The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Appropriations Subcommittee on Agriculture, Environment, and General
Government
BILL: SB 1274
INTRODUCER: Senator Broxson
SUBJECT: Ratification of Rules of the Department of Financial Services
DATE: January 25, 2022
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold Knudson BI Favorable
2. Sanders Betta AEG Recommend: Favorable
3. AP
I. Summary:
SB 1274 ratifies Rule 69L-7.020 of the Florida Administrative Code.
The Department of Financial Services has adopted an amendment to Rule 69L-7.020 of the
Florida Administrative Code, incorporating by reference the 2020 Edition of the Florida
Workers’ Compensation Health Care Provider Reimbursement Manual (manual). The manual
contains reimbursement policies, guidelines, codes, and maximum reimbursement allowances for
services and supplies furnished under the Workers’ Compensation statutes. The manual also
contains reimbursement policies and payment methodologies for pharmacists and medical
suppliers.
The National Council on Compensation Insurance, Inc., estimates that the implementation of the
manual will increase workers’ compensation system costs by 0.2 percent (eight million dollars).
Because the Statement of Estimated Regulatory Costs for this rule exceeds one million dollars
within five years of adoption, legislative ratification is required for this rule to become effective,
pursuant to section 120.541(3), Florida Statutes.
Adoption of the 2020 Edition of the Florida Workers’ Compensation Health Care Provider
Reimbursement Manual will have a recurring financial impact on the workers’ compensation
expenses of the Division of Risk Management. (See section V. Fiscal Impact.)
This bill is effective July 1, 2022.
REVISED: BILL: SB 1274 Page 2
II. Present Situation:
Rulemaking Authority and Legislative Ratification
A rule is an “agency statement of general applicability that implements, interprets, or prescribes
law or policy.”
1
Rulemaking authority is delegated by the Legislature in law to an agency, and
authorizes an agency to adopt, develop, establish, or otherwise create a rule.
2
An agency may not
engage in rulemaking unless it has a legislative grant of authority to do so.
3
The statutory
authority for rulemaking must be specific enough to guide an agency’s rulemaking and an
agency rule must not exceed the bounds of authority granted by the Legislature.
4
Prior to the adoption, amendment, or repeal of any rule, an agency must file a notice of the
proposed rule in the Florida Administrative Register.
5
The notice of the proposed rule must
include:
An explanation of the purpose and effect;
The specific legal authority for the rule;
The full text of the rule; and
A summary of the agency’s statement of estimated regulatory costs (SERC), if one is
prepared.
6
Within 21 days of the notice, the public may provide an agency with information regarding the
SERC or provide proposals for a lower cost alternative to the rule.
7
SERC Requirements
Agencies must prepare the SERC for a rule that has an adverse impact on small businesses or
that increases regulatory costs more than $200,000 within one year after implementation of the
rule.
8
A SERC must include estimates of:
The number of people and entities effected by the proposed rule;
The cost to the agency and other governmental entities to implement the proposed rule;
Transactional costs likely to be incurred by people, entities, and governmental agencies for
compliance; and
An analysis of the proposed rule’s impact on small businesses, counties, and cities.
9
1
Section 120.52(16), F.S.
2
Section 120.52(17), F.S.
3
See ss. 120.52(8) and 120.536, F.S.
4
See Sloban v. Florida Board of Pharmacy, 982 So.2d 26 (Fla. 1st DCA 2008) and Southwest Florida Water Management
District v. Save the Manatee Club, Inc., 773 So.2d 594 (Fla 1st DCA 2000).
5
See ss. 120.54(2)(a) and 120.55(1)(b), F.S.
6
Section 120.54(3)(a)1., F.S.
7
See ss. 120.54(3)(a)1., and 120.541(1)(a), F.S.
8
Section 120.541(1)(a), F.S.
9
Section 120.541(2)(b)-(e), F.S. A small city has an unincarcerated population of 10,000 or less. A small county has an
unincarcerated population of 75,000 or less. A small business employs less than 200 people, and has a net worth of $5 million
or less. BILL: SB 1274 Page 3
The SERC must also include an economic analysis on the likelihood that the proposed rule will
have an adverse impact in excess of one million dollars within the first five years of
implementation on:
Economic growth, private-sector job creation or employment, or private-sector investment;
Business competitiveness,
10
productivity, or innovation; or
Regulatory costs, including any transactional costs.
11
If the economic analysis results in an adverse impact or regulatory costs in excess of one million
dollars within five years after implementation of the rule, then the Legislature must ratify the rule
in order for it to take effect.
12
Workers’ Compensation Maximum Reimbursement Allowances
The Department of Financial Services (DFS), Division of Workers’ Compensation, provides
regulatory oversight of Florida’s workers’ compensation system. Florida’s workers’
compensation law provides for medically necessary treatment and care of injured employees,
including medications. The law provides reimbursement formulas and methodologies to
compensate providers of health services, subject to maximum reimbursement allowances
(MRAs).
A three-member panel (panel), consisting of the Chief Financial Officer (CFO) or CFO’s
designee and two Governor’s appointees, sets the MRAs.
13
The DFS incorporates the statewide
schedules of the MRAs by rule in reimbursement manuals. In establishing the MRA manuals, the
panel considers the usual and customary levels of reimbursement for treatment, services, and
care;
14
the cost impact to employers for providing reimbursement that ensures that injured
workers have access to necessary medical care;
15
and the financial impact of the MRAs on
healthcare providers and facilities; Florida law requires the panel to develop MRA manuals that
are reasonable, promote the workers’ compensation system’s healthcare cost containment and
efficiency, and are sufficient to ensure that medically necessary treatment is available for injured
workers.
