This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h5009.APC
DATE: 2/10/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 5009 PCB APC 22-05 State Group Insurance Program
SPONSOR(S): Appropriations Committee, Stevenson
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Appropriations Committee 28 Y, 0 N Topp Pridgeon
SUMMARY ANALYSIS
The bill conforms to the proposed House of Representatives’ Fiscal Year 2022-2023 General Appropriations
Act (GAA). The GAA contains $2.5 million and 3.00 positions related to the creation of an anti-fraud unit within
the Division of State Group Insurance. See Fiscal Comments.
The State Group Insurance Program (SGI Program) is created by s. 110.123, F.S., and is administered by the
Division of State Group Insurance (DSGI) within the Department of Management Services (DMS). The SGI
Program is an optional benefit for most state employees employed by executive branch agencies, state
universities, the court system, and the Legislature and includes health, life, dental, vision, disability, and other
supplemental insurance benefits. The SGI Program typically makes benefits changes on a plan year basis,
January 1 through December 31.
In Fiscal Year 2021-2022, the SGI Program will serve nearly 170,000 enrolled employees at the cost of $2.9
billion. The Revenue Estimating Conference forecasts the SGI Program will serve approximately the same
number of employees at a cost of $3.1 billion in Fiscal Year 2022-2023.
The bill amends statutes to make the following changes:
Provides that eligible former employees of state government may reenroll in the SGI Program within 24
months of separation from employment which occurred on or after July 1, 2022. All eligible former
employees must pay the same premiums as early retirees.
Directs DMS to establish an anti-fraud unit within DSGI by December 31, 2022. Specifically, DMS must
establish and maintain a designated anti-fraud unit to investigate and report possible fraudulent
insurance acts by insureds, persons making claims for services against the State Employees Health
Insurance Trust Fund, or vendors under contract with the division. The bill authorizes the division to
contract for the provisions related to the anti-fraud division and requires DMS to designate staff with the
primary responsibility of implementing those provisions.
Ratifies DMS’ rule to create nine HMO regions across the state pursuant to s. 110.123(3)(h) 2.d., F.S.
Repeals the Metal Tier health plan contained in s. 110.123(3)(J), F.S.
Except as otherwise provided (Section 4), the bill has an effective date of July 1, 2022.
STORAGE NAME: h5009.APC PAGE: 2
DATE: 2/10/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
State Group Insurance Program
The State Group Insurance Program (SGI Program) is created by s. 110.123, F.S., and is administered
by the Division of State Group Insurance (DSGI) within the Department of Management Services
(DMS). The SGI Program is an optional benefit for most state employees employed by executive
branch agencies, state universities, the court system, and the Legislature and includes health, life,
dental, vision, disability, and other supplemental insurance benefits. The SGI Program typically makes
benefits changes on a plan year basis, January 1 through December 31.
In Fiscal Year 2021-2022, the SGI Program will serve nearly 170,000 enrolled employees at the cost of
$2.9 billion.
1
The Revenue Estimating Conference forecasts the SGI Program will serve approximately
the same number of employees at a cost of $3.1 billion in Fiscal Year 2022-2023.
2
Eligible Employees
The SGI Program is open to the following individuals:
All state officers;
All state employees paid from “salaries and benefits” appropriation categories, regardless of the
number of hours worked;
Retired state officers and state employees;
Surviving spouses of deceased state officers and state employees;
Certain terminated state officers and state employees; and
Certain state employees paid from Other Personal Services (OPS) appropriation categories.
For OPS employees hired after April 1, 2013, to be eligible to participate in the health insurance
program, the employee must
3
:
Be reasonably expected to work an average of at least 30 hours per week; and
Have worked an average of at least 30 hours per week during the employee’s measurement
period (which is 12 consecutive months
4
of employment).
Employees enrolled in the SGI Program who separate from covered-employment are no longer covered
by the benefits of the SGI Program. An exception would be continuation of SGI benefits under the
federal COBRA (Consolidated Omnibus Reconciliation Act) law, which generally allows individuals who
separate from employment to extend health care coverage for up to 18 months. Under COBRA, former
employees must pay the full cost of insurance premiums, plus an administrative fee of 2 percent.
