Current through Reg. 50, No. 187; September 24, 2024
(1) Before charging or quoting premiums to
subscribers, an HMO shall file for approval the rating methodology by which
those premiums were determined with the Office.
(a) All materials submitted shall be legible.
A filing which is illegible or which contains illegible material will be
disapproved without any further processing.
(b) For purposes of this rule, Rule
69O-191.055, F.A.C., and the
time periods established in Section
641.31, F.S., a filing is
considered "filed" with the Office upon receipt of the material required in
paragraph (2)(a), below. For purposes of this rule and Rule
69O-191.055, F.A.C., the term
"filed" does not mean "approved."
(2) Filings of rating methodologies shall
provide adequate information, so that the Office, in accordance with generally
accepted actuarial principles as applied to Health Maintenance Organizations,
may verify that the rating methodology does not produce inadequate, excessive,
or unfairly discriminatory premiums. All rate classifications should be clearly
identified, and the formulas and/or methods of calculating premiums adequately
described, as defined in Rule
69O-191.055, F.A.C.
(a) The components of HMO rate filings shall
consist of one copy of all of the items in subparagraphs 1. through 4. Filings
for small group coverage subject to Section
627.6699, F.S., shall
additionally comply with the provisions of Part III of Chapter 69O-149, F.A.C.
1. A brief letter explaining the type and
nature of the filing. The letter shall indicate if the filing is for a new
product, a rate revision or a resubmission. If the filing is a resubmission,
the letter should indicate when the previous filing was submitted, the Florida
filing number, and the date of the disapproval.
2. The Actuarial Memorandum, completed as
required in Rule 69O-191.055, F.A.C.
3. Rate pages which define all proposed
rates, rating factors, and methodologies for determining rates applicable in
the state.
4. Form OIR-B2-1507,
"Office of Insurance Regulation, Life and Health Forms and Rates Universal
Standardized Data Letter," as adopted in Rule
69O-149.022, F.A.C., completely
filled out in accordance with Form OIR-B2-1507A, "Office of Insurance
Regulation, Life and Health Forms and Rates Universal Standardized Data Letter
Instruction Sheet," as adopted in Rule
69O-149.022,
F.A.C.
(b) Filings, as
that term is defined in paragraph (2)(a), shall be submitted to the Office
electronically through http://www.floir.com/iportal.
(c)
1.
Every HMO submitting a rate filing shall be notified as to whether the filing
has been affirmatively approved by the Office, or has been disapproved by the
Office, including disapprovals for failure of the material to meet the
definition of a "filing" or for illegibility, within any statutory review
period of the date of receipt of the filing.
2. Every HMO submitting a rate filing which
does not comply with the requirement of Rules
69O-191.054 and
69O-191.055, F.A.C., or for
which the Office determines that additional information is necessary for a
proper review, will be notified of the additional information necessary within
the statutory time limit.
3. Every
HMO shall submit the required data by a date certain stated in the
clarification letter to allow the Office sufficient time to perform a proper
review.
4. Failure to correct the
filing by the date certain in the clarification letter will result in an
affirmative disapproval of the filing by the
Office.
(3) For
individual (non-group) subscribers, it should be possible for the Office, using
the filed rating methodology, to verify any premiums charged or quoted. For
group subscribers not subject to experience rating, the HMO shall be able to
demonstrate that any premiums charged or quoted were derived from the filed
rating methodology in an actuarially sound manner. For group subscribers
subject to experience rating, the HMO shall be able to demonstrate that the
premiums charged or quoted were consistent with the filed rating
methodology.
(4) In order that the
above verification may be more readily accomplished, for one year from the
effective date of the contract, HMOs shall maintain worksheets showing in
detail the calculation of the premiums charged to each group subscriber. Such
worksheets shall contain at least the following information:
(a) For experience-rated groups, the
calculation of the per member per month revenue requirements;
(b) For groups not subject to experience
rating, the applicable per member per month revenue requirement;
(c) A description of the development of the
assumed employee and dependent composition of each tier of rates;
(d) A summary showing how the per member per
month revenue requirements, employee and dependent composition, and the
selected ratios between tiers of rates produces the premiums charged to a
group.
(5) HMOs with
fewer than 1,000 Florida subscribers, for all individual forms combined or for
all group forms combined, may, at their option, file a streamlined annualized
rate increase filing not exceeding medical trend as provided in subsection
69O-149.003(6),
F.A.C. The filing shall be made in accordance with paragraph
69O-191.054(2)(a),
F.A.C., with a certification that the filing includes all individual forms or
all group forms in lieu of the actuarial memorandum required by Rule
69O-191.055, F.A.C.
(6)
(a)
Rates for group conversion contracts, issued on a group or on an individual
basis are exempt from the loss ratio requirements below. The loss ratio for
group conversion contracts shall not be less than 120 percent. The premium for
a converted contract may not exceed 200 percent of the standard risk rate, as
published in Chapter 69O-149, Part IV, F.A.C.
(b) Rates for contracts, including riders and
endorsements, issued to individual (non-group) subscribers shall be deemed
excessive if anticipated loss ratios for such contracts are less than
70%.
