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 Committee on Fiscal Policy
BILL: CS/SB 1640
INTRODUCER: Fiscal Policy Committee and Senator Collins
SUBJECT: Payments for Health Care Services
DATE: February 28, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Johnson Knudson BI Favorable
2. Johnson Yeatman FP Fav/CS
I. Summary:
CS/SB 1640 creates several consumer protections relating to the collection of medical debt and
creates price transparency requirements for hospitals, ambulatory surgical centers (ASC) and
insurers relating to nonemergency services. In regards to the collection of hospital and ASC
medical debt, the bill:
 Prohibits a hospital or ASC from engaging in extraordinary collections actions, such as
certain legal or judicial processes including commencing a civil action, garnishing wages or
placing a lien on property.
 Establishes a three-year statute of limitations for actions to collect medical debt, which runs
from the later of the date on which the facility completes written notification of the medical
debt or the date on which the facility refers the medical debt to a third-party for collection.
Currently, medical debt is subject to a five-year statute of limitation.
 Exempts from attachment, garnishment or other legal process in an action on hospital
medical debt:
o A debtor’s interest, not to exceed $10,000 in value, in a single motor vehicle. Currently,
the exempt interest is $1,000.
o A debtor’s interest in personal property, not to exceed $10,000 in value, if the debtor
does not claim or receive the benefits of a homestead exemption. Currently, the exempt
interest is $1,000.
SB 1640 also includes the following price transparency requirements:
 A hospital or ASC must post standard charges for specified services on its website and
establish a process for reviewing and responding to grievances from patients.
 Hospitals and ASCs must provide estimates of anticipated charges for nonemergency
services and provide such estimates to the patient’s health insurer.
 A health insurer, in turn, must prepare an “advanced explanation of benefits” for the patient,
within a specified time frame prior to the service being provided, based on the facility’s
estimate.
BILL: CS/SB 1640 Page 2
The bill also revises the current voluntary shared savings incentive program for insurers
participating in the individual market to make the program mandatory for such insurers.
The bill expands the health care providers that may participate in a direct health care agreement
that is exempt from the insurance code to include a health care provider licensed under ch. 490
(practice of psychology) or ch. 491, F.S. (clinical, counseling, and psychotherapy services).
The fiscal impact of the bill, relating to the enforcement of the federal transparency requirements
for hospitals and ASCs by the Agency for Health Care Administration is indeterminate. The
Office of Insurance Regulation estimates that changing the shared savings program from a
voluntary to mandatory program for insurers and HMOs will require an additional $193,000
salaries and benefits and $150,000 in rate to upgrade, recruit, and fill specific positions to
accommodate the additional workload.
II. Present Situation:
Office of Insurance Regulation
In Florida, the Office of Insurance Regulation (OIR) licenses and regulates insurers, HMOs, and
other risk-bearing entities. To operate in Florida, an insurer or HMO must obtain a certificate of
authority from the OIR and comply with the requirements of the Florida Insurance Code. The
Agency for Health Care Administration (agency) regulates the quality of care provided by
HMOs under part III of ch. 641, F.S. Prior to receiving a certificate of authority from the OIR, an
HMO must receive a Health Care Provider Certificate from the agency. As part of the
certification process used by the agency, an HMO must provide information to demonstrate that
the HMO has the ability to provide quality of care consistent with the prevailing standards of
care. Rates and forms for health insurers and HMOs are subject to prior approval by the OIR. 1
Such rates may not be excessive, inadequate, or unfairly discriminatory.2
The federal Patient Protection and Affordable Care Act (PPACA)3 requires health insurance
issuers to submit data on the proportion of premium revenues spent on clinical services and
quality improvement, also known as the medical loss ratio (MLR).4 It also requires them to issue
rebates to enrollees if this percentage does not meet minimum standards. The PPACA requires
insurers that provide coverage to small businesses and individuals to spend at least 80 percent of
their premium income on health care claims and quality improvement, leaving the remaining 20
percent for administration, marketing, and profit.5 Large group plans must spend at least 85
percent of premium dollars on medical care.6 If an insurer fails to meet the applicable MLR
standard in any given year, the issuer is required to provide a rebate to its customers.
1
Part I, ch. 627, F.S.
2
Id.
3
Pub. L. 111-148, Mar. 23, 2010.
4
Medical Loss Ratio | CMS (last visited Jan. 30, 2024)
5
Medical Loss Ratio: Getting Your Money's Worth on Health Insurance | CMS (last visited Jan. 30, 2024).
6
Id.
