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 Appropriations
BILL: SB 2506
INTRODUCER: Appropriations Committee
SUBJECT: State Group Insurance Program
DATE: April 1, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
Urban/Shettle Sadberry AP Submitted as Comm. Bill/Fav
I. Summary:
SB 2506 amends the State Group Insurance Program administered by the Department of
Management Services.
For the State Group Insurance Program, the bill:
Deletes obsolete language regarding employees paid from the other-personal-services
appropriations categories and hired before April 1, 2013.
For the State Employee Health Insurance Program, the bill:
Repeals the implementation of the metal tier health insurance plans, which had been
scheduled for implementation during the 2020 plan year.
Codifies the regions that must be used for any procurement of HMO services beginning in
2023. These regions are based on utilization and referral patterns studied by DMS recently
and the rule recommended by the department.
Requires an HMO option to be available to all enrollees of the program living in Florida.
For the Prescription Drug Program, the bill:
The bill requires the department to ensure that all rebates, fees and other charges related to
pharmacy spend are remitted to the state for the benefit of the program.
Deletes obsolete language regarding maximum annual coverage for enteral and elemental
formulas
The bill takes effect July 1, 2021.
BILL: SB 2506 Page 2
II. Present Situation:
State Group Insurance Program
Overview
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.
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 must1:
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 person’s measurement
period (which is 12 consecutive months2 of employment).
For OPS employees hired before April 1, 2013, the measurement period was the six-month
period from April 1, 2013, through September 30, 2013.3
State Employee Health Insurance Program
Health Insurance Premiums and Revenues
Over 176,000 active and retired state employees and officers are expected to participate in the
health insurance program during Fiscal Year 2020-2021. The health insurance benefit for active
employees has premium rates for single, spouse program,4 or family coverage regardless of plan
selection. These premiums cover both medical and pharmacy claims. The state will contribute
approximately 92 percent toward the total annual premium for active employees and officers, or
$2.08 billion out of total premium of $2.25 billion for active employees during Fiscal Year 2020-
1
Section 110.123(2)(c)2., F.S.
2
Section 110.123(13)(d), F.S.
3
Section 110.123(13)(c), F.S.
4
The Spouse Program provides discounted rates for family coverage when both spouses work for the state.
BILL: SB 2506 Page 3
2021.5 Retirees and Consolidated Omnibus Budget Reconciliation Act (COBRA) participants
will contribute an additional $235.6 million in premiums, with $250.2 million in other revenue
for a total of $2.74 billion in total revenues.6
State Employee Health Insurance (Medical Claims)
The DMS provides medical services to health plan members through a self-insured preferred
provider organization (PPO), self-insured HMO plans, and a fully-insured HMO plan. Under
current contracts, a single provider (Florida Blue) administers the statewide PPO plan. This
contract expires December 2022. Three providers (Aetna, AvMed, and United Health Care)
administer the self-insured HMO plans providing services in 60 counties combined. Capital
Health Plan is a fully-insured HMO plan providing services in 7 counties. The current HMO
contracts were awarded on a county-by-county basis with service based on the county in which
the member works or resides. These contracts expire December 2021, but are eligible for two 1-
year renewals.
Metal Tier Plans
During the 2017 Regular Session, the Legislature directed the DMS to offer health plans,
beginning in the 2020 plan year, with specific actuarial values. The actuarial values represent the
average cost sharing between the plan and the enrollee for a set of benefits. The cost sharing
element includes premiums as well as deductibles and out-of-pocket coinsurance and
copayments. Specifically, the DMS was directed to include in the health insurance program:
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.7
The DMS was directed to contract with an independent benefits consultant to develop an
implementation plan by January 1, 2019.8 The DMS contracted with Foster & Foster to complete
the report. 9
The table below shows the current premiums by pay plan and by coverage type and the proposed
platinum and bronze plans.10 The report assumes that roughly 80 percent of the enrollees will
choose the platinum plans and another 6 percent will choose the bronze plans.11 As shown in the
columns for enrollee premiums, the enrollees choosing the platinum plans will pay significantly
higher monthly premiums than they do under the current plans. On the other hand, enrollees
selecting the bronze plans may experience lower premiums than under the current plans.
5
Florida Legislature, Office of Economic and Demographic Research, Self-Insurance Estimating Conference, State
Employees’ Group Health Self-Insurance Trust Fund – Report on the Financial Outlook for Fiscal Years Ending June 30,
2020 through June 30, 2025, adopted January 8, 2020, page 6, available at
http://edr.state.fl.us/content/conferences/healthinsurance/HealthInsuranceOutlook.pdf.
