SENATE COMMERCE COMMITTEE

 

STATEMENT TO

 

SENATE, No. 1319

 

with committee amendments

 

STATE OF NEW JERSEY

 

DATED:  FEBRUARY 27, 2012

 

      The Senate Commerce Committee reports favorably and with committee amendments Senate Bill No. 1319.

      As amended by the committee, this bill, which is designated as the “New Jersey Health Benefit Exchange Act,” creates a Statewide health insurance exchange pursuant to the federal “Patient Protection and Affordable Care Act," Pub.L.111-148, as amended by the “Health Care and Education Reconciliation Act of 2010,” Pub.L.111-152 (“the federal act”).

      The bill provides specifically as follows: 

 

The Administration of the Exchange

 

·   The New Jersey Health Benefit Exchange (“the exchange”) is established in the Executive Branch of State Government in order to effectuate the provisions of the federal act, and is allocated within the Department of Banking and Insurance (DOBI) but is to be independent of any supervision or control by DOBI or any board or officer thereof.

·   The exchange is to be governed by a board of directors (“the board”) consisting of eight members as follows: 

      -- the Commissioners of Banking and Insurance and Human Services, or their designees, as nonvoting, ex officio members;

      -- the chairperson of the advisory committee, to be established by the board pursuant to the bill’s provisions, as a nonvoting, ex officio member; and

      -- five public members who are residents of this State, to be appointed by the Governor with the advice and consent of the Senate, including:  one person who is a member in good standing of the American Academy of Actuaries; and four other persons, two of whom are to be appointed upon the recommendation of the President of the Senate and two upon the recommendation of the Speaker of the General Assembly.

·   The public members of the board appointed upon the  recommendation of the President of the Senate and the Speaker of the General Assembly are to be appointed in such a manner as to ensure that the public membership of the board includes individuals who have demonstrated expertise in the following areas:  individual health care coverage; small employer health care coverage; health benefits plan administration; health care finance; and consumer health care advocacy.

·   The public members of the board are to serve on a part-time basis and receive an annual salary of $50,000.  The public members are also to be reimbursed for any expenses incurred by them in the performance of their duties, subject to the limits of funds appropriated or otherwise made available for this purpose.

·   The public members of the board are to serve for a term of four years; except that of the members first appointed, one of the public members appointed upon the recommendation of the President of the Senate and one of the public members appointed upon the recommendation of the Speaker of the General Assembly will each serve for a period of three years, one of the public members appointed upon the recommendation of the President of the Senate and one of the public members appointed upon the recommendation of the Speaker of the General Assembly will each serve for a period of four years, and the other public member appointed will serve for a period of five years.

·   The board is to appoint an executive director of the exchange to supervise the administrative affairs and general management, and operations of the exchange.  The executive director will serve at the pleasure of the board and receive such compensation as the board determines.  All employees of the exchange, except the executive director, are to be in the career service of the Civil Service.

·   While serving as a member of the board or employee of the exchange, and for a period of two years immediately following such service or employment, a person is prohibited from being:

      -- employed by, a consultant to, a member of the board of directors of, affiliated with, or otherwise a representative of, a carrier, an insurance agent or broker, a licensed health care professional, a health care facility, or an entity operating a navigator program as set forth in this bill;

      -- a member, board member, or employee of a trade association of carriers, insurance agents or brokers, health care professionals, health care facilities, or entities operating a navigator program; or

      -- a licensed health care professional, unless that person receives no compensation for rendering services as a licensed health care professional and does not have an ownership interest in a health care professional practice.

·   All meetings of the board are subject to the requirements of the “Senator Byron M. Baer Open Public Meetings Act.”  The board is to provide advance notice of its meetings on the Internet.

·   A member of the board or an employee of the exchange will not be liable in an action for damages to any person for any action taken or recommendation made by the member or employee within the scope of his functions as a member or employee, if the action or recommendation was taken or made without malice. 