BILL: CS/SB 1640 Page 3
The regulations finalized in October 2020 specify that expenses by a health plan in direct support
of a shared savings program must be counted as medical expenditures.7 Thus, a health insurer or
HMO providing shared savings to insureds or subscribers will receive an equivalent credit
towards meeting the MLR standards established by PPACA.
Florida Shared Savings Programs8
In 2019, the Legislature created a voluntary shared savings program for the commercial
insurance market, which allows health insurers and health maintenance organizations (HMOs) to
provide financial incentives to insureds with individual policies or contracts when they obtain
health care services offered by their health insurer or HMO through their shared savings list.
Participation is voluntary and optional for insureds and subscribers. The shoppable health care
services are lower-cost, non-emergency services for which a shared savings incentive is available
for insureds under the 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.9 Health insurers offering a shared savings
incentive program must submit an annual report to the Office of Insurance Regulation (OIR)
regarding the performance of the program. Currently, one insurer is participating in the voluntary
program.
On January 1, 2019, the Division of State Group Insurance of the Department of Management
Services instituted a voluntary shared savings program to reward insureds, subscribers, or their
dependents for making informed and cost-effective decisions about health care spending.10 The
program allows participants to earn rewards by receiving rewardable healthcare services through
two state vendors. Rewards are credited to a select pretax savings or spending account of the
participant, and funds can be used to pay for eligible medical, dental, and vision expenses.
Rewards are earned after the participant shops for a rewardable healthcare service on the
website, receives the service, and the claim has been paid.11 For fiscal year 2022-2023, total
expenses for the program was $18.6 million. The program spent $9.6 million on claims, $6.3
million on administrative fees, and paid out $2.0 million in shared savings to employees.12
U.S. Health Care Spending
Major Payers of Health Care Spending
Highlights of the 2022 national health expenditures data13 include:
7
45 CFR Part 158.
8
Section 627.6387, 627.6648, and 641.31076, F.S.
9
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.
10
Ch. 2017-70, L.O.F.
11
MyBenefits, Shared Savings Program, available at https://www.mybenefits.myflorida.com/health/shared_savings_program
(last viewed Jan. 30, 2024).
12
State Employees Group Health Self-Insurance Trust Fund, Exhibit II, Financial Outlook by Fiscal Year (Jan. 10, 2024)
HealthInsuranceOutlook.pdf (state.fl.us) (last visited Jan. 20, 2024).
13
Centers for Medicare and Medicaid, National Health Expenditure Data https://www.cms.gov/data-research/statistics-
trends-and-reports/national-health-expenditure-data (last visited Jan. 31, 2024).
BILL: CS/SB 1640 Page 4
 Private health insurance spending grew 5.9% to $1,289.8 billion in 2022, or 29 percent of
total NHE.
 Out of pocket spending grew 6.6% to $471.4 billion in 2022, or 11 percent of total NHE.
 Hospital expenditures grew 2.2% to $1,355.0 billion in 2022, slower than the 4.5% growth in
2021.
 Physician and clinical services expenditures grew 2.7% to $884.9 billion in 2022, slower
growth than the 5.3% in 2021.
 Prescription drug spending increased 8.4% to $405.9 billion in 2022, faster than the 6.8%
growth in 2021.
 The largest shares of total health spending were sponsored by the federal government (33
percent) and the households (28 percent). The private business share of health spending
accounted for 18 percent of total health care spending, state and local governments accounted
for 15 percent, and other private revenues accounted for 7 percent.
In 2020, California’s personal health care spending was highest in the nation ($410.9 billion),
representing 12.2 percent of total U.S. personal health care spending. Comparing historical state
rankings through 2020, California consistently had the highest level of total personal health care
spending, together with the highest total population in the nation. Other large states, New York,
Texas, Florida, and Pennsylvania, also were among the states with the highest total personal
health care spending. 14 In 2020, the average per enrollee cost of private health insurance in
Florida was $5.057. In comparison, the per capita personal health care spending ranged from
$7,522 in Utah to $14,007 in New York.15 The national average for per capita spending was
$10,191.16
U.S. Health Outcomes
Although the United States spends more of its gross domestic product on health care than any
other country, the U.S. has the highest rate of infant deaths as well as the highest rate of
preventable deaths.17 Many experts suggest that these longstanding, widespread problems stem
in part from the misaligned incentives built into the traditional, fee-for-service payment model.18
Under fee-for-service, health care providers, such as physicians and hospitals, are paid for each
service they provide, resulting rewards for greater utilization or volume, they are paid more if
they deliver more services, even if they don’t achieve desired results.