Metal Tier Plans
Chapter 2017-88, Laws of Florida, directed DMS, beginning with the 2020 plan year, to offer health
plans with four specific levels of actuarial values. If the state’s contribution towards the health insurance
premium was more than the cost of the plan selected by the employee, then the employee could use
the remainder to: 1) fund a flexible spending arrangement or health saving account; 2) purchase
additional benefits offered through the state plan; or 3) increase the employee salary with the health
care savings. The four levels of plans included:
A platinum level plan, which must have an actuarial value of at least 90 percent.
A gold level plan, which must have an actuarial value of at least 80 percent.
A silver level plan, which must have an actuarial value of at least 70 percent.
A bronze level plan, which must have an actuarial value of at least 60 percent
5
1
State Employees’ Group Health Self-Insurance Trust Fund Revenue Estimating Conference, January 13, 2022.
2
Id.
3
S. 110.123(2)(c)2., F.S.
4
S. 110.123(13)(d), F.S.
5
S. 110.123(3)(j), F.S. STORAGE NAME: h5009.APC PAGE: 3
DATE: 2/10/2022
DMS contracted with a consultant to assist with the implementation of the Metal Tier Plans. The
consultant’s report estimated that 80 percent of state employees would enroll in the platinum level plan
and six percent in the bronze level plan.
6
The report also predicted that employees choosing the
platinum level plan would actually pay considerably more than the current monthly health insurance
premium. Employees in the bronze level plan may have experienced a savings over the current health
premiums. However, a main concern with the implementation of Metal Tiers was the 29,000 eligible
state employees who “opt out” of coverage in the state health plan. If the “opt out” employees enrolled
in the bronze plan and chose the family coverage, the premiums paid by state agencies for health
insurance would have increased annually by $464 million. Premiums paid by state employees would
have increased by $10 million annually. The report estimated an overall increase of $525 million
annually to implement Metal Tiers.
7
Metal Tiers implementation has been held in abeyance through the General Appropriation Act’s
Implementing Bill each year since passage.
Anti-Fraud Investigative Units
Section 626.9891, F.S., requires each insurer admitted to do business in Florida to establish and
maintain a designated anti-fraud unit or contract with others to investigate and report possible
fraudulent insurance acts. Each insurer must adopt an anti-fraud plan and submit the plan to the
Division of Investigative and Forensic Services within the Department of Financial Services (DFS).
The SGI Program is not an insurer for purposes of this requirement, however, and has not established
or contracted for an anti-fraud investigative unit or adopted an anti-fraud plan. Insurance fraud in
Florida is prosecuted under ch. 817, F.S.
The National Health Care Anti-Fraud Association estimates that the financial losses due to health care
fraud is about 3 percent of total health care spending, which totaled $3.6 trillion in the United States in
2018.
8
This means health care fraud costs could have exceeded $100 billion. The State Employees’
Group Health Self-Insurance Estimating Conference financial outlook from January 13, 2022, estimates
the state will spend $3.1 billion in Fiscal Year 2022-2023 for SGI Program costs.
9
The impact of a 3
percent loss due to fraud would cost the state up to $93 million.
Agency Rulemaking
A rule is an agency statement of general applicability that implements, interprets, or prescribes law or
policy or describes the procedure or practice requirements of an agency.
10
The Legislature grants an
agency rulemaking authority through statute and authorizes an agency to adopt, develop, establish, or
otherwise create a rule.
11
To adopt a rule, an agency must have a general grant of authority to
implement a specific law through rulemaking.
12
The specific statute being interpreted or implemented
through rulemaking must provide specific standards and guidelines to preclude the administrative
agency from exercising unbridled discretion in creating policy or applying the law.
13
6
Implementation of Metal Tier Health Plans in the State Group Health Insurance Program, prepared by Foster & Foster
for State of Florida, Department of Management Services, Division of State Group Insurance, p. 155.