·   The board is to establish an advisory committee to provide advice to the board concerning the operation of the exchange and any other matter relating to the responsibilities of the board pursuant to this bill.

      -- The advisory committee is to include 15 members, to be appointed by the board, who will include one representative from each of the following:  health insurers or health maintenance organizations offering health benefits plans in this State;  health service corporations offering contracts in this State; licensed insurance producers; licensed general hospitals; licensed long-term care facilities; mental health care providers; federally qualified health centers; licensed physicians; licensed nurses; small employers; public employee unions; private sector unions; consumer health care advocacy organizations; consumer legal advocacy organizations; and public health researchers or other academic experts with knowledge and background relevant to the functions and goals of the exchange, including knowledge of the health care needs and health disparities among the diverse communities of this State. 

      -- The members of the advisory committee are to serve for a term of three years; except that of the members first appointed, five are to serve for a period of three years, five for a period of two years, and five for a period of one year.  

      -- The members of the advisory committee are to serve without compensation but be reimbursed for any expenses incurred by them in the performance of their duties, subject to the limits of funds appropriated or otherwise made available for this purpose.

      -- The board, within the limits of its existing staff and resources, is to provide such staff support as the advisory committee requires to perform its duties.

 

The Activities of the Exchange

 

·   The board is to facilitate the purchase, through the exchange, of coverage under health benefits plans certified and offered by the exchange (“qualified plans”), at affordable prices, by persons enrolled in the exchange (“enrollees”).

·   The board is to establish the State Business Health Options Program (SHOP), separate from the activities of the board related to the individual market, to assist participating employers in facilitating the enrollment of their employees in qualified plans.  Eligible employers: would include, beginning no later than January 1, 2014, employers with at least two but not more than 50 employees; may include, beginning on January 1, 2016, employers with at least 51 but not more than 100 employees; and, may include, beginning on January 1, 2017, employers with more than 100 employees.

·   The board is to create and offer a Basic Health Plan, in conjunction with the Department of Human Services and consistent with the provisions of the federal act, to enable persons with incomes of between 133% and 200% of the federal poverty level, and noncitizens who would be eligible for Medicaid except for not meeting the minimum residency requirements provided in federal law, who would otherwise be eligible to receive premium subsidies for the purchase of coverage through the exchange, to purchase essential health benefits through the provision of federal funds pursuant to the federal act.

·   The board is to develop and implement a plan of operation for the exchange, which includes, but is not limited to:  procedures and minimum requirements for the selection, certification, and recertification of qualified plans; criteria and procedures for decertifying plans; and procedures, criteria, and a standard application form for prospective enrollees seeking to obtain coverage under qualified plans, and for the enrollment of participating employers in SHOP.

·   The board is to provide:  a customer service center, which will operate a toll-free telephone service and provide oral and written information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the exchange; and an Internet website that provides standardized comparative information on qualified plans, and which also provides information on how to obtain assistance from a navigator chosen by the board or from a licensed insurance producer for those individuals wishing to do so.

·   The board is authorized to apply for any available federal grants and receive any grant funding available from private foundations.

·   The board, as it deems necessary to effectuate the purposes of the bill, may enter into a contract for the provision of goods or performance of services without public advertising for bids, provided that the process for awarding the contract meets certain specified requirements.

 

Qualified Plans and Participating Carriers in the Exchange

 

·   The exchange is to offer to enrollees only health benefits plans that have been certified by the board, approved for issuance or renewal in this State by the Commissioner of Banking and Insurance, and underwritten by a carrier.  The board is to certify those plans that it determines offer the optimal combination of choice, value, quality, and service to enrollees, and to provide, in each region of the State, a choice of qualified plans in each of the benefit categories required under the federal act. 

·   A health insurance carrier participating in the exchange may offer to enrollees a plan that provides limited scope dental benefits that meets the requirements of section 9832 of the federal Internal Revenue Code (26 U.S.C. s.9832), if the plan provides pediatric dental benefits that meet the requirements of section 1302 of the federal act (42 U.S.C. s.18022), and such other dental benefits as the board of directors of the exchange or the Secretary of Health and Human Services may prescribe by regulation.