6
Id.
7
Section 110.123(3)(j), F.S.
8
Section 110.123(3)(k), F.S.
9
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.
10
Id. at 161.
11
Id. at 155.
BILL: SB 2506 Page 4
2019 Standard Plan Premium Rates 2020 PPO/HMO Platinum Plan 2020 PPO/HMO Bronze Plan
Employer Enrollee Total Employer Enrollee Total Employer Enrollee Total
Career Single $684.42 $50.00 $734.42 $685 $165 $850 $600 $5 $605
Service/ Family $1,473.18 $180.00 $1,653.18 $1,475 $395 $1,870 $1,300 $30 $1,330
OPS Spouse $1,623.20 $30.00 $1,653.20 $1,625 $245 $1,870 $1,320 $10 $1,330
SES/ Single $726.08 $8.34 $734.42 $730 $120 $850 $600 $5 $605
SMS Family $1,623.20 $30.00 $1,653.20 $1,625 $245 $1,870 $1,300 $30 $1,330
Early Single n/a $734.42 $734.42 n/a $850 $850 n/a $588 $588
Retirees Family n/a $1,653.18 $1,653.18 n/a $1,870 $1,870 n/a $1,297 $1,297
A major concern regarding implementation of the metal plans is the opportunity for roughly
29,000 eligible employees who “opt-out” of coverage to enroll in the bronze plan. The report
points out that if all of these employees enrolled in a family plan, the premiums paid by state
agencies would increase by $464 million annually, the premiums paid by these employees would
increase by $10 million annually, and newly authorized income supplements would increase by
$61 million. Overall, state agencies would bear an additional $525 million of costs.12
State Employees Prescription Drug Program
As part of the SGI program, the DMS is required to maintain the State Employees’ Prescription
Drug Program (Prescription Drug Plan).13 The DMS contracts with CVS/Caremark, a pharmacy
benefits manager (PBM), to administer the Prescription Drug Plan. The Prescription Drug Plan
has three cost sharing categories for members: generic drugs, preferred brand name drugs, which
are those brand name drugs on the preferred drug list, and non-preferred brand name drugs,
which are those brand name drugs not on the preferred drug list. Contractually, the PBM updates
the preferred drug list quarterly as brand name drugs enter the market and as the PBM negotiates
pricing, including rebates with manufacturers.
III. Effect of Proposed Changes:
Section 1 amends s. 110.123, F.S., to modify the health insurance program available to state
employees and officers.
Subsections (2) and (13) are amended to delete obsolete language relating to OPS employees
hired prior to April 1, 2013. This change has no impact on employees or the State Group
Insurance Program.
Subsection (3) is amended to require at least one HMO option to be available for health
insurance program enrollees residing in the state. Under the current HMO contracts, an HMO
option is available throughout the state.
Statutory direction requiring the DMS to establish HMO regions by rule is deleted. This
language is obsolete because a new subsection (14) is created to establish the HMO regions by
law, beginning in the 2023 plan year. Although HMO regions are established, the DMS retains
the authority to contract with HMOs on a statewide basis.
12
Id. at 159.
13
Section 110.12315, F.S.
BILL: SB 2506 Page 5
Statutory direction requiring the DMS to implement “metal tier” plans beginning in the 2020
plan year, as well as, the requirement for a report to the legislature, is deleted.
Section 2 amends s. 110.12315, F.S., to modify the prescription drug program administered by
the DMS.
Subsection (10) is amended to delete obsolete language that capped coverage for enteral formula
and amino-acid-based elemental formulas at $20,000 annually.
Subsection (11) is added to ensure that any rebates, discounts, and other fees associated with the
purchase or use of prescription drugs or supplies in the program are for the benefit of the
program. The DMS must audit the amounts annually.
Section 3 amends s. 110.131, F.S., to conform a cross-reference to s. 110.123(13)(d), relating
obsolete language regarding OPS employees hired prior to April 1, 2013.
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 identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None.
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C. Government Sector Impact:
Mandated audits of pharmacy rebates, discounts, and other fees, may result in an increase
in rebates remitted into the State Employees Group Health Self-Insurance Trust Fund.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 110.123, 110.12315,
and 110.131.
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.
Statutes affected: S 2506 pb: 110.12315, 110.131
S 2506 Filed: 110.12315, 110.131