A1831

An Act concerning health care benefits plans provided by the State Health Benefits Program and amending and supplementing various parts of the statutory law.

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

1. Section 3 of P.L.1961, c.49 (C.52:14-17.27) is amended to read as follows:

3. a. There is hereby created a State Health Benefits Commission, consisting of [five] 11 members as follows:

(1) the State Treasurer; the Commissioner of Banking and Insurance; the Chairperson of the Civil Service Commission , or their designees, who shall serve ex officio; [a State employees' representative chosen by the Public Employee Committee of the AFL-CIO; and the fifth member of the commission shall be a local employees' representative chosen by the Public Employee Committee of the AFL-CIO.]

(2) two members who shall be appointed by the Governor;

(3) a member appointed by the Public Employee Committee of the New Jersey AFL-CIO who is a member of the public employee organization affiliated with the New Jersey AFL-CIO with the largest number of employees participating in the State Health Benefits Program;

(4) a member appointed by the Public Employee Committee of the New Jersey AFL-CIO who is a member of the public employee organization affiliated with the New Jersey AFL-CIO with the second largest number of employees participating in the State Health Benefits Program;

(5) a member appointed by the Public Employee Committee of the New Jersey AFL-CIO who is a member of the public employee organization affiliated with the New Jersey AFL-CIO with the public employee organization with the third largest number of employees participating in the State Health Benefits Program;

(6) a member appointed by the public employee organization that is not affiliated with the New Jersey AFL-CIO, that represents the largest number of employees in the State Health Benefits Program who are not represented by an employee organization affiliated with the New Jersey AFL-CIO;

(7) a member appointed by the public employee organization that is not affiliated with the New Jersey AFL-CIO, that represents the second largest number of employees in the State Health Benefits Program who are not represented by an employee organization affiliated with the New Jersey AFL-CIO; and

(8) a member, who shall serve as chairperson, appointed by the Governor from among three persons nominated jointly by at least eight of the members appointed pursuant to this subsection.

Each of the members appointed pursuant to paragraphs (2) through (8) of this subsection shall be a New Jersey resident and shall be qualified by experience, education, or training in the review, administration, and design of health insurance plans for self-insured employers.

The initial terms of the members of the commission shall be as follows: the members appointed pursuant to paragraph (2) of this subsection shall serve for a term of three years; the members appointed pursuant to paragraphs (3), (4), (5), (6), and (7) of this subsection shall serve for a term of two years. All subsequent terms of the members appointed pursuant to paragraphs (2) through (7) of this subsection shall be for three years. The chairperson, appointed pursuant to paragraph (8) of this subsection shall serve for an initial term of two years and thereafter shall serve for a term of five years. A member of the commission may be reappointed to succeeding terms without limit in the same manner as the original appointment. A vacancy occurring on the commission shall be filled in the same manner as the original appointment and only for the unexpired term.

[The treasurer shall be chairman of the commission and the health benefits program authorized by P.L.1961, c.49 shall be administered in the Treasury Department.] The Director of the Division of Pensions and Benefits shall be the secretary of the commission. The commission [and committee] shall establish a health benefits program for the employees of the State, the cost of which shall be paid as specified in section 6 of P.L.1961, c.49 (C.52:14-17.30). The commission [, in consultation with the committee,] shall establish rules and regulations as may be deemed reasonable and necessary for the administration of P.L.1961, c.49.

The Attorney General shall be the legal advisor of the commission [and committee]. In those instances in which the Attorney General has a conflict of interest with the commission, a commission decision, or a commission action, the commission shall have the right to retain independent counsel. The fees of such independent counsel shall be paid for by the Department of the Treasury.

The members of the commission [and committee] shall serve without compensation but shall be reimbursed for any necessary expenditures. The public employee members shall not suffer loss of salary or wages during service on the commission [or committee].

The commission shall publish annually a report showing the fiscal transactions of the program for the preceding year and stating other facts pertaining to the plan. The commission shall submit the report to the Governor and furnish a copy to every employer for use of the participants and the public.

b. [There is established a State Health Benefits Plan Design Committee, composed of 12 members as follows:

six members who shall be appointed by the Governor as representatives of public employers whose employees are enrolled in the program;

three members who shall be appointed by the Public Employee Committee of the AFL-CIO;

one member who shall be appointed by the head of the union, that is not affiliated with the AFL-CIO, that represents the greatest number of police officers in this State;

one member who shall be appointed by the head of the union, that is not affiliated with the AFL-CIO, that represents the greatest number of firefighters in this State; and

one member who shall be appointed by the head of the State Troopers Fraternal Association.

The members of the committee shall serve for a term of three years and until a successor is appointed and qualified. Of the initial appointments by the Governor, three members shall serve for two years and until a successor is appointed and qualified, and two shall serve for one year and until a successor is appointed and qualified. Of the initial appointment by the head of the union representing the greatest number of police officers in the State, the member shall serve for two years and until a successor is appointed and qualified. Of the initial appointment by the head of the union representing the greatest number of firefighters in the State, the member shall serve for one year and until a successor is appointed and qualified.

The members of the committee shall select a chairperson from among the members, who shall serve for a term of one year, with no member serving more than one term as chairperson until all the members of the committee have served a term in a manner alternating among the employer representatives and employee representatives, unless the committee determines otherwise with regard to this process.

The committee shall have the responsibility for and authority over the various plans and components of those plans, including for medical benefits, prescription drug benefits, dental, vision, and any other health care benefits, offered and administered by the program. The committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion. Any reference in law to the State Health Benefits Commission in the context of the creation, modification, or termination of a plan or plan component shall be deemed to apply to the committee.