·   Carriers permitted to offer qualified dental plans are required to be licensed to offer dental coverage, but need not be licensed to offer other health benefits.

·   Two or more carriers may jointly offer a comprehensive plan through the exchange in which the dental benefits are provided by a carrier through a qualified dental plan and the other benefits are provided by a carrier through a qualified health plan, provided that the plans are priced separately and are also made available for purchase separately at the same price.

·   A carrier that offers a qualified health benefits plan in conjunction with a plan that provides limited scope dental benefits is required to provide separate pricing for the health benefits plan and the dental plan and also make each of the plans available for purchase separately.

·   A carrier that offers a qualified health benefits plan that includes limited scope dental coverage in that plan must offer and price the health benefits plan without the limited scope dental coverage and must offer and price the limited scope dental coverage without the health benefits plan, so that either can be purchased separately.

·   To be certified as a qualified health benefits plan, a plan, at a minimum, is to:  include within its  health care provider network those essential community providers, where available, that serve predominately low-income, medically underserved individuals, as specified in the bill; and pay those providers at the highest rate that it pays to comparable providers for each category of services provided by the essential community provider, but in no case less than what Medicaid pays for the same service.

·   The board may require carriers participating in the exchange to make available to the exchange and regularly update an electronic directory of contracting health care providers, and the exchange may provide an integrated and uniform consumer directory of providers indicating which carriers the providers contract with and whether the providers are currently accepting new patients.

·   The board is to require that a carrier, as a condition of participation in the exchange:

      -- fairly and affirmatively offer, market, and sell in the exchange at least one product within each of the categories of health benefits plans that the federal act requires to be offered through the exchange;

      -- if the carrier sells any products to individuals outside the exchange, fairly and affirmatively offer, market, and sell all products made available to individuals in the exchange to individuals purchasing coverage outside the exchange; and if the carrier sells any products to employers outside the exchange, fairly and affirmatively offer, market, and sell all products made available to employers in SHOP to employers purchasing coverage outside the exchange;

      -- provide a detailed description of the benefits offered by a qualified plan through an Internet website and by other means for individuals without access to the Internet;

      -- submit a justification to the board for any premium increase in a qualified plan before implementing the increase, and prominently post that information on its Internet website;

      -- make available to the public and to the board, the U.S. Secretary of Health and Human Services (“the secretary”), and the Commissioner of Banking and Insurance, as applicable, accurate and timely information, with respect to a qualified plan, concerning claims payment policies and practices, financial data, enrollment and disenrollment, claims denied, rating practices, cost sharing and payments for any out-of-network coverage, and enrollee and participating employer rights specified under federal law or determined appropriate by the secretary; and

      -- make available to the public and submit to the board such other information as may be required pursuant to the federal act or as the board reasonably determines necessary to accomplish the purposes of the bill.

·   The board is to establish procedures necessary to avoid risk selection between qualified plans offered through the exchange and plans offered outside the exchange and among qualified plans offered within the exchange, including, but not limited to, such mechanisms as it determines appropriate for adjusting payments to qualified plans to account for risk selection and assure market stability.

·   The provisions of the bill are not to be construed to require a carrier not participating in the exchange to meet any requirements relating to health care coverage or its operations not otherwise imposed under federal or State law.

 

The Provision of Health Care Coverage through the Exchange

 

·   The board is to:

      -- provide for the processing of applications, determination of eligibility for premium tax credits and any cost-sharing reduction and eligibility redetermination due to changes in income or circumstances, and establishment of an enrollee database, and coordinate and share data with Medicaid, NJ FamilyCare, and other State and local government entities as applicable, to ensure efficient, cost-effective, and comprehensive health care coverage and continuity of coverage and care when an enrollee transitions between a qualified plan and Medicaid or NJ FamilyCare, or the reverse, consistent with federal law and regulations;