Value-Based Payment Models
In response to concerns about rising medical costs, greater utilization of services, and quality of
outcomes, many insurers and HMOs have implemented value-based health care payment models
(e.g., bundled payments) with providers, which aim to change that dynamic, so physicians earn
more for delivering health care that helps patients have better outcomes, while also keeping costs
down, thereby reducing costs and inefficiencies in the health care system.
14
National Health Expenditures Fact Sheet, https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-
expenditure-data/nhe-fact-sheet (last visited Jan. 20, 2024).
15
State Health Expenditure Accounts by State of Residence Highlights https://www.cms.gov/research-statistics-data-and-
systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/res-highlights.pdf (last visited Jan. 20, 2024).
16
Id.
17
Value-Based Care: What It Is, and Why It’s Needed | Commonwealth Fund (Feb. 7, 2023).
18
Id.
BILL: CS/SB 1640 Page 5
Medical Debt
Medical debt, or personal debt incurred from unpaid medical bills, is a leading cause of
bankruptcy in the United States. Two-thirds of medical debts are the result of a one-time or
short-term medical expense arising from an acute medical need.19 Many medical collections on
consumer credit reports are low-dollar accounts. Data from the CFPB’s Consumer Credit Panel
show that in 2020, the median medical collection was $310, the mean medical collection was
$773, and 62 percent of medical collections were under $490.20 In Florida, approximately 14.3
percent of the population has medical debt in collection.21 The median amount of medical debt in
collections is $915.22 The percentage of persons without health insurance coverage is 12.1
percent.23 Medical debt is the most common collection information reported on consumer credit
records.24
The Urban Institute analysis found that, as of December 2020, among people who had at least
one medical collection on their credit record, the median person owed a total of $797 in medical
debt.25 Additionally, some medical debts are not included on credit records but may be captured
in surveys.
Medical Debt Collection Process in Florida
Current law provides a court process for the collection of lawful debts, including medical debts.
A creditor may sue a debtor and, if the creditor prevails, the creditor may receive a final
judgment awarding monetary damages. If the debtor does not voluntarily pay the judgment, the
creditor has several legal means to collect on the debt, including:
 Wage garnishment.
 Garnishment of money in a bank account.
 Directing the sheriff to seize assets, sell them, and give the proceeds to the creditor.
In order to protect debtors from being destitute, current law provides that certain property is
exempt from being taken by a creditor. The Florida Constitution provides that the debtor's
homestead and $1,000 of personal property is exempt.26 Statutory law provides numerous
categories of exempt property, and federal statutory law also provides certain exemptions that
apply in all of the states.27
19
Hamel, Liz et al. “The Burden of Medical Debt: January 2016 Results from the Kaiser Family Foundation/New York
Times Medical Bills Survey.” Kaiser Family Foundation. January 2016. The Burden of Medical Debt: Results from the
Kaiser Family Foundation/New York Times Medical Bills Survey (kff.org) (last visited Jan. 20, 2024).
20
Medical Debt Burden in the United States (consumerfinance.gov). (last visited Jan. 28, 2024).
21
Debt in America: State-Level Medical Debt | Urban Data Catalog (Sep. 14, 2023) and Debt in America: An Interactive
Map; Technical Appendix (urban-data-catalog.s3.amazonaws.com) (last visited Jan. 28, 2024).
22
Id.
23
Id.
24
Furey, Michael and Ryan Kelly. “Market Snapshot: Third-Party Debt Collections Tradeline Reporting.” Consumer
Financial Protection Bureau. July 18, 2019. https://files.consumerfinance.gov/f/documents/201907_cfpb_thirdparty-debt-
collections_report.pdf. (last visited Jan. 25, 2024).
25
Debt in America: An Interactive Map (urban.org) (last visited Jan. 24, 2024).
26
Art. X, s. 4(a), Fla. Const.
27
For example, the federal ERISA law provides that most retirement plans are exempt from creditor claims.
BILL: CS/SB 1640 Page 6
In addition to the protection from creditors contained in the Florida Constitution, chapter 222,
F.S., protects other personal property from certain claims of creditors and legal process:
garnishment of wages for a head of family;28 proceeds from life insurance policies;29 wages or
unemployment compensation payments due certain deceased employees; 30 disability income
benefits;31 assets in qualified tuition programs; medical savings accounts; Coverdell education
savings accounts; hurricane savings accounts;32 $1,000 interest in a motor vehicle; professiona