This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1351.HRS
DATE: 3/31/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1351 Savings and Out-of-pocket Expenses in Health Insurance
SPONSOR(S): Melo
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Healthcare Regulation Subcommittee Poche McElroy
2) Health & Human Services Committee
SUMMARY ANALYSIS
Health spending in the United States has exploded in the last 50 years, totaling $74.1 billion in 1970,
increasing to $1.4 trillion by 2000, then tripling in 2021 to $4.3 trillion. The United States spends more per
person on health care than any other high-income country in the world and spending has continued to increase
over the past few decades. Health spending per person in the U.S. was $12,914 in 2021, more than $5,000
greater than any other high-come nation.
The United States is experiencing significant changes in health care payment and delivery. Consumers bear a
greater share of health care costs, and more participate in high deductible health plans. Clear, factual
information about the cost and quality of health care is necessary for consumers to select value-driven health
care options and for consumers and providers to be involved in and accountable for decisions about health and
health care services. To promote consumer involvement, health care pricing and other data needs to be free,
timely, reliable, and reflect individual health care needs and insurance coverage.
HB 1351 expands health care price transparency, allowing consumers access to all information necessary to
make informed choices in health care, while rewarding those consumers who make choices that emphasize
low cost, high quality care. Specifically, the bill:
Requires individual health insurers; group, blanket, and franchise health insurers; and HMOs to offer a
shared savings program to insureds and subscribers.
Authorizes, but does not require, an individual health insurer, group health insurer, or health
maintenance organization that offers a shared savings incentive program to include items and services
listed in federal law, the Table 1-500 Items and Services List, as shoppable health care services for
which the shared savings incentive is available.
Requires a share savings incentive paid to an insured or subscriber to be equal to or greater than 25
percent of the difference in cost compared to the second-lowest cost in-network amount paid for the
service in the rating area.
Requires health insurers and HMOs to apply an insured’s or subscriber’s payments to an out-of-
network, nonpreferred provider to the insured’s deductible and out-of-pocket maximum, if certain
criteria are met.
The bill has no fiscal impact to state or local governments.
The bill provides an effective date of July 1, 2023. STORAGE NAME: h1351.HRS PAGE: 2
DATE: 3/31/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Health Care Spending
Health spending in the United States has exploded in the last 50 years, totaling $74.1 billion in 1970,
increasing to $1.4 trillion by 2000, then tripling in 2021 to $4.3 trillion.
1
The United States spends more per person on health care than any other high-income country in the
world and spending has continued to increase over the past few decades. Health spending per person
in the U.S. was $12,914 in 2021, more than $5,000 greater than any other high-come nation.
2
The following chart illustrates the rate of growth in total national health expenditures per capita from
1970 to 2021
3
:
1
Peterson-Kaiser Family Foundation, Health System Tracker, Health Spending – How has U.S. spending on healthcare changed over
time?, February 7, 2023, available at https://healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/ (last
viewed on March 31, 2023).
2
Peterson-Kaiser Family Foundation, Health System Tracker, Health Spending – How does health spending in the U.S. compare to
other countries?, February 9, 2023, available at https://healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/
(last viewed on March 31, 2023). The average amount spent on health per person in comparable countries – $6,125 – is less than half
of what the U.S. spends.
3
Supra, FN 1. STORAGE NAME: h1351.HRS PAGE: 3
DATE: 3/31/2023
Health care prices are a primary driver of health care spending. Between 1970 and 2019, total U.S.
health care spending grew from 6.9 percent of GDP to 17.7 percent of GDP.
4
The Organization for
Economic Cooperation Development estimated that total spending in 2019 in member countries
averaged 8.8 percent of GDP, compared with 16.8 percent in the U.S.
5
One study found that U.S.
commercial health spending per enrollee increased by 21.8% between 2015 and 2019.
6
The rising
prices of health care services accounted for approximately two-thirds of that growth, with prices for
prescription drugs, provider services (physical examinations, screenings and procedures) and inpatient
and outpatient care rising by 18.3%.
7
At the same time, increased service quantity accounted for nearly
one-fifth of overall spending growth, as per capita use increased by only 3.6 percent.
8
Health Care Price Transparency
The United States is experiencing significant changes in health care payment and delivery. Consumers
bear a greater share of health care costs, and more participate in high deductible health plans. Clear,
factual information about the cost and quality of health care is necessary for consumers to select value-
driven health care options and for consumers and providers to be involved in and accountable for
decisions about health and health care services. To promote consumer involvement, health care pricing
and other data needs to be free, timely, reliable, and reflect individual health care needs and insurance
coverage.