      -- require that a written agreement be established between the board and the Division of Medical Assistance and Health Services in the Department of Human Services to govern eligibility determination and redetermination services for, and enrollment in, the exchange, Medicaid, and NJ FamilyCare;

      -- market, publicize, and provide outreach to enrollees and potential enrollees in regard to health care coverage and federal subsidies available through the exchange;

      -- assign a rating to each qualified plan in accordance with criteria developed by the secretary; and utilize a standardized format for presenting plan options in the exchange;

      -- establish and make available by electronic means a calculator to determine the actual cost of coverage after the application of any premium tax credit and cost-sharing reduction under the federal act;

      -- establish uniform billing and payment policies for qualified plans and coordinate those policies with Medicaid and NJ FamilyCare; 

      -- grant a certification attesting that a person is exempt from the tax imposed under the federal act for not having qualifying health care coverage if the person meets the requirements for that exemption;

      -- perform such duties as are required of the exchange by the secretary or the Secretary of the Treasury under the federal act, relating to the determination of eligibility for premium tax credits, reduced cost sharing, or exemptions from the tax imposed under the federal act for not having qualifying health care coverage;

      -- notify enrollees of their right to appeal health care coverage determinations by carriers under State and federal law and to file a grievance against the exchange itself; and

      -- establish the navigator program, in accordance with the federal act, to:  increase public awareness of, and facilitate enrollment in, qualified plans; and provide appropriate referrals for health insurance consumer assistance for enrollees with a grievance, complaint, or question relating to their plan or coverage.

 

New Jersey Health Benefit Exchange Trust Fund

 

·   The bill establishes the New Jersey Health Benefit Exchange Trust Fund in the Department of the Treasury as a nonlapsing revolving fund, to be the repository for monies collected from carriers pursuant to the bill and other monies received as grants or otherwise appropriated for the purposes of the exchange.  The monies in the fund are to be used only for the purpose of supporting the activities of the exchange.

·   The exchange may apply a uniform surcharge to all qualified health benefit plans, and a uniform assessment on carriers that do not contract with the exchange, as the board determines necessary to effectuate the purposes of this substitute.  The proceeds are to be deposited into the fund and used only to pay for administrative and operational expenses of the exchange in carrying out its responsibilities and as otherwise required under federal law or regulation. 

 

Other Provisions

 

·   In addition to furnishing information to any federal department or agency as required under the federal act or any other federal law or regulation, the board is to annually report on the activities, receipts, and expenditures of the exchange to the Governor, Legislature, and State Auditor, and to make this information available on its Internet website; and the State Auditor is to conduct an audit of the exchange at least once in each five-year period.

·   The Commissioner of Banking and Insurance is to report to the Governor and the Legislature, no later than January 1, 2018, on the commissioner’s findings and recommendations concerning whether to:  continue the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program, as provided under current law; revise these programs to reflect the provisions of this bill; or phase out these programs and transition their health care coverage to coverage provided through the exchange.

·   The bill takes effect on the first day of the seventh month following enactment, but authorizes the board and the Commissioners of Banking and Insurance and Human Services to take anticipatory administrative action in advance as necessary for its implementation.

 

COMMITTEE AMENDMENTS

      The committee amendments to the bill:

      -- add a definition of “qualified dental plan;”

      -- increase the membership of the board from seven to eight members to include the chairperson of the advisory committee, to be established by the board pursuant to the bill, as a nonvoting, ex officio member;

      -- change the status of the Commissioners of Banking and Insurance and Human Services to nonvoting members of the board;

      -- provide that the public members of the board, instead of serving without compensation, are to serve on a part-time basis and receive an annual salary of $50,000;

      --  stipulate that reimbursement for expenses incurred by the public members of the board is subject to the limits of funds appropriated or otherwise made available for this purpose;

      -- preclude a representative of an entity operating a navigator program as set forth in the bill from serving as a member of the board or an employee of the exchange;