The members of the committee shall have the same duty and responsibility to the program as do the members of the commission.

If any matter before the committee receives at least seven votes in the affirmative, the commission shall approve and implement the committee's decision.

If any matter before the committee receives six votes in the affirmative and six votes in the negative or the committee otherwise reaches an impasse on a decision, the provisions of section 55 of P.L.2011, c.78 (C.52:14-17.27b) shall be followed.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

c. (1) The commission, by a majority vote of its full authorized membership, shall establish and modify rules and regulations as may be deemed reasonable and necessary for the administration of P.L.1961, c.49 (C.52:14-17.25 et seq.).

(2) The commission shall have responsibility for, and authority over, the various plans and components of those plans, including medical benefits, prescription drug benefits, dental, vision, and any other health benefits, offered and administered by the program. The commission shall have the authority to create, modify, or terminate any plan or component of any plan at its sole discretion. Any reference in law to the State Health Benefits Plan Design Committee in the context of the creation, modification, or termination of a plan or plan component shall be deemed to apply to the commission.

(3) The commission shall ensure that audits are performed as required by section 17 of P.L.2008, c.89 (C.52:14-17.27a), and that claims reviews are performed as specified in section 6 of P.L.1961, c.49 (C.52:14-17.30) and section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). Actions of the commission resulting from such audits and claims reviews shall require a majority vote of the fully authorized membership of the commission to be approved.

(4) Members of the commission shall have access to information, consistent with the “Health Insurance Portability and Accountability Act of 1996,” Pub.L.104-191, necessary to carry out the duties vested in the commission by statute, including, but not limited to, the setting of premiums, designing of health care plans, and entering into contracts for the provision of benefits for health services pursuant to section 4 of P.L.1961, c.49 (C.52:14-17.28). Commission members shall have access to data necessary to carry out the duties vested in the commission by statute, including, but not limited to, any available claims and utilization data; reimbursement rates between third-party administrators, medical service providers, and hospitals; and any documents relating to the solicitation and award of contracts, including, but not limited to, requests for proposals, quotations, and requests for quotations, at least 30 days prior to the release of such contract documents.

The chair shall transmit a request for information to the appropriate individual or entity. Information requested by the commission shall be provided as soon as is practicable and in a usable format. In any vote before the commission, the chair may take into account whether legitimate requests for information have been provided as soon as is practicable and in a usable format. The chair may also take into account whether requests for information have been excessive or unreasonable. Upon the commencement of binding arbitration proceedings pursuant to the provisions of subsection b. of section 55 of P.L.2011, c.78 (C.52:14-17.27b) the arbitrator may take into account whether legitimate requests for information have been provided as soon as is practicable and in a usable format, or whether requests for information were excessive or unreasonable, for the purpose of rendering a final decision on a matter before the arbitrator.

(5) Except as otherwise specified in P.L. , c. (C. ) (pending before the Legislature as this bill), actions of the commission shall require the affirmative vote of a majority of the members present at a meeting at which a majority of the full authorized membership is present. Six members of the commission shall constitute a quorum for the transaction of business.

(6) Matters before the commission shall be resolved within 30 days from the date such matters are placed before the commission. After such 30-day period, if a decision on a matter before the commission has not been rendered, or if the commission remains at an impasse, the provisions of subsection b. of section 55 of P.L.2011, c.78 (C.52:14-17.27b) shall be followed.

(7) In consultation with the program actuary, the State Health Benefits Commission shall develop plan designs for the State Health Benefits Program, including the health plans as described in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). Such plan designs shall apply to and remain in effect for those employees and retirees who are covered under such plans until the commission, in consultation with the program actuary, shall determine that adjustments to one or more of the plans are necessary.

(8) Upon the advice of the program actuary that the anticipated costs of one or more of the State Health Benefit Program health plans, including the plans described in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), are likely to exceed the rate of medical or prescription drug inflation for a given plan year, as determined by the program actuary based upon relevant indices or information, the commission shall undertake such actions and plan modifications as may be necessary to appropriately manage such costs and ensure the continued viability of the program, subject to established processes including, but not limited to, collective negotiations agreements.

(9) Within 180 calendar days after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the State’s actuary for the State Health Benefits Program shall issue an actuarial report concerning the State Health Benefits Program health plans, including the plans described in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). The report shall include the State and public entities other than the State that participate and do not participate in the State Health Benefits Program, inclusive of retirees who are not Medicare-eligible paid for by the State. The report shall make recommendations addressing the cost of higher priced medications, including, but not limited to, glucagon-like peptide-1 drugs utilized for diabetes, weight loss, and cardiovascular disease. Within 90 calendar days of the commission’s receipt of the actuary’s report and recommendations regarding higher priced medications, including glucagon-like peptide-1 drugs, the commission shall undertake actions and plan modifications as may be necessary to appropriately manage the cost of higher priced medications.

(10) The commission shall review and consider any prescription medications that have been newly approved by the federal Food and Drug Administration on a quarterly basis and shall review such information when considering updates to the prescription drug formularies for each of the State Health Benefit Program health plans, including the plans described in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). Prescription medications newly approved by the Food and Drug Administration shall only be included on the prescription drug formularies of the State Health Benefits Program health plans based on a majority vote of commission members.