Price transparency can refer to the availability of provider-specific information on the price for a specific
health care service or set of services to consumers and other interested parties.
9
Price can be defined
as an estimate of a consumer’s complete cost on a health care service or services that reflects any
negotiated discounts; is inclusive of all costs to the consumer associated with a service or services,
including hospital, physician, and lab fees; and, identifies a consumer’s out-of-pocket cost.
10
Further,
price transparency can be considered "readily available information on the price of health care services
that, together with other information, helps define the value of those services and enables patients and
4
Health Affairs, Research Brief – Considering Health Spending, The Role of Prices in Excess US Health Spending, June 9, 2022,
available at https://www.healthaffairs.org/do/10.1377/hpb20220506.381195/full/> (citing the Centers for Medicare and Medicaid
Services statistics at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/NationalHealthAccountsProjected) (last viewed on March 31, 2023).
5
Id.
6
Health Care Cost Institute, 2019 Health Care Cost and Utilization Report, pg. 2, available at
https://healthcostinstitute.org/images/pdfs/HCCI_2019_Health_Care_Cost_and_Utilization_Report.pdf.
7
Id.
8
Supra, FN 4.
9
Government Accounting Office, Meaningful Price Information is Difficult for Consumers to Obtain Prior to Receiving Care, September
2011, pg. 2, available at http://www.gao.gov/products/GAO-11-791.
10
Id. STORAGE NAME: h1351.HRS PAGE: 4
DATE: 3/31/2023
other care purchasers to identify, compare, and choose providers that offer the desired level of value."
11
Indeed, the definition of the price or cost of health care has different meanings depending on who is
incurring the cost.
12
As health care costs continue to rise, most health insurance buyers are asking their consumers to take
on a greater share of their costs, increasing both premiums and out-of-pocket expenses. According to
the Kaiser Family Foundation, more than one in five Americans with private insurance is enrolled in a
high deductible health plan. Most covered workers face additional out-of-pocket costs when they use
health care services, such as co-payments or coinsurance for physician visits and hospitalizations.
Eighty-eight percent of covered workers have a general annual deductible
13
for single coverage that
must be met before most services are paid for by their health plan.
14
Among covered workers with a general annual deductible, the average deductible amount for single
coverage is $1,763.
15
Deductibles differ by firm size; for workers in plans with a deductible, the average
deductible for single coverage is $2,543 in small firms, compared to $1,493 for workers in large firms.
16
Sixty-one percent of covered workers in small firms are in a plan with a deductible of at least $1,000 for
single coverage compared to 56 percent in large firms; a similar pattern exists for those in plans with a
deductible of at least $2,000 (49 percent for small firms vs. 25 percent for large firms).
National Price Transparency Studies
To explore how expanding price transparency efforts could produce significant cost savings for the
healthcare system, the Gary and Mary West Health Policy Center funded an analysis, “Healthcare Price
Transparency: Policy Approaches and Estimated Impacts on Spending.” This report, conducted in
collaboration with researchers from the Center for Studying Health System Change and RAND, found
that implementation of three policy changes could save $100 billion over ten years.
Provide personalized out-of-pocket expense information to patients and families before
receiving care.
Provide prices to physicians through electronic health record systems when ordering treatments
and tests.
Expand state-based all-payer health claims databases, which could save up to $55 billion by
collecting and providing data and analytics tools that supply quality, efficiency and cost
information to policy makers, employers, providers, and patients.
17
The report specifically found that requiring all private health insurance plans to provide personalized
out-of-pocket price data to enrollees would reduce total health spending by an estimated $18 billion
over the 10-year period from 2014 to 2023.
18
As Americans take on more of their health care costs, research suggests that they are looking for more
and better price information.
19
One study in 2014, which included a survey of more than 2,000 adults from across the country, found
that 56 percent of Americans actively searched for price information before obtaining health care,
including 21 percent who compared the price of health care services across multiple providers.
20
11
Healthcare Financial Management Association, Price Transparency in Health Care: Report from the HFMA Price Transparency Task
Force, pg. 2, 2014, available at https://www.hfma.org/content/dam/hfma/document/policies_and_practices/PDF/22279.pdf.
12
Id.
13
The term “general annual deductible” means a deductible which applies to both medical and pharmaceutical benefits and which must
be met by the insured individual before most services are covered by the health plan.
14
The Henry J. Kaiser Family Foundation, 2022 Employer Health Benefits Survey, October 27, 2022, available at
https://www.kff.org/health-costs/report/2022-employer-health-benefits-survey/ (last viewed on March 31, 2023).
