• 300 Words (More or Less) 2013

    Advocacy_IconEach year, FAIA's advocacy staff develops succinct summaries of insurance-related issues to help lawmakers, the media, and the public better understand these often-complicated insurance topics.

    Citizens and Private Option Clearinghouses
    Navigators
    Workers' Compensation Drug Costs
    Uninsured Motorist Coverage
    Changes to Insurance Rates and Forms  

    Citizens and Private Option Clearinghouses

    PROBLEM: Current law states that Citizens’ policyholders who receive an offer from a carrier with a premium less than 15 percent higher than Citizens are required to accept the offer. While it’s the law, it’s difficult to police because there’s no mechanism in place to review policies submitted to Citizens for eligibility and desirability to private carriers. As a result, many policies suitable for the private market end up in Citizens.

    BACKGROUND: There are two approaches to marketing insurance: through direct writers and through independent agents. Agents of direct writer companies, such as State Farm, don’t control or own the policyholder’s information—the company they represent does. Independent agents represent many companies and, because they (not their companies) own the policyholder information, they can move “their” clients to other companies whenever the price, coverage, or service is better. It’s an important distinction; if independent agents didn’t “own” the policyholder information, their companies could service the policyholder without the agent—and the agent couldn’t move the consumer if circumstances warrant a change. This is why “ownership” of that information is critical to the existence and value of independent agents.

    Any clearinghouse program needs to recognize independent agents can’t represent companies that don’t recognize their ownership of the policyholder’s information. Many carriers that market through independent agencies don’t want to appoint direct writer agents, and the contracts of direct writer carriers don’t allow their agents to be appointed with other carriers. A one-size-fits-all approach won’t work for a Citizens clearinghouse.

    SOLUTION: In addition to a clearinghouse run by Citizens, allow other “certified and voluntary” private option clearinghouses to do the same thing. In addition to being optional (to carriers, agents, and consumers), a private clearinghouse would be subject to the same standards and perform the same services—at less cost to taxpayers—as the Citizens clearinghouse. Private option clearinghouses would be audited for sound operation consistent with good public policy.

    CALL TO ACTION: Support private option clearinghouses in SB 1770 by Sen. SimmonsSB 1622 by Sen. Richter, and HB 7093 by Rep. Nelson, as an additional means for diverting ineligible policies from Citizens and potentially saving millions of dollars in terms of exposure, policy counts, and agent appointments.

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    Navigators

    PROBLEM: The Patient Protection and Affordable Care Act (PPACA) created “Navigators” to help the uninsured enroll in approved health insurance exchanges. Navigators will be engaging in activities very similar to those performed by licensed insurance agents. Licensed agents in Florida are required to take prelicensing classes, pass a test, maintain their license with continuing education, and carry professional liability insurance—none of which are required of navigators. This poses a danger to consumers, who may be advised and assisted by unqualified, poorly trained, and unregulated persons while making one of the most critical financial decisions of their lives. While the PPACA requires exchanges to have navigators, it does not clearly define their role. Fortunately, the PPACA allows states to set their own standards for the regulation of navigators.

    BACKGROUND: PPACA requires that each exchange (whether federally facilitated, a partnership, or state based) establish a navigator program. Section 1311(i)(3) of the PPACA defines to some extent the duties of navigators: conduct public education activities to raise awareness of the availability of Qualified Health Plans (QHPs); distribute fair and impartial information concerning enrollment in QHP, and the availability of premium tax credits and cost sharing reductions; facilitate enrollment in QHPs; provide referrals to any applicable office for any enrollee with a grievance, complaint, or question regarding their health plan, coverage, or determination under such plan or coverage; and provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served.

    SOLUTION: Legislation should be enacted that sets licensing standards and provides ongoing regulation, including bonding, of navigators and any entity created by PPACA that assists consumers regarding health insurance products in an exchange. The role of the navigator and other entities created by PPACA should be clearly defined and limited to determining the eligibility of individuals or groups to participate in an exchange. According to exchange rules, it is the role of agents and brokers to assist qualified individuals, employers, or employees in purchasing QHPs. Only a licensed agent or broker may sell, solicit, or negotiate health insurance.

    CALL TO ACTION: Support Navigator Licensure and Regulation. 

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    Workers’ Compensation Drug Costs

    PROBLEM: Some physicians are using a loophole in Florida’s workers’ compensation law to charge exorbitant prices for prescription drugs dispensed from their offices.

    BACKGROUND: Under Florida’s workers’ compensation law, §440.13 (12), F.S., the price for drugs is regulated by a state-appointed three-member panel of medical experts and set, using a formula, generally equal to the average wholesale price (AWP) plus a $4.18 dispensing fee. A new class of businesses—drug repackagers—however, may change the quantity or label of prescription drugs, thus requiring a new National Drug Code and triggering the assignment of new and frequently higher AWP. Newly released data from the National Council on Compensation Insurance (NCCI) shows the prescription drug mark-up can exceed 600 percent. Physicians who purchase drugs through repackagers pay a lower cost but may dispense them to patients at a higher price. This practice has turned drug dispensing into profit centers in some doctors’ offices, which may lead to over-prescribing.