7
Id., p. 159.
8
National Health Care Anti-Fraud Association, The Challenge of Health Care Fraud, https://www.nhcaa.org/tools-
insights/about-health-care-fraud/the-challenge-of-health-care-fraud/ (last visited Feb. 4, 2022).
9
State Employees’ Group Health Insurance Trust Fund Report on Financial Outlook adopted by the Self-Insurance
Estimating Conference on January 13, 2022.
10
S. 120.52(16), F.S.
11
Ss. 120.52(17) and 120.536(1), F.S.
12
S. 120.536(1), F.S.
13
Sloban v. Florida Board of Pharmacy, 982 So. 2d 26, 29-30 (Fla. 1st DCA 2008); Board of Trustees of the Internal
Improvement Trust Fund v. Day Cruise Association, Inc., 794 So. 2d 696, 704 (Fla. 1st DCA 2001). STORAGE NAME: h5009.APC PAGE: 4
DATE: 2/10/2022
The formal rulemaking process begins by an agency giving notice of the proposed rule.
14
The notice is
published by the Department of State in the Florida Administrative Register
15
and must include an
explanation of the purpose and effect of the rule, the specific legal authority for the rule, the full text of
the rule, a summary of the agency’s statement of estimated regulatory cost (SERC), if one is prepared,
whether legislative ratification is required, and how a party may request a public hearing on the
proposed rule.
16
DMS Rulemaking – State Group Health Self-Insurance Plan
Section 110.123(3)(h)2.d., F.S., gives DMS the discretion to award health maintenance organization
(HMO) contracts on a regional or statewide basis. DMS has chosen to award HMO contracts on a
county-by-county basis, with one HMO per county. The smaller geographic area of individual counties
rather than a region may limit DMS’ negotiating ability when procuring contracts. In 2019, to address
this issue, the Legislature required DMS to adopt regions throughout the state, which must be ratified
by the Legislature prior to becoming effective.
On July 10, 2019, DMS published an initial notice of rule development to establish a definition for HMO
Region to implement the statutory requirement that DMS establish regions throughout the state which
an HMO is authorized by contract to provide services to SGI Program enrollees. In October 2019, DMS
published the proposed rule in the Florida Administrative Register. On December 10, 2021, DMS
submitted the proposed rule to the President of the Senate and the Speaker of the House of
Representatives. Ratification will be completed upon this bill becoming law.
17
Effect of the Bill
Eligible Former Employees
The bill authorizes eligible former employees to participate in the SGI Program. The bill defines “eligible
former employee” as a former full-time state employee who worked at least 6 cumulative years with a
branch or agency of state government, was enrolled in the state group insurance program at the time of
his or her separation from employment, and whose separation from employment occurred on or after
July 1, 2022. The term does not include seasonal workers paid from Other Personal Services (OPS)
funds, state university employees, or other benefits-only employees.
On or after October 1, 2022, DMS is required to provide an open enrollment period for eligible former
employees who want to obtain health insurance coverage under the SGI Program for the plan year
beginning in January 2023. The options offered to such former employees must provide the same
health insurance coverage as the coverage provided to active employees and under the same premium
payment conditions in effect for early retirees.
Current Premiums for "Early Retirees"
18
Cost
High Deductible Plan – Individual $736.80
High Deductible Plan – Family $1,632.05
Standard Plan – enhance benefits – Individual $805.12
Standard Plan – enhance benefits – Family $1,801.08
Metal Tier Plans
The bill repeals the section of law directing DMS to implement health insurance plans at four different
actuarial levels beginning with the 2020 plan year.
19
The Metal Tiers plan has not been implemented.
14
S. 120.54(3)(a), F.S.
15
S. 120.55, F.S.
16
S. 120.54(3)(a), F.S.
17
S. 120.541, F.S.
18
Ch. 2021-36, L.O.F., pp 425-426.