15
Id.
16
Id.
17
White, C., Ginsburg, P., et al., Gary and Mary West Health Policy Center, Healthcare Price Transparency: Policy Approaches and
Estimated Impacts on Spending, May 2014, available at http://www.westhealth.org/wp-content/uploads/2015/05/Price-Transparency-
Policy-Analysis-FINAL-5-2-14.pdf.
18
Id., pg. 1.
19
Public Agenda and Robert Wood Johnson Foundation, How Much Will It Cost? How Americans Use Prices in Health Care, March
2015, page 34, available at https://www.publicagenda.org/reports/how-much-will-it-cost-how-americans-use-prices-in-health-care/. STORAGE NAME: h1351.HRS PAGE: 5
DATE: 3/31/2023
The individuals who compared prices stated that such research affected their health care choices and
saved them money.
21
In addition, the study found that most Americans do not equate price with quality
of care. Seventy-one percent do not believe higher price reflects higher level care quality and 63
percent do not believe that lower price is indicative of lower level care quality.
22
Consumers enrolled in
high-deductible and consumer-directed health plans are more price-sensitive than consumers with
plans that have much lower cost-sharing obligations. Accordingly, these consumers find an estimate of
their individual out-of-pocket costs more useful than any other kind of health care price transparency
tool.
23
Another study found that when they have access to well-designed reports on price and quality,
80 percent of health care consumers will select the highest value health care provider.
24
Florida Price Transparency: Florida Patient's Bill of Rights and Responsibilities
In 1991, the Legislature enacted the Florida Patient’s Bill of Rights and Responsibilities (Patient’s Bill of
Rights).
25
The statute established the right of patients to expect medical providers to observe standards
of care in providing medical treatment and communicating with their patients.
26
The standards of care
include, but are not limited to, the following aspects of medical treatment and patient communication:
Individual dignity;
Provision of information;
Financial information and the disclosure of financial information;
Access to health care;
Experimental research; and
Patient’s knowledge of rights and responsibilities.
A patient has the right to request certain financial information from health care providers and facilities.
27
Specifically, upon request, a health care provider or health care facility must provide a person with a
reasonable estimate of the cost of medical treatment prior to the provision of treatment.
28
Estimates
must be written in language “comprehensible to an ordinary layperson.”
29
The reasonable estimate
does not preclude the health care provider or health care facility from exceeding the estimate or making
additional charges as the patient’s needs or medical condition warrant.
30
A patient has the right to
receive a copy of an itemized bill upon request and to receive an explanation of charges upon
request.
31
Currently, under the Patient’s Bill of Rights financial information and disclosure provisions:
A request is necessary before a health care provider or health care facility must disclose to a
Medicare-eligible patient whether the provider or facility accepts Medicare payment as full
payment for medical services and treatment rendered in the provider’s office or health care
facility.
20
Id., pg. 3.
21
Id., pg. 4.
22
Supra, FN 14.
23
American Institute for Research, Consumer Beliefs and Use of Information About Health Care Cost, Resource Use, and Value,
Robert Wood Johnson Foundation, October 2012, pg. 4, available at
https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2012/rwjf402126.
24
Hibbard, JH, et al., An Experiment Shows That a Well-Designed Report on Costs and Quality Can Help Consumers Choose High-
Value Health Care, Health Affairs 2012; 31(3): 560-568.
25
S. 1, Ch. 91-127, Laws of Fla. (1991); s. 381.026, F.S.
26
S. 381.026(3), F.S.
27
S. 381.026(4)(c), F.S.
28
S. 381.026(4)(c)3., F.S.
29
Id.
30
Id.
31
S. 381.026(4)(c)5., F.S. STORAGE NAME: h1351.HRS PAGE: 6
DATE: 3/31/2023
A request is necessary before a health care provider or health care facility is required to furnish
a person an estimate of charges for medical services before providing the services. The Florida
Patient’s Bill of Rights and Responsibilities does not require that the components making up the
estimate be itemized or that the estimate be presented in a manner that is easily understood by
an ordinary layperson.
A licensed facility must place a notice in its reception area that financial information related to
that facility is available on the website of the Agency for Health Care Administration (AHCA).
The facility may indicate that the pricing information is based on a compilation of charges for the
average patient and that an individual patient’s charges may vary.
A patient has the right to receive an itemized bill upon request.
Health care providers and health care facilities are required to make available to patients a summary of
their rights. The applicable regulatory board or Agency may impose an administrative fine when a
provider or facility fails to make available to patients a summary of their rights.