(cf: P.L.2011, c.78, s.45)

2. Section 55 of P.L.2011, c.78 (C.52:14-17.27b) is amended to read as follows:

55. a. Whenever the [State Health Benefits Plan Design Committee of the State Health Benefits Program or the] School Employees' Health Benefits Plan Design Committee of the School Employees' Health Benefits Program fails to render a decision on a matter before the committee because it has not received a vote of the majority of the committee members after 60 days have passed following the initial consideration of the matter, the committee shall utilize a super conciliator, randomly selected from a list developed by the New Jersey Public Employment Relations Commission. The super conciliator shall assist the committee based upon procedures and subject to qualifications established by the commission pursuant to regulation.

The super conciliator shall promptly schedule investigatory proceedings. The purpose of the proceedings shall be to:

Investigate and acquire all relevant information regarding the committee's failure to render a decision;

Discuss with the members of the committee their differences, and utilize means and mechanisms, including but not limited to requiring 24-hour per day negotiations, until a voluntary settlement is reached, and provide recommendations to resolve the members' differences; and

Institute any other non-binding procedures deemed appropriate by the super conciliator.

If the actions taken by the super conciliator fail to resolve the dispute, the super conciliator shall issue a final report, which shall be provided to the committee promptly and made available to the public within 10 days thereafter.

The super conciliator, while functioning in a mediatory capacity, shall not be required to disclose any files, records, reports, documents, or other papers classified as confidential which are received or prepared by him or to testify with regard to mediation conducted by him under this section. Nothing contained herein shall exempt an individual from disclosing information relating to the commission of a crime.

b. (1) Whenever the State Health Benefits Commission fails to render a decision on a matter before the commission after 30 days have passed following the initial consideration of the matter, or the commission remains at an impasse on a matter before the commission, the commission shall select a neutral third-party arbitrator with subject matter expertise who shall assist the commission based upon procedures and subject to qualifications established by the commission pursuant to regulation. If an arbitrator ceases or is unable to act during the arbitration proceeding, a replacement arbitrator shall be selected to continue the proceedings and resolve the matter.

The arbitrator shall promptly schedule investigatory proceedings. The purpose of the proceedings shall be to:

investigate and acquire all relevant information regarding the commission’s failure to render a decision;

discuss with the members of the commission their differences, and utilize means and mechanisms, including but not limited to requiring 24-hour per day negotiations, until a voluntary settlement is reached, and provide recommendations to resolve the members' differences; and

institute any other non-binding procedures deemed appropriate by the arbitrator.

(2) If the commission fails to reach a resolution of the matter after 30 days of arbitration, the arbitrator shall issue a final decision on the matter, which shall be binding. The decision shall be provided to the commission promptly and made available to the public within 10 days thereafter.

The arbitrator shall not be required to disclose any files, records, reports, documents, or other papers classified as confidential which are received or prepared by the arbitrator or to testify with regard to arbitration conducted under this section. Nothing contained herein shall exempt an individual from disclosing information relating to the commission of a crime.

(cf: P.L.2011, c.78, s.55)

3. (New section) The State Health Benefits Commission shall require the third-party medical claims reviewer procured pursuant to section 2 of P.L.2019, c.143 (C.52:14-17.30b), as part of the contract, to utilize appropriate data analytics to determine the most effective methodology for conducting annual reviews of in-network claims and out-of-network claims, as shall be determined through the utilization of appropriate methods of data analytics, to ensure that the State Health Benefits Program is being properly charged for in-network and out-of-network provider services. The claims review program shall utilize data analytics to determine the most effective approach for reviewing claims reimbursed to providers located in New York and Pennsylvania, with a focus on claims resulting from higher cost services, including, but not limited to, services provided by specialty physicians. The State Treasurer shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as may be necessary to implement the provisions of this section. The regulations shall specify any additional quantitative and qualitative criteria that shall apply to the claims review requirements established by this section.

4. (New section) a. This section shall apply to the State Health Benefits Program but only to employers other than the State that participate in the program, except that the provisions of this section shall not increase the contribution rates being paid by employees who had 20 or more years of creditable service in one or more State or locally-administered retirement systems on the effective date of section 77 of P.L.2011, c.78 (C.52:14-17.28e). This section shall not apply to State colleges or universities established pursuant to chapter 64 of Title 18A of the New Jersey Statutes, Rutgers, The State University, New Jersey Institute of Technology, Rowan University, Montclair State University, Kean University and any other State college or university now or hereafter established or authorized by law. This section shall not apply to University Hospital, as described under section 14 of P.L.2012, c.45 (C.18A:64G-6.1a).

b. Notwithstanding the provisions of any other law, rule, or regulation to the contrary, beginning with the plan year that commences the year following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), and for each plan year thereafter, the State Health Benefits Program shall offer only five plans that provide medical and prescription drug benefits for employees, and retirees who are not Medicare-eligible, and their dependents, if any. All other plans offered prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) for employees, and retirees who are not Medicare-eligible, and their dependents, if any, shall be terminated, unless as otherwise specified in this section.

The five plans shall be:

(1) the SHBP Unity 2019 PPO plan as offered by the State Health Benefits Commission effective July 1, 2019, except that the commission and employers other than the State shall require employee contribution rates to be those specified in subsection d. of this section;

(2) the SHBP Tiered Network plan as offered by the State Health Benefits Commission as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), except that the commission and employers other than the State shall require employee contribution rates to equate to 75 percent of the rates paid by employees of employers other than the State enrolled in the SHBP Unity 2019 PPO plan pursuant to this section;

(3) the SHBP PPO 2030 plan as offered by the State Health Benefits Commission as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill);

(4) the SHBP PPO 2035 plan as offered by the State Health Benefits Commission as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill); and

(5) the NJ Gold plan as developed by the State Health Benefits Commission in accordance with subsection c. of this section.