19
S. 110.123(3)(J), F.S. STORAGE NAME: h5009.APC PAGE: 5
DATE: 2/10/2022
Anti-Fraud Investigative Units
By December 31, 2022, the Division of State Group Insurance is required to:
Establish and maintain a designated anti-fraud unit
20
to investigate and report possible
fraudulent insurance acts by insureds, persons making claims for services against the State
Employees Health Insurance Trust Fund, or vendors under contract with the division. The bill
authorizes the division to contract for the provision of these services.
Adopt an anti-fraud plan.
Designate staff with the primary responsibility of implementing the anti-fraud provisions in this
bill.
Ratification of DMS Rules – State Group Health Self-Insurance Plan
Effective upon becoming a law, this bill ratifies the following DMS rules filed for adoption with the
Department of State to satisfy the requirements in s. 110.123(3)(h)2.d., F.S.:
Rule 60P-1.003, F.A.C., entitled Definitions.
Rule 60P-2.002, F.A.C., entitled Eligibility and Enrollment.
Rule 60P-2.003, F.A.C., entitled Changes in Coverage.
Rule 60P-1.003, F.A.C. creates the following nine HMO regions across the state:
Region 1: Bay, Calhoun, Escambia, Gulf, Holmes, Jackson, Okaloosa, Santa Rosa, Walton,
and Washington counties.
Region 2: Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla counties.
Region 3: Alachua, Bradford, Columbia, Dixie, Gilchrist, Hamilton, Lafayette, Levy, Marion,
Suwannee, and Union counties.
Region 4: Baker, Clay, Duval, Flagler, Nassau, Putnam, St. Johns, and Volusia counties.
Region 5: Brevard, Indian River, Lake, Orange, Osceola, and Seminole counties.
Region 6: Citrus, Desoto, Hardee, Hernando, Highlands, Manatee, Pasco, Pinellas, Polk,
Sarasota, and Sumter counties.
Region 7: Martin, Okeechobee, Palm Beach, and St. Lucie counties.
Region 8: Charlotte, Collier, Glades, Hendry, and Lee counties.
Region 9: Broward, Miami-Dade, and Monroe counties.
The House of Representatives’ proposed General Appropriations Act for the 2022-2023 Fiscal Year
provides DMS authorization in Fiscal Year 2021-2022 to competitively procure HMO service contracts
for the plan year beginning on January 1, 2024.
B. SECTION DIRECTORY:
Section 1 amends s. 110.123, F.S., authorizing eligible former employees to participate in the SGI
Program.
Section 2 creates s. 110.12306, F.S., requiring the DSGI to establish and maintain, or contract to
establish and maintain, a designated anti-fraud unit.
Section 3 creates s. 110.12313, F.S., requiring DMS to provide an open enrollment period for eligible
former employees.
Section 4 ratifies specified rules of the Florida Administrative Code.
Section 5 provides an effective date of July 1, 2022, except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
20
The bill provides that the term “designated anti-fraud unit” means a distinct unit within the Division of State Group
Insurance which is made up of employees whose principal responsibilities are the investigation and disposition of claims
and who are also assigned to investigate fraud. STORAGE NAME: h5009.APC PAGE: 6
DATE: 2/10/2022
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
The House of Representatives’ proposed General Appropriations Act for Fiscal Year 2022-2023
provides 3.00 positions and $335,001 in funding for the creation of an anti-fraud unit within the Division
of State Group Insurance (DSGI). In addition, $2.2 million is provided to the DSGI to contract with a
vendor for a comprehensive fraud analytic solution that will review billing information to help detect
fraud, waste, and abuse in the state health program. The anti-fraud unit will likely provide an overall
cost savings through the detection and prevention of fraud.
The cost of eligible former employees returning to the state health plan is indeterminate. However,
former employees choosing to participate in the state health plan will be paying the same premium cost
as “early retirees.” The adoption of the HMO regions rule will likely provide a potential cost savings and
better negotiating ability for DMS when procuring HMO contracts.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditure of funds; reduce the authority that counties and municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not require rulemaking nor confer rulemaking authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None. STORAGE NAME: h5009.APC PAGE: 7
DATE: 2/10/2022
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
Not applicable.