32
The Patient’s Bill of Rights also authorizes, but does not require, primary care providers
33
to publish a
schedule of charges for the medical services offered to patients.
34
The schedule must include certain
price information for at least the 50 services most frequently provided by the primary care provider.
35
The law also requires the posting of the schedule in a conspicuous place in the reception area of the
provider’s office and at least 15 square feet in size.
36
A primary care provider who publishes and
maintains a schedule of charges is exempt from licensure fees for a single renewal of a professional
license and from the continuing education requirements for a single 2-year period.
37
The law also requires urgent care centers to publish a schedule of charges for the medical services
offered to patients.
38
This applies to any entity that holds itself out to the general public, in any manner,
as a facility or clinic where immediate, but not emergent, care is provided, expressly including offsite
facilities of hospitals or hospital-physician joint ventures; and licensed health care clinics that operate in
three or more locations. The schedule requirements for urgent care centers are the same as those
established for primary care providers.
39
The schedule must describe each medical service in language
comprehensible to a layperson. This provision prevents a center from using medical or billing codes,
Latin phrases, or technical medical jargon as the only description of each medical service. An urgent
care center that fails to publish and post the schedule of charges is subject to a fine of not more than
$1,000 per day (until the schedule is published and posted).
40
Florida Price Transparency: Health Care Facilities
Under s. 395.301, F.S., a health care facility
41
must provide, within 7 days of a written request, a good
faith estimate of reasonably anticipated charges for the facility to treat the patient’s condition. Upon
request, the facility must also provide revisions to the estimate. The estimate may represent the
32
S. 381.0261, F.S.
33
S. 381.026(2)(d), F.S., defines primary care providers to include allopathic physicians, osteopathic physicians, and nurses who
provide medical services that are commonly provided without referral from another health care provider, including family and general
practice, general pediatrics, and general internal medicine.
34
S. 381.026(4)(c)3., F.S.
35
Id.
36
Id.
37
S. 381.026(4)(c)4., F.S.
38
S. 395.107(1), F.S.
39
S. 395.107(2), F.S.
40
S. 395.107(6), F.S.
41
The term "health care facilities" refers to hospitals and ambulatory surgical centers, which are licensed under part I of Chapter 395,
F.S. STORAGE NAME: h1351.HRS PAGE: 7
DATE: 3/31/2023
average charges for that diagnosis related group
42
or the average charges for that procedure. The
facility is required to place a notice in the reception area that this information is available. A facility that
fails to provide the estimate as required may be fined $500 for each instance of the facility’s failure to
provide the requested information.
Also pursuant to s. 395.301, F.S., a licensed facility must notify each patient during admission and at
discharge of his or her right to receive an itemized bill upon request. If requested, within 7 days of
discharge or release, the licensed facility must provide an itemized statement, in language
comprehensible to an ordinary layperson, detailing the specific nature of charges or expenses incurred
by the patient. This initial bill must contain a statement of specific services received and expenses
incurred for the items of service, enumerating in detail the constituent components of the services
received within each department of the licensed facility and including unit price data on rates charged
by the licensed facility. The patient or patient’s representative may elect to receive this level of detail in
subsequent billings for services.
Current law also directs these health care facilities to publish information on their websites detailing the
cost of specific health care services and procedures, as well as information on financial assistance that
may be available to prospective patients. The facility must disclose to the consumer that these
averages and ranges of payments are estimates, and that actual charges will be based on the services
actually provided.
43
Under s. 408.05, F.S., AHCA contracts with a vendor to collect and publish this cost
information to consumers on an internet site.
44
Hospitals and other facilities post a link to this site -
https://pricing.floridahealthfinder.gov/ - to comply with the price transparency requirements. The cost
information is searchable, and based on descriptive bundles of commonly performed procedures and
services. The information must, at a minimum, provide the estimated average payment received and
the estimated range of payment from all non-governmental payers for the bundles available at the
facility.
45
The law also establishes the right of a patient to request a personalized estimate on the costs of care
from health care practitioners who provide services in a licensed hospital facility or ambulatory surgical
center.
46
Federal Price Transparency Laws and Regulations
Congress and federal regulatory agencies recently took steps to improve the quantity and quality of
health care cost information available to patients.
Hospital Facility Transparency
On November 15, 2019, the federal Centers for Medicare & Medicaid Services (CMS) finalized
regulations
47
changing payment policies and rates for services furnished to Medicare beneficiaries in
hospital outpatient departments. In doing so, CMS also established new requirements for hospitals to
publish standard charges for a wide range of health care services offered by such facilities. Specifically,
the regulations require hospitals to make public both a machine-readable file of standard charges and a
consumer-friendly presentation of prices for at least 300 shoppable health care services. The
regulations became effective on January 1, 2021.