Employers other than the State that participate in the State Health Benefits Program shall retain the ability to enter the program for medical only plans and may separately purchase pharmacy and dental benefits outside of the program without limitation or restriction.

c. Beginning the first day of January next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and for each plan year thereafter, the program shall offer a plan to be called the NJ Gold plan. The NJ Gold plan shall be developed by the State Health Benefits Commission in a manner which does not require employee contributions in the form of withholding from the employee’s base salary, or the retirement allowance of retirees. The NJ Gold plan shall provide benefits that are actuarially equivalent to 80 percent of the full actuarial value of the benefits provided under the plan.

d. (1) Beginning the first day of January next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and for each plan year thereafter, the SHBP Unity 2019 PPO plan shall require each employee, and retiree who is not Medicare-eligible and who is required by another provision of law to contribute in retirement toward the cost of health care benefits coverage under the State Health Benefits Program, to contribute annually toward the cost of health care benefits coverage for the employee and retiree, and dependents if any, under the SHBP Unity 2019 PPO plan offered by the State Health Benefits Program pursuant to this section, an amount equal to a percentage of the employee’s annual salary or retiree’s annual retirement allowance, including any cost-of-living adjustments made to that allowance. The contribution shall be withheld by the employer from the salary of the employee or by the retirement system from the retirement allowance, including any cost-of-living adjustments made to that allowance, of the retiree who is not Medicare-eligible. The percent to be contributed shall be as follows with the retirement allowance including any cost-of-living adjustments made to that allowance:

(a) For single coverage or its equivalent –

an employee whose base salary or retirement allowance is $20,000 or more but less than $30,000 annually shall pay 2.584 percent;

an employee whose base salary or retirement allowance is $30,000 or more but less than $45,000 annually shall pay 2.906 percent;

an employee whose base salary or retirement allowance is $45,000 or more but less than $50,000 annually shall pay 3.1 percent;

an employee whose base salary or retirement allowance is $50,000 or more but less than $55,000 annually shall pay 4.75 percent;

an employee whose base salary or retirement allowance is $55,000 or more but less than $60,000 annually shall pay 5.75 percent;

an employee whose base salary or retirement allowance is $60,000 or more but less than $65,000 annually shall pay 6.975 percent;

an employee whose base salary or retirement allowance is $65,000 or more but less than $70,000 annually shall pay 7.25 percent;

an employee whose base salary or retirement allowance is $70,000 or more but less than $80,000 annually shall pay 7.95 percent;

an employee whose base salary or retirement allowance is $80,000 or more but less than $95,000 annually shall pay $6,350; and

an employee whose base salary or retirement allowance is $95,000 or more annually shall pay $6,750.

(b) For employee and spouse/partner coverage or its equivalent –

an employee whose base salary or retirement allowance is $20,000 or more but less than $30,000 annually shall pay 2.584 percent;

an employee whose base salary or retirement allowance is $30,000 or more but less than $36,000 annually shall pay 3.552 percent;

an employee whose base salary or retirement allowance is $36,000 or more but less than $50,000 annually shall pay 3.875 percent;

an employee whose base salary or retirement allowance is $50,000 or more but less than $55,000 annually shall pay 5.49 percent;

an employee whose base salary or retirement allowance is $55,000 or more but less than $60,000 annually shall pay 6.5 percent;

an employee whose base salary or retirement allowance is $60,000 or more but less than $65,000 annually shall pay 8.5 percent;

an employee whose base salary or retirement allowance is $65,000 or more but less than $70,000 annually shall pay 9.25 percent;

an employee whose base salary or retirement allowance is $70,000 or more but less than $75,000 annually shall pay 10.95 percent;

an employee whose base salary or retirement allowance is $75,000 or more but less than $80,000 annually shall pay $8,950;

an employee whose base salary or retirement allowance is $80,000 or more but less than $85,000 annually shall pay $9,400;

an employee whose base salary or retirement allowance is $85,000 or more but less than $100,000 annually shall pay $10,975; and

an employee whose base salary or retirement allowance is $100,000 or more annually shall pay $12,000.

an employee whose base salary or retirement allowance is $20,000 or more but less than $26,000 annually shall pay 2.584 percent;

an employee whose base salary or retirement allowance is $26,000 or more but less than $30,000 annually shall pay 2.906 percent;

an employee whose base salary or retirement allowance is $30,000 or more but less than $35,000 annually shall pay 3.229 percent;

an employee whose base salary or retirement allowance is $35,000 or more but less than $45,000 annually shall pay 3.875 percent;

an employee whose base salary or retirement allowance is $45,000 or more but less than $50,000 annually shall pay 4.52 percent;

an employee whose base salary or retirement allowance is $50,000 or more but less than $55,000 annually shall pay 5.813 percent;

an employee whose base salary or retirement allowance is $55,000 or more but less than $60,000 annually shall pay 6.548 percent;

an employee whose base salary or retirement allowance is $60,000 or more but less than $65,000 annually shall pay 7.75 percent;

an employee whose base salary or retirement allowance is $65,000 or more but less than $70,000 annually shall pay 8.395 percent;

an employee whose base salary or retirement allowance is $70,000 or more but less than $85,000 annually shall pay 12.75 percent;

an employee whose base salary or retirement allowance is $85,000 or more but less than $100,000 annually shall pay 13.0 percent;

an employee whose base salary or retirement allowance is $100,000 or more but less than $110,000 annually shall pay $14,975; and

an employee whose base salary or retirement allowance is $110,000 or more annually shall pay $17,500.