(c) Rates for contracts,
including riders and endorsements, issued to group subscribers shall be deemed
excessive if target loss ratios anticipated over the rating period for such
contracts are less than the following:
|
Group Size
|
Loss Ratio
|
|
51 to 100
|
70%
|
|
101 to 500
|
75%
|
|
over 500
|
80%
|
(d)
Rates filed for approval that are anticipated to result in an actual to
expected ratio over the rating period which is less than 1.0 shall be deemed to
be excessive.
(e) Rates for
contracts providing home health care coverage pursuant to Section
641.2018, F.S., shall comply
with the provisions of Chapters 69O-157 and 69O-149, F.A.C.
(7) Rates are inadequate if:
(a) The premiums derived from the rating
structure, plus investment income, co-payments, and revenues from coordination
of benefits and subrogation, fees-for-service and reinsurance recoveries are
not set at a level at least equal to the anticipated cost of medical and
hospital benefits, expenses and contingency margin during the period for which
the rates are to be effective.
(b)
Individual contracts do not incorporate the projected entire effects of
insurance trend.
(c) The premium
schedule is determined such that if all assumptions are satisfied, the annual
rate increase needed will exceed medical trend.
(8) Premiums as to a risk or group of risks
are unfairly discriminatory if:
(a) For
individual non-group subscribers, the premiums charged deviate from the filed
rating methodology.
(b) For group
subscribers not subject to experience rating, the premiums charged are designed
to produce total revenue for that group which differs from the revenue
requirements for its rating class, as filed with the Office of Insurance
Regulation. For group subscribers subject to experience rating, the premiums
charged deviate from the filed rating methodology.
(c) The effect of changes to the underlying
age/gender slope, reduction in the anticipated loss ratio for the form, and
change in the durational slope for individual contract forms, results in
subscriber impact greater than 50 percent of medical trend, as defined by
subsection 69O-149.003(6),
F.A.C., unless phased-in over a 3 year period. A shorter time period shall be
considered on a case-by-case basis based on unique situations and justification
by the HMO. The HMO, at its option, may request a new business rate schedule
based on the full effect of the new assumptions with the phase-in only
applicable to existing subscribers.
(d) When an HMO discontinues offering a
particular contract form for health insurance coverage pursuant to Section
627.6425(3)(a)
or 641.31074(3)(a),
F.S., the nonrenewal of coverage shall occur on the contract anniversary, and
the offer of new coverage pursuant to Section 627.6425(3)(a)2. or
641.31074(3)(a)2., F.S., shall be considered a renewal of coverage and shall be
renewed on the contract anniversary at the same class basis as the coverage
being discontinued. If the forms do not have consistent class definitions, the
class shall be determined based on the original application and underwriting
status of the individual when the discontinued coverage was first
issued.
(9) Each HMO
shall make an annual filing with the Office for each policy form no later than
12 months after the date of approval of its previous filing for the policy
form, demonstrating the reasonableness of benefits in relation to premium
rates.
(10) Prohibitions. A premium
schedule is unfairly discriminatory if it incorporates any of the following:
(a) Select and Ultimate Premium Schedules are
prohibited. Select and ultimate premium schedules are premium schedules that
have premiums that vary based on the time elapsed since issuance of the
contract.
(b) Attained age premium
schedules where the slope by age is substantially different from the slope of
the ultimate claim cost curve are prohibited. An attained-age premium schedule
is one in which the subscriber's premium rate is dependent upon his or her age
at contract renewal. The aging component of the claim cost is not pre-funded.
These schedules shall be constructed so that the slope by age is substantially
similar to the slope of the ultimate claim cost curve. The premiums must form a
smooth progression and, to eliminate jumps in premium caused by bracketed age
groups, HMOs shall use each available renewable age. The requirement to use
each available renewable age does not apply to any group contract where the
final premium charged is an average of the individual members.
(c) Premium structures that provide for
retroactive cost determination, or if the subscriber or contract holder
participate in the experience under the form.
(11) An HMO may issue multiple year rate
guarantee or rating cap provisions subject to the following:
(a) The coverage is for annually rated group
health insurance contracts for which filing of rates is exempted by Section
641.31(3)(d),
F.S.;
(b) The provision may not
apply for greater than 24 months;
(c) The rate for the entire rating period
reflects the increased risk of a rate guarantee with an increased premium or
other consideration, is actuarially sound, includes claim costs projected at
trend levels at least as high as those applicable to other groups with similar
benefits structures in the rating area covered under the form(s) and is
reasonably anticipated to meet the target loss ratio for the group;
(d) The provision is available to groups on a
nondiscriminatory basis as determined by the insurer's underwriting standards;
and,
(e) The HMO uses experience
rating in determining the group's rate consistently based on its rating and
underwriting practices without regard to whether the rate is issued with or
without a rate guarantee.
Rulemaking Authority 641.31, 641.36 FS. Law Implemented
624.424, 641.21(1)(f), 641.22(2), (4), (6), 641.31(2), (3), 641.31074,
641.3922(3) FS.
New 2-22-88, Amended 10-25-89, Formerly 4-31.054, Amended
10-8-96, 8-15-02, 1-19-03, Formerly 4-191.054, Amended 6-18-07,
7-30-17.