    SOLUTION: Senate Bill 662 (by Sen. Hays) and HB 605 (by Rep. Hudson) allows physicians to dispense drugs from their offices and collect the $4.18 dispensing fee. However, if the drug has been repackaged or relabeled, the reimbursement amount would be calculated by multiplying the number of units dispensed by the per-unit AWP set by the original manufacturer, which may not be the manufacturer of the repackaged or relabeled drug. Unless the carrier has contracted for a lower price, the repackaged price cannot exceed the amount otherwise payable. According to the NCCI, curing this abuse would save Florida employers more than $27 million a year.

    House Bill 483 by Rep. Diaz could worsen the abuse because it would exempt repackaged or relabeled drugs from the reasonable restrictions of SB 662/HB 605. In effect, the bill would allow repackagers to charge whatever they wish so long as the provider gives a $15 credit to the insurance carrier or self-insured employer for each prescription that costs more than $25. It also provides that a carrier may not refuse to authorize a physician solely because they dispense repackaged drugs.

    CALL TO ACTION: Support SB 662 by Sen. Hays and HB 605 by Rep. Hudson. Oppose HB 483 by Rep. Diaz.

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    Uninsured Motorist Coverage

    PROBLEM: A recent court case by Florida’s First District Court of Appeal created uncertainty as to whether insurers may presume that a “non-stacking” policy waiver signed by the named insured may waive “stacking” benefits on behalf of all insureds.

    BACKGROUND: Under Florida law, uninsured motorist (UM) coverage is available in two forms—stacked and non-stacked. Stacked UM policies allow insureds to combine the coverage limits on multiple vehicles they own. For example, if an insured has a policy covering three separate cars, each with a $300,000 UM limit, the total coverage available would be $900,000, the combined limits of the three vehicles. Under Florida law, UM policies are presumed to be “stacked” and, in order to have non-stacked coverage, the named insured must sign a state-approved rejection form. It has long been understood that if the named insured rejects the stacked coverage, the rejection waives it for anyone covered under the policy.

    Unfortunately, in Travelers Comm. Ins. Co. v. Harrington, 86 So. 3d 1274 (Fla. 1st DCA 2012), the court ruled that, because of ambiguity in the statute, the rejection of stacked UM by the named insured under §627.727 (9), F.S., does not waive it for resident relatives who have not personally signed the waiver. In the case in point, a mother signed the waiver rejecting stacked coverage, yet when her daughter was injured, the daughter was able to “stack” the coverage under the mother’s three cars. Ironically, if it had been the mother who was injured, the non-stacked limitation would have applied. This ruling calls into question the very viability of non-stacked coverage as a money-saving alternative for an insured.

    SOLUTION: Senate Bill 706 by Sen. Montford and HB 341 by Rep. Ingram amends §627.727 (9), F.S., to make it clear that the signed rejection of “stacked” coverage by the named insured conclusively presumes the coverage is waived on behalf of all insureds. This amendment clarifies what many believe is the original intent of the rejection option for stacked UM: To offer a less expensive option for consumers.

    CALL TO ACTION: Support SB 706 by Sen. Montford and HB 341 by Rep. Ingram.

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    Changes to Insurance Rates and Forms

    PROBLEM: The sometimes lengthy regulatory approval process for changes to insurance rates and policy forms increases expenses for insurance companies and inhibits competition, increasing the cost of insurance to the consumer.

    BACKGROUND: The Florida Office of Insurance Regulation (OIR) regulates both rates to be charged for insurance and the policy forms applying to such insurance. Generally, before making a change to rates or forms, an insurer must file requests with the OIR and obtain approval.  

    • Commercial Rates: Unlike personal lines insurance where consumer protection may be necessary, commercial lines customers are sophisticated business owners. Recognizing that commercial lines do not need the same level of government regulation as do personal lines, the Florida Legislature passed legislation in 2010 and 2011 that allowed 16 types of commercial insurance to change rates without first filing them with the OIR and obtaining prior approval. However, the OIR may still deny the rate change if it is found to be excessive, inadequate, or unfairly discriminatory. 
    • Commercial and Personal Lines Forms: During the past year, the OIR has allowed (under two orders) all property and casualty forms, except for workers’ compensation forms, to be used without prior review and approval. Florida law gives the OIR the option to waive the prior-approval requirement provided it can be done without endangering the public.   

    SOLUTION: SB 468 by Sen. Hukill and CS/HB 335 by Rep. Boyd add two additional lines of commercial insurance to the list of those eligible to change rates without first filing and obtaining prior approval: (1) medical malpractice for a facility that is not a hospital, nursing home, or assisted living facility; and (2) medical malpractice for a health care practitioner who is not a dentist, physician, or surgeon. These rate filing exemptions allow insurance companies to make rate changes to most types of commercial insurance on an expedited basis, which will enhance the availability of new and improved products at competitive rates.

    SB 468 and CS/HB 335 also formalize the previous OIR orders exempting all property and casualty forms, except workers’ compensation, from the filing and approval process as long as the insurer makes an informational filing with OIR within 30 days of the form’s issuance. The informational filing must include a certification of compliance stating that the form complies with all state laws and rules. In an effort to avoid confusing the affected policyholder, the legislation requires the insurer to provide a copy of the new form to the named insured’s agent before or upon providing the form to the named insured. This will give agents an opportunity to explain the change to their clients. Codifying into law these exemptions from form filing and approval will continue to result in a more manageable workload for OIR and will enhance competition by allowing insurance companies to react quickly to market conditions.

    CALL TO ACTION: Support SB 468 by Sen. Hukill and CS/HB 335 by Rep. Boyd. 

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