(d) For parent and child coverage or its equivalent –

an employee whose base salary or retirement allowance is $20,000 or more but less than $30,000 annually shall pay 2.584 percent;

an employee whose base salary or retirement allowance is $30,000 or more but less than $36,000 annually shall pay 3.552 percent;

an employee whose base salary or retirement allowance is $36,000 or more but less than $45,000 annually shall pay 3.875 percent;

an employee whose base salary or retirement allowance is $45,000 or more but less than $50,000 annually shall pay 4.199 percent;

an employee whose base salary or retirement allowance is $50,000 or more but less than $60,000 annually shall pay 5.813 percent;

an employee whose base salary or retirement allowance is $60,000 or more but less than $65,000 annually shall pay 8.5 percent;

an employee whose base salary or retirement allowance is $65,000 or more but less than $70,000 annually shall pay 9.25 percent;

an employee whose base salary or retirement allowance is $70,000 or more but less than $75,000 annually shall pay 10.25 percent;

an employee whose base salary or retirement allowance is $75,000 or more but less than $80,000 annually shall pay $7,850;

an employee whose base salary or retirement allowance is $80,000 or more but less than $85,000 annually shall pay $8,250;

an employee whose base salary or retirement allowance is $85,000 or more but less than $100,000 annually shall pay $8,475; and

an employee whose base salary or retirement allowance is $100,000 or more annually shall pay $10,750.

(2) An employee enrolled in the SHBP Unity 2019 PPO plan shall be required to pay only the contribution specified in this subsection, notwithstanding any other provision of law, rule, or regulation to the contrary requiring contributions by employees toward the cost of health care benefits coverage under the program. No other contribution may be required by collective negotiations agreement, unless the parties to a collective negotiations agreement agree to negotiate different contributions than are specified in this subsection.

(3) Only those retirees who are not Medicare-eligible and who are required by another provision of law to contribute in retirement toward the cost of health care coverage under the State Health Benefits Program shall be required to pay the contribution specified in this subsection.

A retiree who is not Medicare-eligible, who is enrolled in the SHBP Unity 2019 PPO plan, and who is required by another provision of law to contribute in retirement toward the cost of health care coverage under the program shall be required to pay only the contribution specified in this subsection, notwithstanding the provisions of section 77 of P.L.2011, c.78 (C.52:14-17.28e) to the contrary requiring contributions by retirees toward the cost of health care benefits coverage under the program.

(4) For an employee, the annual base salary paid by the employer for the position held by the employee shall be used to identify the percentage to be used to calculate the annual contribution required under this subsection. For a retiree who is not Medicare-eligible, the annual retirement allowance, including any cost of living adjustments to that allowance, received by the retiree shall be used to identify the percentage to be used to calculate the annual contribution required under this subsection.

(5) The annual contribution by an employee or a retiree who is not Medicare-eligible as calculated in accordance with this subsection shall not exceed the amount as calculated in accordance with section 5 of P.L.1961, c.49 (C.52:14-17.29).

(6) The contributions required by this subsection shall apply to employees for whom the employer has assumed a health care benefits payment obligation, to require that such employees pay the amount of contribution specified in this subsection for health care benefits coverage. The contributions required by this subsection shall apply to retirees for whom a local government employer has assumed a health care benefits payment obligation but who are required by law to contribute toward the cost of health care benefits coverage under the program, to require that such retirees pay the amount of contribution specified in this subsection for health care benefits coverage.

(7) For the plan year that commences next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and for each plan year thereafter, the contributions required pursuant to this subsection may be modified through collective negotiations agreements entered into between the employers who participate in the State Health Benefits Program and their employees. The contributions required pursuant to this subsection shall become part of the parties' collective negotiations agreement and shall then be subject to collective negotiations in a manner similar to other negotiable items between the parties. Negotiations concerning contributions for health care benefits shall be conducted as if the contributions required pursuant to this subsection were included in the prior contract. The contribution calculation based on the percentage of base salary set forth in this subsection may be modified or a new method of contribution calculation other than a percentage of salary may be provided for in accordance with a collective negotiations agreement, provided that the parties to the collective negotiations agreement agree on the new or modified method of contribution calculation.

e. Prior to the first day of January next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), the program, through the Division of Pensions and Benefits in the Department of the Treasury, shall provide for an enrollment period during which all employees who commenced employment prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be required to affirmatively select one of the plans specified in subsection b. of this section. If an employee fails to affirmatively select a plan during this enrollment period, the program shall enroll the employee, and the employee’s dependents, if any, in the SHBP Unity 2019 PPO plan for the plan year beginning on the first day of January next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

During the enrollment period, any person who is enrolled in a plan offered by the program and who is paying the full cost of health care benefits coverage shall also be required to affirmatively select one of the plans specified in subsection b. of this section. If a person fails to affirmatively select a plan during this enrollment period, the program shall enroll the person, and the person’s dependents, if any, in the SHBP Unity 2019 PPO plan for the plan year beginning on the first day of January next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

f. (1) Beginning on the first day of January next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), an employee commencing employment on or after the effective date P.L. , c. (C. ) (pending before the Legislature as this bill) who does not waive coverage shall be required to affirmatively select one of the plans specified in subsection b. of this section. If the employee fails to affirmatively select a plan during this enrollment period, the program shall enroll the employee, and the employee’s dependents, if any, in the SHBP Unity 2019 PPO plan for the plan year beginning on the first day of January next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

The employee shall remain enrolled in the plan selected by the employee at the annual open enrollment for each plan year, provided that the employee during this period may waive coverage as an employee and select and change the type of coverage received under the plan following a qualifying life event, in accordance with the program regulations.