16
The panel develops four different reimbursement manuals to determine statewide schedules of
maximum reimbursement allowances. The healthcare provider manual limits the maximum
reimbursement for licensed physicians to 110 percent of Medicare reimbursement,
17
while
reimbursement for surgical procedures is limited to 140 percent of Medicare.
18
The hospital
manual sets maximum reimbursement for outpatient scheduled surgeries at 60 percent of usual
10
Business competitiveness includes the ability of those doing business in Florida to compete with those doing business in
other states or domestic markets.
11
Section 120.541(2)(a), F.S.
12
Section 120.541(3), F.S. Legislative ratification is not required for adoption of federal standards, amendments to the Florida
Building Code, or amendments to the Florida Fire Prevention Code. See s. 120.541(4), F.S.
13
Section 440.13(12)(a), F.S.
14
Section 440.13(12)(d)1., F.S.
15
Section 440.13(12)(d)2., F.S.
16
Section 440.13(12)(d)3., F.S.
17
Section 440.13(12)(b)4., F.S.
18
Section 440.13(12)(b)5., F.S. BILL: SB 1274 Page 4
and customary charges,
19
while other outpatient services are limited to 75 percent of usual and
customary charges.
20
Reimbursement of inpatient hospital care is limited based on a schedule of
per diem rates approved by the panel.
21
The ambulatory surgical centers manual limits
reimbursement to 60 percent of usual and customary charge as such services are generally
scheduled outpatient surgeries. The prescription drug reimbursement manual limits
reimbursement to the average wholesale price plus a $4.18 dispensing fee.
22
Repackaged or
relabeled prescription medication dispensed by a dispensing practitioner has a maximum
reimbursement of 112.5 percent of the average wholesale price plus an $8.00 dispensing fee.
23
Fees may not exceed the schedules adopted under ch. 440, F.S., and DFS rule.
24
The Legislature previously ratified Rule 69L-7.020 of the Florida Administrative Code, which
incorporates by reference the 2016 Edition of the Florida Workers’ Compensation Health Care
Provider Manual, providing for reimbursement of healthcare providers under the increased
MRAs approved by the panel. The DFS has subsequently adopted amended versions of the rule,
incorporating by reference the manual. The NCCI estimates that the manual will increase
workers’ compensation system costs by 0.2 percent (eight million dollars).
25
According to the
SERC, the revisions to the MRAs in the updated manual are projected to result in increased costs
to the overall compensation system of eight million dollars over the next five years.
26
Because the SERC for these rules exceeds one million dollars within five years of adoption,
legislative ratification is required for these rules to become effective, pursuant to
s. 120.541(3), F.S.
III. Effect of Proposed Changes:
The bill ratifies Rule 69L-7.020 of the Florida Administrative Code, allowing the rules to go into
effect. The bill solely meets the condition for effectiveness imposed by s. 120.541(3), F.S. The
bill expressly limits ratification to the effectiveness of the rules. The bill provides that it will not
be codified in the Florida Statutes but only noted in the historical comments to each rule by the
Department of State.
The effective date is July 1, 2022.
19
Section 440.13(12)(b)3., F.S.
20
Section 440.13(12)(a), F.S.
21
Section 440.13(12)(a), F.S.
22
Section 440.13(12)(c), F.S.
23
Id.
24
Section 440.13(13)(b), F.S. The Department of Financial Services also has broad rulemaking authority under
s. 440.591, F.S.
25
National Council on Compensation Insurance, Inc., Analysis of Florida Medical Fee Schedule Changes Proposed to be
Effective July 1, 2021 (Nov. 16, 2020) (on file with the Senate Committee on Banking and Insurance).
26
Florida Department of Financial Services, Statement of Estimated Regulatory Costs Rule 69L-7.020, F.A.C. (Nov. 2021)
(on file with the Senate Committee on Banking and Insurance). BILL: SB 1274 Page 5
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The National Council on Compensation Insurance, Inc. (NCCI) estimates the
implementation of the 2020 Edition of the Florida Workers’ Compensation Health Care
Provider Reimbursement Manual will increase workers’ compensation system costs by
eight million dollars.
27
C. Government Sector Impact:
The Department of Financial Services estimates adoption of the 2020 Edition of the
Florida Workers’ Compensation Health Care Provider Reimbursement Manual will have
the following recurring financial impact on the workers’ compensation expenses of the
Division of Risk Management:
Fiscal Year 2022-23: $232,400
Fiscal Year 2023-24: $235,000
Fiscal Year 2024-25: $235,800
28
27
Id.
28
Florida Department of Financial Services, SB 1274 Bill Analysis (Jan. 11, 2022) (on file with the Senate Committee on
Banking and Insurance). BILL: SB 1274 Page 6
It is anticipated that proposed updates to the Florida Workers’ Compensation
Reimbursement Manual for Ambulatory Surgical Centers and the Florida Workers
Compensation Reimbursement Manual for Hospitals will substantially offset this increase
in health care provider reimbursement cost.
29
While the State of Florida may experience a marginal increase in workers’ compensation
costs, any potential increase will be substantially offset by other factors, including
potential reductions in facility reimbursements and lower frequency of worker’s
compensation claims.
30
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
None.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.
29
Id.
30
Id.