenditures, inpatient expenditures, other medical expenditures, incentive pool adjustments, copayments, coordination of benefits, subrogation, and any other expenses associated with the delivery of medical benefits. The commission shall utilize assistance from the Agency for Health Care Administration, the State University System, an independent actuary, and representatives from health maintenance organizations in developing the rule for appropriate medical loss ratios. (6) The office shall calculate and publish at least annually the medical loss ratios of all licensed health maintenance organizations. The publication shall include an explanation of what the medical loss ratio means and shall disclose that the medical loss ratio is not a direct reflection of quality, but must be looked at along with patient satisfaction and other standards that define quality. History. — s. 7, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 784, 804, 809(1st), ch. 82-243; s. 5, ch. 83-198; s. 6, ch. 84-313; s. 6, ch. 87-236; s. 7, ch. 88-388; ss. 115, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 43, ch. 95-211; s. 19, ch. 96-199; s. 265, ch. 99-8; s. 2, ch. 2000-155; s. 1564, ch. 2003-261. 641.234 Administrative, provider, and management contracts. (1) The office may require a health maintenance organization to submit any contract for administrative services, contract with a provider other than an individual physician, contract for management services, and contract with an affiliated entity to the office. (2) After review of a contract the office may order the health maintenance organization to cancel the contract in accordance with the terms of the contract and applicable law if it determines: (a) That the fees to be paid by the health maintenance organization under the contract are so unreasonably high as compared with similar contracts entered into by the health maintenance organization or as compared with similar contracts entered into by other health maintenance organizations in similar circumstances that the contract is detrimental to the subscribers, stockholders, investors, or creditors of the health maintenance organization; or (b) That the contract is with an entity that is not licensed under state statutes, if such license is required, or is not in good standing with the applicable regulatory agency. (3) All contracts for administrative services, management services, provider services other than individual physician contracts, and with affiliated entities entered into or renewed by a health maintenance organization on or after October 1, 1988, shall contain a provision that the contract shall be canceled upon issuance of an order by the office pursuant to this section. (4)(a) If a health maintenance organization, through a health care risk contract, transfers to any entity the obligations to pay any provider for any claims arising from services provided to or for the benefit of any subscriber of the organization, the health maintenance organization shall remain responsible for any violations of ss. 641.3155, 641.3156, and 641.51(4). The provisions of ss. 624.418-624.4211 and 641.52 shall apply to any such violations. (b) As used in this subsection: 1. The term “health care risk contract” means a contract under which an entity receives compensation in exchange for providing to the health maintenance organization a provider network or other services, which may include administrative services. 2. The term “entity” means a person licensed as an administrator under s. 626.88 and does not include any provider or group practice, as defined in s. 456.053, providing services under the scope of the license of the provider or the members of the group practice. The term does not include a hospital providing billing, claims, and collection services solely on its own and its physicians’ behalf and providing services under the scope of its license. History. — ss. 8, 24, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 20, ch. 96-199; s. 72, ch. 2000-318; s. 9, ch. 2002-389; s. 1565, ch. 2003-261. 641.2342 Contract providers. Each health maintenance organization shall file, upon the request of the office, financial statements for all contract providers of comprehensive health care services who have assumed, through capitation or other means, more than 10 percent of the health care risks of the health maintenance organization. However, this provision shall not apply to any individual physician. History. — ss. 9, 24, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1566, ch. 2003-261. 641.25 Administrative penalty in lieu of suspension or revocation. If the office finds that one or more grounds exist for the revocation or suspension of a certificate issued under this part, the office may, in lieu of revocation or suspension, impose a fine upon the health maintenance organization. With respect to any nonwillful violation, the fine must not exceed $2,500 per violation. Such fines may not exceed an aggregate amount of $25,000 for all nonwillful violations arising out of the same action. With respect to any knowing and willful violation of a lawful order or rule of the office or commission or a provision of this part, the office may impose upon the organization a fine in an amount not to exceed $20,000 for each such violation. Such fines may not exceed an aggregate amount of $250,000 for all knowing and willful violations arising out of the same action. The commission must adopt by rule penalty categories that specify varying ranges of monetary fines for willful violations and for nonwillful violations. History. — s. 9, ch. 72-264; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 786, 804, 809(1st), ch. 82-243; s. 6, ch. 83-198; s. 7, ch. 87-236; s. 10, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 21, ch. 96-199; s. 1567, ch. 2003-261. 641.255 Acquisition, merger, or consolidation. (1) Every acquisition of a health maintenance organization shall be subject to the provisions of s. 628.4615. However, in the case of a health maintenance organization organized as a for-profit corporation, the provisions of s. 628.451 govern with respect to any merger or consolidation; and, in the case of a health maintenance organization organized as a not-for-profit corporation, the provisions of s. 628.471 govern with respect to any merger or consolidation. (2) In addition to the requirements set forth in ss. 628.451, 628.4615, and 628.471, each party to any transaction involving any licensee which, as indicated in its most recent quarterly or annual statement, derives income from Medicaid funds shall in the filing made with the office identify: (a) Any person who has received any payment from either party or any person on that party’s behalf; or (b) The existence of any agreement entered into by either party or by any person on that party’s behalf to pay a consultant fee, a broker fee, a commission, or other fee or charge, which in any way relates to the acquisition, merger, or consolidation. The commission may adopt a form to be made part of the application which is to be sworn to by an officer of the entity which made or will make the payment. The form shall include the name of the person or entity paying the fee; the name of the person or entity receiving the fee; the date of payment; and a brief description of the work performed. (3) A health maintenance organization that is a member of a holding company system is subject to s. 628.461 but not s. 628.4615. History. — ss. 787, 809(1st), ch. 82-243; ss. 13, 17, ch. 86-250; s. 4, ch. 87-50; s. 10, ch. 90-248; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 22, ch. 96-199; s. 1568, ch. 2003-261; s. 17, ch. 2014-101. 641.26 Annual and quarterly reports. (1) Every health maintenance organization shall, annually within 3 months after the end of its fiscal year, or within an extension of time therefor as the office, for good cause, may grant, in a form prescribed by the commission, file a report with the office, verified by the oath of two officers of the organization or, if not a corporation, of two persons who are principal managing directors of the affairs of the organization, properly notarized, showing its condition on