48
42
Diagnosis related groups (DRGs) are a patient classification scheme which provides a means of relating the type of patients a
hospital treats (i.e., its case mix) to the costs incurred by the hospital. DRGs allow facilities to categorize patients based on severity of
illness, prognosis, treatment difficulty, need for intervention and resource intensity. For more information, see
https://www.cms.gov/icd10m/version37-fullcode-
cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf.
43
S. 395.301, F.S.
44
S. 408.05(3)(c), F.S.
45
Id.
46
S. 456.0575(2), F.S.
47
Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical
Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals to Make Standard
Charges Public, 84 FR 65524 (November 27, 2019)(codified at 45 CFR Part 180).
48
Id. STORAGE NAME: h1351.HRS PAGE: 8
DATE: 3/31/2023
The regulations define a shoppable service as one that can be scheduled in advance, effectively giving
patients the opportunity to select the venue in which to receive the service. This is a more expansive
designation of shoppable services than currently exists in Florida law. For each shoppable service, a
hospital must disclose several pricing benchmarks to include:
The gross charge;
The payer-specific negotiated charge;
A de-identified minimum negotiated charge;
A de-identified maximum negotiated charge; and,
The discounted cash price.
This information should provide a patient with both a reasonable point estimate of the charge for a
shoppable service, and also a range in which the actual charge can be expected to fall.
The penalty for facility noncompliance under the federal regulations is a maximum fine of $300 per
day.
49
Very early indications suggest that there are varying levels of compliance with the new rules
among hospital facilities.
50
The Federal No Surprises Act
On December 27, 2020, Congress enacted the No Surprises Act as part of the Consolidated
Appropriations Act of 2021.
51
The No Surprises Act includes a wide-range of provisions aimed at
protecting patients from surprise billing practices and ensuring that patients have access to accurate
information about the costs of care. Most sections of the Act go into effect on January 1, 2022, and the
Departments of Health and Human Services, Treasury, and Labor are tasked with issuing regulations
and guidance to implement a number of the provisions.
52
Many hospitals do not comply with the federal transparency requirement. A 2021 review of more than
3,500 hospitals found that 55 percent of hospitals were not compliant with the rule and had not posted
price information for commercial plans or had not posted any prices at all.
53
Further, an August 2022
review of 2,000 hospitals found that 16 percent with all transparency requirements.
54
Nearly 84 percent
of hospitals failed to post machine-readable files containing standard charges, and roughly 78 percent
of hospitals did not provide a consumer-friendly shoppable services display.
55
Another review of more
than 6,400 hospitals showed wide-spread non-compliance with the federal transparency rule- more
than 63 percent of hospitals are not complying.
56
According to that review, only 38 percent of Florida
hospitals are in compliance.
57
Shared Savings Programs
In 2019, the Legislature adopted the Patient Savings Act,
58
which allows health insurers to create a
shared savings incentive program (program) to encourage insured individuals to shop for high quality,
lower cost health care services and share any savings realized with the insured, as a result of the
49
Supra, FN 42.
50
ADVI, “Implementation of Newly Enacted Hospital Price Transparency,” available at
https://advi.com/analysis/Hospital_Transparency_-_ADVI_Summary.pdf.
51
PL 116-260. The No Surprises Act is found in Division BB of the Act.
52
Id.
53
John Xuefeng Jiang, et al., Factors associated with compliance to the hospital price transparency final rule: A national landscape
study, Journal of General Internal Medicine (2021), available at https://link.springer.com/article/10.1007/s11606-021-07237-y (last
viewed on March 31, 2023).
54
Patients’ Rights Advocates, Third semi-annual hospital transparency compliance report, 2022, available at
https://www,patientrightsadvocates.org/august-semi-annual-compliance-report-2022.
55
Id.
56
Foundation for Government Accountability, How America’s Hospitals Are Hiding the Cost of Health Care, pg. 3, August 2022,
available at https://www.TheFGA.org/paper/americas-hospitals-are-hiding-the-cost-of-health-care. (last viewed on March 31, 2023).
Only two hospitals to date have been fined for noncompliance with the transparency rule, both of which are in Georgia’s Northside
Hospital System.
57
Id., pg. 4.
58
Ch. 2019-100, L.O.F. STORAGE NAME: h1351.HRS PAGE: 9
DATE: 3/31/2023
insured’s choice. The Act authorized implementation of these incentive programs for plan years
beginning January 1, 2020.