      -- remove the exception from the “Senator Byron M. Baer Open Public Meetings Act,” P.L.1975, c.231 (C.10:4-6 et seq.) that applied to the board’s meetings and would have permitted the board to conduct a closed session when considering matters relating to litigation, personnel, contracting, and payment rates;

      -- require the board to establish an advisory committee, which includes representatives from various stakeholders, to provide advice to the board concerning the operation of the exchange and any other matter relating to implementation of the provisions of the bill;

      -- remove the requirement that the board permit employers with at least 51 but not more than 100 employees to purchase coverage through the exchange beginning on January 1, 2016 and employers with more than 100 employees to purchase coverage through the exchange beginning on January 1, 2017, and instead provide that the board may use its discretion in the timing of such changes;

      -- provide that, if the board decides not to allow employers with at least 51 but not more than 100 employees to purchase coverage through the exchange beginning on January 1, 2016, or employers with more than 100 employees to purchase coverage through the exchange beginning on January 1, 2017, the board must issue a report to the Governor, and to the Legislature that explains the reasons why it decided not to allow those employers to purchase coverage through the exchange, and must make this report available to the public on the Internet website of the exchange;

      -- require that the Basic Health Plan be established in conjunction with the Department of Human Services and (in conformance with the provisions of the federal act) and that it be made available to:  eligible persons with incomes of between 133% and 200% of the federal poverty level, whether or not they are uninsured (because the person may have other health care coverage that does not provide essential health benefits or is not affordable based on the person’s income, as specified in the federal act); and noncitizens who would be eligible for Medicaid except for not meeting the minimum residency requirements provided in federal law;

      -- require that the Internet website maintained by the board provide information on how to obtain assistance from navigators chosen by the board and information on how to obtain assistance from an insurance agent or broker for those individuals wishing to do so;

      -- provides that the board shall certify those plans that it determines, instead of providing “good value” and offering “high quality coverage,” offer the optimal combination of choice, value, quality, and service;

      -- require that carriers permitted to offer qualified dental plans be licensed to offer dental coverage, but clarify that they need not be licensed to offer other health benefits;

      -- provide that two or more carriers may jointly offer a comprehensive plan through the exchange in which the dental benefits are provided by a carrier through a qualified dental plan and the other benefits are provided by a carrier through a qualified health plan, provided that the plans are priced separately and are also made available for purchase separately at the same price;

      -- require a carrier that offers a qualified health benefits plan in conjunction with a plan that provides limited scope dental benefits to provide separate pricing for the health benefits plan and the dental plan and also make each of the plans available for purchase separately;

      -- require a carrier that offers a qualified health benefits plan that includes limited scope dental coverage in that plan to offer and price the health benefits plan without the limited scope dental coverage and to offer and price the limited scope dental coverage without the health benefits plan, so that either can be purchased separately;

      -- require that a qualified health benefits plan include within its  health care provider network essential community providers, where available, that serve predominately low-income, medically underserved individuals and pay those providers at the highest rate that it pays to comparable providers for each category of services provided by the essential community provider, but in no case less than what Medicaid pays for the same service;

      -- provide that the board may permit a carrier participating in the exchange to offer to enrollees a plan that provides nonmedical remedial treatment rendered in accordance with a recognized religious method of healing;

      -- require that a written agreement between the board and the Division of Medical Assistance and Health Services in the Department of Human Services govern eligibility determination and redetermination services for, and enrollment in, the exchange, Medicaid, and NJ FamilyCare;

      -- require that a navigator chosen by the board be incorporated, organized and operated in such a manner as to qualify as a nonprofit corporation described in section 501(c)(3) of the federal Internal Revenue Code, 26 U.S.C. s.501(c)(3), and meet any certification and training requirements established by the board, provided however that the board is not permitted to require a navigator to be a licensed insurance producer; and

      -- remove certain exceptions to P.L.1963, c.73 (C.47:1A-1 et seq.) and P.L.2001, c.404 (C.47:1A-5 et al.), commonly referred to as the open public records act, as they would have pertained to certain records maintained by the exchange.