S3756

An Act concerning the State Health Benefits Program and the School Employees’ Health Benefits Program and supplementing P.L.1961, c.49 (C.52:14-17.25 et seq.) and P.L.2007, c.103 (C.52:14-17.46.1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. The cost of health care for public employees in the State has been increasing at a pace that will make our current system of health care delivery unsustainable if it continues on its present trajectory.

b. As health care costs continue to rise more quickly than the average annual income, those costs displace other priorities for individuals, such as saving for retirement or their children’s education, and even discourage people from obtaining recommended health care. The litany of research in this area has demonstrated that action must be taken to reduce costs.

c. One way to reduce costs is to increase competition among the claims administrators that contract with the State to administer the State Health Benefits Program and the School Employees’ Health Benefits Program that cover thousands of State, municipal, school district, and related public employees and their dependents.

d. Permitting these employees to have greater choice in the selection of claims administrators for their respective health plan will also increase accountability of the administrators and overall performance, quality, and cost by encouraging competition among the claims administrators.

e. Many federal and State sponsored health plans embrace the use of multiple administrators to ensure sufficient competition not only at the time of bid awards but throughout the life of the contract. For example, use of multiple administrators encourages contracted administrators to compete, on an ongoing basis, for membership by accelerating innovation and by delivering on key measures of success, such as on the ability to manage the rate of health care inflation, network breadth, member experience, and programs to advance health care quality, unit cost discounts, and other cost saving initiatives. Without meaningful competition, the State may have limited ability to determine if best practices are met in the aforementioned areas.

f. A more competitive procurement process also increases accountability and transparency. Having multiple contract administrators will enable a more accurate comparison to measure relative performance on key metrics pertaining to cost, quality, and experience.

g. For the purpose of reducing health care costs and facilitating greater satisfaction, efficiency, and accountability in the administration of health benefits claims to State employees, their eligible family members, and participating local government and school district employees and their eligible family members, the State of New Jersey deems it fitting and crucial to procure more than one contract administrator for each health benefits plan type offered by the State Health Benefits Program and the School Employees’ Health Benefits Program for implementation in the plan year beginning in January of 2024.

2. The definitions set forth in section 2 of P.L.1961, c.49 (C.52:14-17.26) shall be applicable to sections 2 and 3 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill).

In addition, as used in this act:

“Competitive range” means the group of responsive proposals to a request for proposal that are among the most highly rated proposals.

“Director” means the Director of the Division of Pension and Benefits or the director’s designee.

“Early retiree” means a retired employee of the State or participating employer who is retired, under 65 years of age, and not yet eligible to enroll in Medicare.

“Medicare retiree” means a retired employee of the State or participating employer who is 65 years of age or older, or otherwise qualified to enroll in Medicare due to health status, and is currently enrolled in Medicare. Eligible retirees include those who are enrolled in a Self-insured Medicare Supplement plan or a Fully-Insured Medicare Advantage plan. When relevant, the term Medicare retiree is used to distinguish Medicare Supplement retirees.

“Plan type” means preferred provider organization, health maintenance organization, tiered network plan, high-deductible health plan, Medicare supplemental PPO and HMO, and Medicare Advantage plan.

“Prevailing wage” means the wage rates and fringe benefits for service employees found prevailing in the locality as determined by the Department of Labor and Workforce Development or contained in a predecessor contractor’s collective bargaining agreements.

“Request for Proposal” or “RFP” refers to all documents, whether attached or incorporated by reference, used for a publicly advertised procurement process that solicits proposals or offers to provide the goods or services specified therein.

“Responsive proposal” refers to a proposal that is deemed to have adequately addressed all material provisions of an RFP's terms and conditions, specifications, and other requirements.

3. a. For each plan type offered to eligible employees, early retirees, and Medicare retirees, and their dependents, the State Health Benefits Commission shall select at least two qualified vendors for claims administration services, provided that, if fewer than two qualified vendors in response to an RFP issued on behalf of the commission submit responsive proposals within a competitive range established by the director in consultation with the commission, the commission shall have the authority to either select one qualified vendor or reissue a solicitation for the plan type.

b. Each eligible employee, early retiree, and Medicare retiree shall have the opportunity, on an annual basis, during the open enrollment period or other applicable enrollment period, to choose a plan from among the plans the commission has selected pursuant to subsection a. of this section.

c. The commission shall award the contracts for each plan type under subsection a. of this section on the basis of the bid response that is the most advantageous to the State, which shall consider price, network breadth, member experience, and the ability to engage in innovation designed to slow health care cost growth. The commission shall also consider as positive factors for any bidder the percentage of employees who will perform the work under the contract who (1) will perform those services in-State, and (2) will be compensated at least a prevailing wage and afforded health benefits under a health benefits plan authorized pursuant to State or federal law.

d. The commission is authorized to award a contract to the bidder who presented the bid that is most advantageous to the State based upon an evaluation of factors in subsection c. of this section, and to thereafter award another contract to one or more bidders within the competitive range that can provide a comparable bid price and performance to the first awarded contract.

4. a. The State Health Benefits Program shall provide to a plan sponsor of a public employer that participates in the State Health Benefits Program, at no cost and upon request not more than once in each calendar year, aggregated and de-identified claims experience data for the applicable group of public employees, provided that any disclosure of aggregate data shall be done in a manner that complies with the federal Health Insurance Portability and Accountability Act of 1996, Pub.L.104-191, and any other applicable federal and state privacy protection laws and related regulations.

b. The director, in consultation with the commission, shall establish a standard format for the report to be provided in compliance with subsection a. of this section. The report shall be provided in electronic format within 90 days of receipt of the written request.

5. The definitions set forth in section 32 of P.L.2007, c.103 (C.52:14-17.46.2) shall be applicable to sections 5 to 7 of this act, P.L. , c. (C. ) (pending before the Legislature as this bill).

In addition, as used in this act:

“Competitive range” means the group of responsive proposals to a request for proposal that are among the most highly rated proposals.

“Director” means the Director of the Division of Pension and Benefits or the director’s designee.

“Early retiree” means a retired employee of the State or participating employer who is retired, under 65 years of age, and not yet eligible to enroll in Medicare.

“Responsive proposal” refers to a proposal that is deemed to have adequately addressed all material provisions of an RFP's terms and conditions, specifications, and other requirements.

6. a. For each plan type offered to eligible employees, early retirees, and Medicare retirees, and their dependents, the School Employees’ Health Benefits Commission shall select at least two qualified vendors for claims administration services, provided that, if fewer than two qualified vendors in response to an RFP issued on behalf of the commission submit responsive proposals within a competitive range established by the director in consultation with the commission, the commission shall have the authority to either select one qualified vendor or reissue a solicitation for the plan type.

7. a. The School Employees’ Health Benefits Program shall provide to a plan sponsor of a public employer that participates in the School Employees’ Health Benefits Program, at no cost and upon request not more than once in each calendar year, aggregated and de-identified claims experience data for the applicable group of public employees, provided that any disclosure of aggregate data shall be done in a manner that complies with the federal Health Insurance Portability and Accountability Act of 1996, Pub.L.104-191, and any other applicable federal and state privacy protection laws and related regulations.

8. This act shall take effect immediately.

STATEMENT

This bill allows for the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP) to
select more than one claims administrator in order to increase competition and lower costs in the long term.

This bill also requires that SHBP and SEHBP provide, upon request, aggregated and de-identified claims data to the plan sponsor of a public employer that participates in the respective program in order to increase transparency within the administration of these health care plans.