The law permits an issuer of individual and group health insurance policies, as well as a health
maintenance organization (HMO), to establish a program. An established program may offer a shared
savings incentive payment to an insured who receives treatment from a comprehensive list of more
than 25 individual entities or groups that provide a health care service; this includes hospitals,
physicians, nursing homes, pharmacies, and others.
59
Health insurers who choose to offer a program must develop a website outlining the range of
“shoppable health care services”
60
available to insureds. This website must provide insureds with an
inventory of participating health care providers and an accounting of the shared savings incentives
available for each shoppable service. The law provides a list of nonemergency services that qualify as
“shoppable health care services”. These include, but are not limited to:
Clinical laboratory services.
Infusion therapy.
Inpatient and outpatient surgical procedures.
Obstetrical and gynecological services.
Outpatient nonsurgical diagnostic tests and procedures.
Physical and occupational therapy services.
Radiology and imaging services.
Prescription drugs.
Services provided through telehealth.
A program must be a component part of the policy, contract, or certificate of insurance provided by
each participating health insurer, and the insurer must notify its insureds of the program annually and at
the time of enrollment and renewal.
61
Shared Savings Incentives
Florida law defines a “shared savings incentive” as an optional financial incentive that may be paid to
an insured for choosing certain shoppable health care services under a program. When an insured
obtains a shoppable health care service for less than the average price for the service, any savings
generated will be shared by the health insurer and the insured. An insured is entitled to a financial
incentive that is no less than 25 percent of the savings that accrue to the insurer as a result of the
insured’s participation.
A program may financially reward insureds who use shoppable health care services in several different
forms. Insureds may receive financial incentives in the form of premium reductions, or deposits into a
flexible spending account, health savings account, or health reimbursement account.
62
Health Insurance
Health insurance is the insurance of human beings against bodily injury or disablement by accident or
sickness, including the expenses associated with such injury, disablement, or sickness.
63
Individuals
purchase health insurance coverage for the purpose of managing anticipated expenses related to
health or protecting themselves from unexpected medical bills or large health care costs. How much the
insurance covers – and how much the policyholder pays via copays, deductibles, and coinsurance –
59
Ss. 627.6387, 627.6648, and 641.31076, F.S. The State Employee Group Program, which provides health care benefits to state
employees, also offers a shared savings program, described in s. 110.12303, F.S.
60
The term “shoppable health care services” generally refers to medical services that can be scheduled in advance. Florida law
specifies a list of services that qualify for this designation, see Id.
61
Supra, FN 43.
62
Id.
63
S. 624.603, F.S. STORAGE NAME: h1351.HRS PAGE: 10
DATE: 3/31/2023
depends on the details of the policy itself, with specific rules and regulations that apply to some plans.
Managed care is the most common delivery system for medical care today by health insurers.
64
Managed care systems combine the delivery and financing of health care services by limiting the
choice of doctors and hospitals.
65
In return for this limited choice, however, medical care is less costly
due to the managed care network’s ability to control health care services. Some common forms of
managed care are preferred provider organizations
66
(PPO) and health maintenance organizations
67
(HMO).
Health insurance provides a safety net for a serious injury or illness. All major medical health insurance
plans cap in-network out-of-pocket costs, a combination of copays, deductibles, and coinsurance, at no
more than an amount determined by the Centers for Medicaid and Medicare Services (CMS) each
year. For 2022, it’s $8,700 for a single person; $17,400 for a family.
68
Types of Health Insurance
There are several different types of health insurance in the U.S., including public coverage (Medicare,
Medicaid, Children’s Health Insurance Program, Indian Health Services, and Veterans Administration
coverage) and private coverage. Private healthcare coverage can be provided by an employer or
purchased in the individual/family market. Members of the armed services and their families are
covered under Tricare, and people employed by the federal government are covered under Federal
Employees Health Benefits Program.
Regulation of Health Insurance in Florida
The Office of Insurance Regulation (OIR) licenses and regulates the activities of insurers, HMOs, and
other risk-bearing entities.
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The Agency for Health Care Administration (AHCA) regulates the quality of
care by HMOs under part III of ch. 641, F.S. Before receiving a certificate of authority from the OIR, an
HMO must receive a Health Care Provider Certificate from AHCA.
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As part of AHCA’s certification
process, an HMO must provide information to demonstrate that it can provide quality of care consistent
with the prevailing standards of care.
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All persons who transact insurance in the state must comply
with the Insurance Code (Code).