(2) For the plan year beginning on the first day of January next following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a retiree who is not Medicare-eligible, shall be required to affirmatively select one of the plans specified in subsection b. of this section. If the retiree fails to affirmatively select a plan during this enrollment period, the program shall enroll the retiree, and the retiree’s dependents, if any, in the SHBP Unity 2019 PPO plan for the plan year beginning on the first day of January next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) as a retiree, if the retiree does not waive coverage. The retiree shall remain enrolled in that plan for each plan year until the retiree becomes eligible for Medicare. The retiree who becomes eligible for Medicare shall no longer be eligible for enrollment in the plan, except that any dependent of the retiree who is not eligible for Medicare may remain eligible for coverage.

(3) Except as otherwise provided in this subsection or subsection e. of this section, selection of a plan shall be at the sole discretion of the employee or retiree who is not Medicare-eligible.

g. Parties to a collective negotiations agreement shall be permitted to enter into binding agreements to provide employees with access to health care reimbursement arrangements, health care savings accounts, and flexible spending accounts to the full extent permitted by federal law including statutes, regulations, and policy guidance of the Internal Revenue Service.

h. (1) Notwithstanding the provisions of this section, or any other law, rule, or regulation to the contrary, for each plan year, the State Health Benefits Commission shall annually track and calculate the actual premium costs of each plan offered, inclusive of medical and prescription drug costs, following each plan’s initial offering after the effective date of this act, P.L. , c. (C. ) (pending before the Legislature as this bill). In addition, the commission shall compare such costs to trends of health care costs at the national, regional, and State levels. After the commission’s review of any mid-year report the commission shall meet annually between March 1 and April 15 to discuss actual and projected utilization and costs for plans in which active and retiree members are enrolled. Such meeting may also include representatives from the New Jersey Division of Pensions and Benefits. Any cost sharing of any increases or decreases in the premium costs of the health plans offered in each plan year shall be subject to adjustment, pursuant to the escalator and de-escalator provisions provided in this section.

(2) As used in this section:

“Baseline premium” means the blended premium for the current plan year plus one percent.

“Blended premium” means and includes the premiums for medical and prescription drug rates for all levels of coverage.

"Consumer Price Index" means the Consumer Price Index for All Urban Consumers, New York-Northern New Jersey-Long Island Metropolitan Area, All Items (1982-84=100), as published by the Bureau of Labor Statistics in the United States Department of Labor.

(3) Every year prior to the renewal of each plan, the commission shall determine whether the blended premium of a plan in a plan year exceeds the baseline premium. If so, the commission shall determine how to manage the plan to lower the premium, reduce the rate of premium increases, or both. If the commission cannot agree upon plan design changes or other cost saving measures that would reduce the actuary’s recommendations for premiums for the upcoming plan year to the preliminary baseline premium by the September 1 preceding the start of the next plan year, then an escalator shall be applied to employee contribution rates, pursuant to paragraph (4) of this subsection.

(4) If the renewal premium is six percent or more above the preliminary baseline premium, the escalator to be applied to employee contribution rates shall be equal to the rate of inflation as determined by the Consumer Price Index. Any increase in employee contributions shall be effective the first pay period of the new plan year.

(5) If the renewal premium is six percent or more below the preliminary baseline premium, the commission shall determine how to manage the plan to share the savings in reduced costs or to improve the quality of the plan through design changes or other measures. If the commission cannot agree to either reduce costs or improve the quality of the plan, or agree upon a reduction in the employee contribution rates by September 1 preceding the start of the plan year, then contribution rates shall be reduced by the application of a de-escalator. The de-escalator shall be the amount of the decrease in the renewal premium. Any decrease in employee contributions shall be effective the first pay period of the new plan year.

(6) The commission’s actions undertaken pursuant to paragraphs (3), (4), and (5) of this subsection shall not be subject to the dispute resolution procedures set forth in subsection b. of section 55 of P.L.2011, c.78 (C.52:14-17.27b).

5. (New section) a. Within 180 days following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), when a public employer other than the State does not participate in the State Health Benefits Program, if the public employer does not offer a plan substantially similar in design to the SHBP Unity 2019 PPO Plan and its employees are enrolled in medical and prescription drug plans with higher annual premiums than the SHBP Unity 2019 PPO plan, upon request of the collective negotiations representative who represents those employees, the public employer other than the State and the collective negotiations representative shall negotiate over offering employees a health care plan substantially similar in design to the SHBP 2019 Unity PPO at substantially similar contribution rates and annual premiums, offering employees incentives to select plans with lower costs, or, in the alternative, enrolling in the State Health Benefits Program. Modifications to the health benefit provisions of collective negotiations agreements or to health benefit plans, including prescription drug plans, offered to employees, shall only be by mutual agreement between the collective negotiations representative and the local employer. Upon request of the parties, the Public Employment Relations Commission shall assign a mediator to assist in the resolution of a dispute. If mediation is unsuccessful and the parties are unable to reach a mutual agreement, there shall be no changes to health benefits provided pursuant to a collective negotiations agreement, practice, or policy.

b. Notwithstanding any law, rule, or regulation to the contrary, local government entities that do not participate in the State Health Benefits Program shall be permitted to provide employees with access to health care reimbursement arrangements, health care savings accounts, and flexible spending accounts pursuant to collective negotiations agreements to offset Internal Revenue Service eligible employee out-of-pocket costs related to eligible medical and prescription drug services, to the full extent permitted by federal law including statutes, regulations, and policy guidance of the Internal Revenue Service.

c. The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be construed to interfere with or require changes to the health plans offered by a public employer other than the State that does not participate in the State Health Benefits Program.

6. (New section) Notwithstanding the provisions of any other law, rule, or regulation to the contrary, within one year from the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), any employer other than the State shall be required to make a determination as to whether to participate in the State Health Benefits Program. Any employer other than the State which elects to participate in the State Health Benefits Program shall be required to remain enrolled in the program for a minimum period of two consecutive plan years following the election to participate in the program. Any employer other than the State that elects not to participate in the State health Benefits Program shall be prohibited from enrolling in the program for a minimum of two consecutive plan years.

7. This act shall take effect immediately.

STATEMENT

This bill makes various changes to the State Health Benefits Program (SHBP).

State Health Benefits Commission

The bill revises the structure of the State Health Benefits Commission (SHBC) to include 11 members as follows:

(1) the State Treasurer; the Commissioner of Banking and Insurance; the Chairperson of the Civil Service Commission, or their designees, who will serve ex officio;

(2) two members appointed by the Governor;

(8) a member, who will serve as chairperson, appointed by the Governor from among three persons nominated jointly by at least eight of the members appointed.

The bill specifies that the SHBC will establish the health benefits program and, with respect to plan design, the SHBC will have responsibility for, and authority over, the various health care benefits plans and components of those plans, including medical benefits, prescription drug benefits, dental, vision, and any other health benefits, offered and administered by the SHBP and will have the authority to create, modify, or terminate any plan or component of any health care benefits plan, at its sole discretion. The bill empowers the SHBC to obtain certain information necessary to make informed decisions and to enter into contracts with third-party administrators and consultants.

The SHBC will also be required to follow the advice and guidance of the program actuary when developing plan designs for the health plans provided by the program. Whenever the program actuary advises that the anticipated costs of one or more of the plans under the program is likely to exceed the rate of medical or prescription drug inflation for a given plan year, as determined by the program actuary based upon relevant indices and information, the commission will be required to take such actions as may be necessary to appropriately mange such costs and ensure the continued viability of the program, subject to established processes including, but not limited to, collective negotiations agreements.

Actuarial Report

Additionally, the bill, requires that within 180 calendar days after the effective date of the bill, the State’s actuary for the SHBP will issue an actuarial report concerning the SHBP health plans. The report must include the State and public entities other than the State that participate and do not participate in the State Health Benefits Program, inclusive of retirees who are not Medicare-eligible paid for by the State. The report must make recommendations addressing the cost of higher priced medications, including, but not limited to, glucagon-like peptide-1 drugs utilized for diabetes, weight loss, and cardiovascular disease. Within 90 calendar days of the commission’s receipt of the actuary’s report and recommendations regarding higher priced medications, including glucagon-like peptide-1 drugs, the commission will undertake actions and plan modifications as may be necessary to appropriately manage the cost of higher priced medications.

The bill requires the commission to review and consider any prescription medications that have been newly approved by the federal Food and Drug Administration on a quarterly basis and must review such information when considering updates to the prescription drug formularies for each of the plans in the SHBP and those described in the bill. The bill provides that prescription medications newly approved by the Food and Drug Administration will only be included on the prescription drug formularies of the SHBP health plans based on a majority vote of commission members.

Plan Design Committee and Arbitration Process

This bill eliminates the SHBP Plan Design Committee and transfers the powers and functions of the Plan Design Committee to the newly organized SHBC. With the elimination of the SHBP Plan Design Committee, the bill ends the use of a super conciliator by the SHBP to resolve deadlocked matters before the SHBP Plan Design Committee. Instead, the bill requires all decisions before the commission to be resolved within 30 days from the date such decisions are placed before the commission. After the 30 day period, if a decision on a matter before the commission is not reached, or if the commission remains at an impasse, the commission will select a neutral third-party arbitrator with subject matter expertise who will attempt to assist the commission in reaching a voluntary resolution on the matter.

The bill requires the arbitrator to promptly schedule investigatory proceedings to investigate and acquire all relevant information regarding the committee’s failure to render a decision; discuss with the members of the committee their differences, and utilize means and mechanisms, including but not limited to requiring 24-hour per day negotiations, until a voluntary settlement is reached, and provide recommendations to resolve the members’ differences; and institute any other non-binding procedures deemed appropriate by the arbitrator. If the actions taken by the arbitrator fail to resolve the dispute after 30 days, the arbitrator will issue a final binding decision, which will be provided to the commission promptly and made available to the public within 10 days thereafter.

Medical Claims Review

This bill also requires SHBC to require that the third-party medical claims reviewer will utilize appropriate data analytics to determine the most effective methodology for conducting annual reviews of in-network claims and out-of-network claims, as must be determined through the utilization of appropriate methods of data analytics, to ensure that the SHBP is being properly charged for in-network and out-of-network provider services. The claims review program will utilize data analytics to determine the most effective approach for reviewing claims reimbursed to providers located in New York and Pennsylvania, with a focus on claims resulting from higher cost services, including, but not limited to, services provided by specialty physicians. The State Treasurer is required to adopt, pursuant to the “Administrative Procedure Act,” such rules and regulations as may be necessary to implement the provisions of this section. The regulations must specify any additional quantitative and qualitative criteria that will apply to the claims review requirements established by this section.

SHBP-Local Plans

The bill requires that the SHBP offer five plans that provide medical and prescription drug benefits for local government employees of employers other than the State that participate in the SHBP and retirees who are not Medicare-eligible, and their dependents, if any. However, under the bill, these provisions will not increase the contribution rates of employees who had 20 or more years of creditable service in one or more State or locally-administered retirement systems on the effective date of section 77 of P.L.2011, c.78 (C.52:14-17.28e). Under the bill, this section will not apply to State colleges or universities, Rutgers, The State University, New Jersey Institute of Technology, Rowan University, Montclair State University, Kean University and any other State college or university now or hereafter established or authorized by law, or to University Hospital.

The five plans will be:

(1) the SHBP Unity 2019 PPO plan as offered by the State Health Benefits Commission effective July 1, 2019, except that the commission and employers other than the State will require employee contribution rates as set forth in the bill which will be the default plan for employees and retirees who fail to affirmatively select a plan during the open enrollment period;

(2) the SHBP Tiered Network plan as offered by the State Health Benefits Commission as of the effective date of this bill, except that the commission and employers other than the State will require employee contribution rates to equate to 75 percent of the rates paid by employees of employers other than the State enrolled in the SHBP Unity 2019 PPO plan pursuant to the bill;

(3) the SHBP PPO 2030 plan as offered by the State Health Benefits Commission as of the effective date of this bill;

(4) the SHBP PPO 2035 plan offered by the State Health Benefits Commission as of the effective date this bill; and

(5) the NJ Gold plan.

The NJ Gold plan will be developed by the SHBC in a manner which does not require employee contributions in the form of withholding from the employee’s base salary, or the retirement allowance of retirees. The NJ Gold plan will provide benefits that are actuarially equivalent to 80 percent of the full actuarial value of the benefits provided under the plan.

The bill provides for the escalation or de-escalation of employee contribution rates depending on the anticipated increase or decrease in premium costs, as applicable. The bill directs the State Health Benefits Commission to annually track and calculate the actual premium costs of each plan offered, inclusive of medical and prescription drug costs, following each plan’s initial offering after the effective date of the bill, and to compare such costs to trends of health care costs at the national, regional, and State levels. After the commission’s review of any mid-year report the commission will meet annually between March 1 and April 15 to discuss actual and projected utilization and costs for plans in which active and retiree members are enrolled. Such meeting may also include representatives from the New Jersey Division of Pensions and Benefits. Any cost sharing of any increases or decreases in the premium costs of the health plans offered in each plan year will be subject to adjustment, pursuant to the escalator and de-escalator provisions provided in the bill.

Under the bill, every year prior to the renewal of each plan, the commission will determine whether the blended premium, defined in the bill as the premiums for medical and prescription drug rates for all levels of coverage, of a plan in a plan year exceeds the baseline premium, defined in the bill as the blended premium for the current plan year plus one percent. If so, the commission will determine how to manage the plan to lower the premium, reduce the rate of premium increases, or both. If the commission cannot agree upon plan design changes or other cost saving measures that would reduce the actuary’s recommendations for premiums for the upcoming plan year to the preliminary baseline premium by the September 1 preceding the start of the next plan year, then an escalator will be applied to employee contribution rates.

If the renewal premium is six percent or more above the preliminary baseline premium, the escalator to be applied to employee contribution rates will be equal to the rate of inflation as determined by the Consumer Price Index. Any increase in employee contributions will be effective the first pay period of the new plan year.

If the renewal premium is six percent or more below the preliminary baseline premium, the commission will determine how to manage the plan to share the savings in reduced costs or to improve the quality of the plan through design changes or other measures. If the commission cannot agree to either reduce costs or improve the quality of the plan, or agree upon a reduction in the employee contribution rates by September 1 preceding the start of the plan year, then contribution rates will be reduced by the application of a de-escalator. The de-escalator will be the amount of the decrease in the renewal premium. Any decrease in employee contributions will be effective the first pay period of the new plan year.

The commission’s actions undertaken pursuant to the escalator and de-escalator provisions will not be subject to the commission’s dispute resolution procedures.

Non-SHBP-Local Employers

The bill also requires that within 180 days following the enactment this bill, when a public employer other than the State does not participate in the SHBP, if the public employer does not offer a plan substantially similar in design to the SHBP Unity 2019 PPO Plan and its employees are enrolled in medical and prescription drug plans substantially similar in design to the SHBP Unity 2019 PPO plan but with higher annual premiums than the SHBP Unity 2019 PPO plan, upon request of the collective negotiations representative who represents those employees, the public employer other than the State and the collective negotiations representative will negotiate over offering employees a health care plan substantially similar in design to the 2019 Unity PPO at substantially similar contribution rates and annual premiums, offering employees incentives to select plans with lower costs, or, in the alternative, enrolling in the SHBP. Modifications to the health benefit provisions of collective negotiations agreements or to health benefit plans, including prescription drug plans, offered to employees, will only be by mutual agreement between the collective negotiations representative and the local employer. Upon request of the parties, the Public Employment Relations Commission will assign a mediator to assist in the resolution of a dispute. If mediation is unsuccessful and the parties are unable to reach a mutual agreement, there will be no changes to health benefits provided pursuant to a collective negotiations agreement, practice, or policy.

The bill clarifies that local government entities that do not participate in the SHBP will be permitted to utilize health reimbursement arrangements pursuant to collective negotiations agreements to offset IRS eligible employee out-of-pocket costs related to eligible medical and prescription drug services. The bill also specifies that its provisions will not be construed to interfere with or require changes to the health plans offered by a public employer other than the State that does not participate in the State Health Benefits Program.

Local Participation in SHBP

The bill also requires that, within one year from the effective date of this bill, any employer other than the State will be required to make a determination as to whether or not to participate in the SHBP. Any employer other than the State which elects to participate in the SHBP will be required to remain enrolled in the program for a minimum period of two consecutive plan years following the election to participate in the program. Any employer other than the State that elects not to participate in the SHBP will be prohibited from enrolling in the program for a minimum of two consecutive plan years.