S1976

An Act directing the State Health Benefits Commission and School Employees’ Health Benefits Commission to study and implement reference-based pricing, and supplementing P.L.1961, c.49 (C.52:14-17.25 et seq.).

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

1. a. The State Health Benefits Commission, established pursuant to section 3 of P.L.1961, c.49 (C.52:14-17.27), and the School Employees’ Health Benefits Commission, established pursuant to section 33 of P.L.2007, c.103 (C.52:14-17.46.3), shall conduct a comprehensive review of reference-based pricing health benefits models and the fiscal impact of implementing reference-based pricing for the State Health Benefits Program and the School Employees’ Health Benefits Program. The review shall be conducted in consultation with the actuary of each program and the carriers under contract with each program. The review shall identify areas of health care benefits and services where reference-based pricing can be implemented.

b. Each commission shall evaluate the following, at minimum:

(1) the anticipated costs and savings to the State, to participating employers, and to persons covered under each program associated with implementing reference-based pricing;

(2) the potential effect of reference-based pricing on higher-cost medical services, including radiology, outpatient specialty, and elective inpatient procedures;

(3) the optimal maximum reimbursable amount, including the optimal percentage of Medicare reimbursement to health care facilities and providers, at which reference-based pricing should be established;

(4) the outcomes of reference-based pricing employed in other jurisdictions in the country;

(5) the changes in consumer choice and provider prices and participation before and after implementation of reference-based pricing in other jurisdictions utilizing reference-based pricing, comparing those changes to choices made by comparable employed groups not subject to reference-based pricing during the same time period; and

(6) the requirements and limitations of State and federal law, including the Patient Protection and Affordable Care Act (PPACA) (Pub. L. 111–148, 2010), to which the most feasible models would be subject.

c. Each commission shall have the power to call to its assistance and avail itself of the services of employees of any State, county, or municipal department, board, bureau, commission or agency as it may require and as may be available for purposes of this section. Each commission may consult with and seek the assistance of any other public or private organization or individual with relevant expertise as may be necessary.

d. Each commission shall issue a final report on its findings and recommendations, which shall include recommendations for legislation, to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), within 180 days after the effective date of P.L. , c. (pending before the Legislature as this bill). Following the issuance of its final report, the commission shall convene at the call of the chairperson to consider and respond to any written request submitted to it by a legislator or officer or employee of the Executive Branch of State government on any item set forth in its report.

2. Within one year following the effective date of P.L. , c. (pending before the Legislature as this bill), the State Health Benefits Commission, established pursuant to section 3 of P.L.1961, c.49 (C.52:14-17.27), and the School Employees’ Health Benefits Commission, established pursuant to section 33 of P.L.2007, c.103 (C.52:14-17.46.3), shall implement reference-based pricing for each contract entered into with a carrier after the effective date in a manner that places limitations on reimbursement rates using Medicare rates as the reference point. Each commission, prior to implementation, shall adopt a written report detailing how the reference percentages have been set by each commission, the expected cost savings, and the existing negotiated cost ranges by procedure that each carrier under contract with each commission has in place prior to implementation of the reference-based price limitation.

3. This act shall take effect immediately.

STATEMENT

This bill requires the State Health Benefits Commission and School Employees’ Health Benefits Commission to conduct comprehensive reviews of reference-based pricing health benefits models and the fiscal impact of implementing reference-based pricing for the State Health Benefits Program and the School Employees’ Health Benefits Program. The review must be conducted in consultation with the actuary of each program and the carriers under contract with each program. The review must identify areas of health care benefits and services where reference-based pricing can be implemented.

The bill specifies the areas and issues to be evaluated by each commission and requires each commission to issue a final report on its findings and recommendations within 180 days after the effective date of the bill.

Within one year following the effective date of this bill, each commission must implement reference-based pricing for each contract entered into with a carrier after the effective date in a manner that places limitations on reimbursement rates using Medicare rates as the reference point. Each commission, prior to implementation, must adopt a written report detailing how the reference percentages have been set by each commission, the expected cost savings, and the existing negotiated cost ranges by procedure that each carrier under contract with each commission has in place prior to implementation of the reference-based price limitation.