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OIR has the power to collect, propose, publish, and disseminate any
information relating to the subject matter of the Code,
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and may investigate any matter relating to
insurance.
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Health Insurance Cost-Sharing
The term “cost-sharing” refers to how health plan costs are shared between insurers and insureds.
Generally, costs are shared in two main ways:
Premium contributions. The employer pays a portion of the premium and the remainder is
deducted from employees’ paychecks. Most insurers require employers to contribute at least
half of the premium cost for covered employees.
Cost-sharing at the time of service. Cost-sharing at the time a service is provided may take
the form of copayments, or a fixed amount paid at the time of obtaining services; co-insurance,
or a percent of the charge for services that is typically billed after services are received; and
deductibles, or a flat amount that must be paid before insurance benefits kick in.
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Florida Department of Financial Services, Health Insurance and Health Maintenance Organizations – A Guide for Consumers,
http://www.myfloridacfo.com/Division/Consumers/understandingCoverage/Guides/documents/HealthGuide.pdf
65
Id.
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S. 627.6471, F.S.
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Part I of chapter 641, F.S.
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Healthcare.gov, Out-of-pocket maximum/limits, available at https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/.
69
S. 20.121(3)(a), F.S.
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S. 641.21(1), F.S.
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S. 641.495, F.S.
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S. 624.11, F.S.
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S. 624.307(4), F.S.
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S. 624.307(3), F.S. STORAGE NAME: h1351.HRS PAGE: 11
DATE: 3/31/2023
Types of Cost-sharing
Types of cost-sharing in health insurance plans include:
Premium Contribution. A health insurance premium is the total amount that must be paid in
advance in order obtain coverage for a particular level of services. Usually health insurance
premiums are billed and paid on a monthly basis. Employers typically require employees to
share the cost of the plan premium. Most insurers require the employer to cover at least half of
the premium cost for employees. Employers are free to require employees to cover some or all
of the premium cost for dependents, such as a spouse or children.
Copayments. A copayment or “copay” is a flat fee that the patient pays at the time of service.
After the insured pays the copay, the health plan usually pays 100 percent of the balance on
eligible services. Eligible services are those services that the plan includes in its coverage. The
fee usually ranges between $10 and $40. Copayments are common in HMO products and are
often characteristic of PPO plans as well.
Coinsurance. Insureds must pay a portion of the services they receive under a health plan.
This payment is called “coinsurance” and is usually a small percentage of the service cost after
the plan pays benefits. If the plan pays 70 percent of the cost, the patient pays 30 percent of the
cost. If the plan pays 90 percent, the patient pays 10 percent, and so forth. Coinsurance is
common for PPO products and less common in HMOs.
Deductible. The deductible is the amount an insured pays before the plan pays anything.
Deductibles generally apply per person per calendar year. Under PPOs with coinsurance, a
deductible usually applies to all services, including laboratory tests, hospital stays and doctor’s
office visits. Some plans, however, waive the deductible for office visits. Most HMOs do not
have general deductibles, but may have a service-specific deductible for inpatient
hospitalization or for brand-name prescription drugs. Generally, the higher the deductible, the
lower the premium. Some plans with particularly high deductibles are known as “high-
deductible” plans. While these plans may have significantly lower premiums, insureds are
exposed to high out-of-pocket costs.
Out-of-Pocket Maximum. Once out-of-pocket expenses per insured reach a defined limit in a
single calendar year, the plan will pay 100 percent of eligible charges for the rest of the calendar
year. The definition of out-of-pocket maximum will differ depending on your insurance carrier.
Some carriers exclude specific costs or increase the maximum for care provided by out-of-
network providers. Out-of-pocket cap levels typically are in the range of $1,000 to $5,000 per
person.
Preferred Providers vs. Out-of-Network Providers
Most health plans have a list of doctors, hospitals, and other providers that have agreed to participate in
the plan’s network. Providers in the network have a contract with a health plan to care for its members
at a certain cost. A member of the plan will generally pay less for medical services when they use one
of the providers on this list. If a plan member sees a doctor or uses a hospital that does not participate
with the health plan, the member is going out-of-network and will usually have to pay more for out-of-
network care. Some plans will not cover any amount of out-of-network care, while others cover a
percentage of care.
In-network providers have a contract with an insurer that limits the amount of money the provider may
charge individuals who are covered under the contracted insurance company. The agreed-upon
contract rate includes both the patient and insurer shares and may be based on certain assumptions
regarding the volume of patients that will use that provider’s services. The portion of the contracted rate
a patient pays is determined by his or her policy.
Out-of-network providers are providers who have not agreed to accept a contracted rate with a patient’s
insurance company. If a patient chooses to seek treatment outside of his or her network, insurance
companies typically require the patient to pay a larger deductible, copayment and coinsurance amount.
Effect of Proposed Changes STORAGE NAME: h1351.HRS PAGE: 12
DATE: 3/31/2023
Shared Savings Programs
HB 1351 requires all individual health insurers; group, blanket, and franchise health insurers; and
HMOs to offer a shared savings program to their insureds or subscribers. The bill also requires a
shared savings incentive paid to an insured or subscriber to be equal to or greater than 25 percent of
the difference in cost compared to the second-lowest cost in-network amount paid for the service in the
rating area.
This change in incentive payment lowers the amount that the insurer or HMO must share with an
insured or subscriber; instead of simply anchoring the shared saving incentive to the difference in
reference price for the service and the actual amount paid for the service, the new anchor is the
second-lowest in-network cost for the same service. This incentive works assuming the insured or
subscriber selects the lowest cost for the service; if the insured or subscriber chooses a service with a
cost higher than the lowest or second-lowest cost, but still below the insurer’s or HMO’s reference
price, there may be no incentive payment due to the insured or subscriber under this change. Lastly, it
is not clear what is meant by “rating area” to determine costs for services in a given area of the state.
The bill authorizes, but does not require, an individual health insurer, group health insurer, or health
maintenance organization that offers a shared savings incentive program to include items and services
listed in federal law, the Table 1-500 Items and Services List (List), as shoppable health care services
for which the shared savings incentive is available. The List is added to the group of shoppable health
care services from which a health insurer can select certain items and services for its program.
Cost Sharing
The bill requires an individual health insurer; group, blanket, and franchise health insurer; or an HMO to
apply an insured’s or subscriber’s payments to an out-of-network, nonpreferred provider to the
insured’s deductible and out-of-pocket maximum under the policy if:
The insured asks for such payments to be applied in that manner;
The service provided by the out-of-network, nonpreferred provider would have been covered
under the policy if it was completed by a preferred provider; and
The amount charged for the service was the same or less than:
o The average amount charged by the insurer’s provider network; or
o The service’s statewide average amount paid based on data reported to the Florida
Health Price Finder website.
The bill will likely allow insureds and subscribers to reach their deductible and out-of-pocket maximums
under a health insurance policy more quickly, lowering out-of-pocket payments for the remainder of
each year the maximums are reached. This may require insurers to cover a greater amount of services
than under current law, and may prompt changes in network contracting to reflect shifting care volume
and use patterns.
The bill provides an effective date of July 1, 2023.
B. SECTION DIRECTORY:
Section 1: Amends s. 627.6387, F.S., relating to shared savings incentive program.
Section 2: Amends s. 627.6471, F.S., relating to contracts for reduced rates of payment; limitations;
coinsurance and deductibles.
Section 3: Creates s. 627.65613, F.S., relating to nonpreferred provider services; deductibles and out-
of-pocket limitations.
Section 4: Amends s. 627.6648, F.S., relating to shared savings incentive program.
Section 5: Amends s. 641.31, F.S., relating to health maintenance contracts.
Section 6: Amends s. 641.31076, F.S., relating to shared savings incentive program.
Section 7: Provides an effective date of July 1, 2023.
STORAGE NAME: h1351.HRS PAGE: 13
DATE: 3/31/2023
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
OIR will amend its form review procedures and checklists to accommodate the requirements of the
bill. According to OIR, there are approximately 988 licensed health insurers and HMOs impacted by
the bill that do not have a shared savings programs. All health policy and contract forms used by
these insurers and HMOs will need to be amended to include the shared savings program, and
refiled with OIR for approval. OIR can absorb the costs of this review within existing resources;
however, such review will impact the product review unit’s workload.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The requirement for insurers and HMOs to offer a shared savings program may result in more insureds
and subscribers receiving a cut of savings resulting from low cost, high quality treatment choices below
the insurer’s or HMO’s benchmark reference price.
Health insurers may see an indeterminate reduction in claim costs as consumers are incentivized to
choose lower cost, high quality providers under the shared saving program. This may result in lower
premiums
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not impact municipal or county governments. STORAGE NAME: h1351.HRS PAGE: 14
DATE: 3/31/2023
2. Other:
None.
B. RULE-MAKING AUTHORITY:
OIR has sufficient existing rulemaking authority to implement the provisions of the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
To clarify applicability, the bill should state the provisions apply to insurance policies and HMO
contracts effective January 1, 2024.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES