S1883

SENATE, No. 1883

STATE OF NEW JERSEY

INTRODUCED MARCH 10, 1997

By Senator BENNETT

An Act concerning certain health benefits programs and amending and supplementing Title 17B of the New Jersey Statutes.

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

1. (New section) a. There is created the New Jersey Health Coverage Reform Board, which shall be in, but not of, the New Jersey Department of Insurance.

b. The Board of Directors of the New Jersey Individual Health Coverage Program established pursuant to section 9 of P.L.1992, c.161 (17B:27A-10) and the Board of Directors of the New Jersey Small Employer Health Benefits Program established pursuant to section 12 of P.L.1992, c.162 (C.17B:27A-28) shall cease to exist on the effective date of this act, at which time the New Jersey Health Coverage Reform Board, created pursuant to subsection a. of this section shall assume all the powers, functions and duties of the respective boards of directors of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program and shall administer these programs under the respective powers and authorities set forth in P.L.1992, c.161 (C.17B:27A-2 et seq.) and P.L.1992, c.162 (C.17B:27A-17 et seq.). Where in any law, rule, regulation, judicial or administrative proceeding, contract or otherwise, reference is made to either the New Jersey Individual Health Coverage Program Board or New Jersey Small Employer Health Benefits Program Board, the same shall mean the New Jersey Health Coverage Reform Board.

c. The New Jersey Health Coverage Reform Board shall have the additional authority to: collect, hold, place in escrow, invest, refund, reimburse, and otherwise spend or dispose of funds raised through assessments of member carriers, in accordance with the purposes of P.L.1992, c.161 (C.17B:27A-2 et seq.) and P.L.1992 (C.17B:27A-17 et seq.) and their respective plans of operations; and to compensate public board members appointed by the Governor for attendance at board and committee meetings, not to exceed $200 per meeting, over and above travel expenses, to be paid from the board's administrative assessment funds. The costs of effectuating the provisions of this act shall be treated as an assessable expense pursuant to subsection a. of section 10 of P.L.1992, c.161 (C.17B:27A-11).

d. The organizational meeting of the New Jersey Health Coverage Reform Board shall occur on the day of the first scheduled monthly meeting of the New Jersey Small Employer Health Benefits Program Board following the effective date of this act. Initially, the board shall consist of all the members of the boards of directors of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program, duly appointed or elected pursuant to subsection b. of section 9 of P.L.1992, c.161 (C.17B:27A-10) or subsection a. of section 13 of P.L.1992, c.162 (C.17B:27A-29), who shall serve out the remainder of their terms. Board members whose terms have expired and whose seats have not been filled as of the effective date of this act shall cease to serve on the board. After the effective date of this act the New Jersey Health Coverage Reform Board shall seek recommendations, subject to the commissioner's approval, for new board members from the following organizations to replace existing board members, as the terms of comparable board members, as determined by the commissioner, expire. The new membership of the board shall be comprised of nineteen members as follows:

(1) three representatives of small employers, at least one of whom represents minority small employers, who shall be recommended by business or trade organizations, subject to the approval of the commissioner;

(2) one representative of a hospital, who shall be recommended by a hospital association, subject to the approval of the commissioner; (3) one representative of organized labor who shall be recommended by a labor organization, subject to the approval of the commissioner;

(4) one licensed health insurance producer, who shall be nominated by the Governor and confirmed by the Senate;

(5) one physician licensed to practice medicine and surgery in this State who shall be nominated by the Governor and confirmed by the Senate;

(6) one member of the public, who is covered by an individual or small employer health benefits plan who shall be nominated by the Governor and confirmed by the Senate;

(7) nine representatives of carriers, one of whom shall be a representative of an authorized insurance company offering individual health benefits plans in New Jersey, who shall be elected by the carriers offering individual health benefits plans; one of whom shall be a representative of an approved health maintenance organization offering individual health benefits plans, who shall be elected by the carriers offering individual health benefits plans; one of whom shall be a representative of an approved health maintenance organization offering small employer health benefits plans, who shall be elected by those carriers offering small employer health benefits plans; five of whom shall be representatives of authorized insurance companies offering small employer health benefits plans, and one of whom shall be a representative of a mutual health insurer of this State subject to the provisions of Subtitle 3 of Title 17B of the New Jersey Statutes, all five of whom shall be elected by those carriers offering small employer health benefits plans; and one of whom shall be a representative of a health service corporation incorporated in New Jersey or a domestic mutual insurer which converted from a health service corporation in accordance with the provisions of sections 2 through 4 of P.L.1995, c.196 (C.17:48E-46 through C.17:48E-48), who shall be elected by those carriers offering small employer health benefits plans; and

(8) the commissioner and the Commissioner of Health, or their designees, who shall serve ex officio.

In the event that one or more representatives of the carrier designations pursuant to paragraph (7) of this subsection d. are not available to serve as members, the commissioner shall appoint a representative to serve as a board member until such time that a representative of that carrier designation becomes available to serve.

e. Within 90 days of the initial meeting of the New Jersey Health Coverage Reform Board, the board shall submit to the commissioner a plan of operation establishing the administration of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program under the New Jersey Health Coverage Reform Board pursuant to the provisions of this act. The plan of operation and any subsequent amendments thereto shall be submitted to the commissioner who shall, after notice and hearing, approve the plan if the commissioner finds that it is reasonable and equitable and sufficiently carries out the provisions of this section. The plan of operation shall become effective after the commissioner has approved it in writing. The plan or any subsequent amendments thereto shall be deemed approved if not expressly disapproved by the commissioner in writing within 90 days of receipt by the commissioner.

The plan of operation shall include, but not be limited to, the following:

(1) A method of handling and accounting for assets and moneys of the program and an annual fiscal reporting to the commissioner;

(2) A means of providing for the filling of vacancies on the board, subject to the approval of the commissioner; and

(3) Any additional matters which are appropriate to effectuate the provisions of this section.

Until such time as a new plan of operation is adopted by the New Jersey Health Coverage Reform Board and approved by the commissioner, the New Jersey Health Coverage Reform Board shall operate under the plans of operation of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program, as applicable, adopted pursuant to section 9 of P.L.1992, c.161 (C.17B:27A-10) and section 15 of P.L.1992, c.162 (C.17B:27A-31), respectively.

2. (New section) a. The Legislature finds and declares that:

(1) Health benefits coverage, while providing important protection for individuals, is costly for individuals and businesses which insure their employees.

(2) Mandated health benefits have social, financial and medical implications for patients, providers and health benefits plans.

(3) It is therefore, in the public interest to require the review of proposed mandated health benefits by an expert body to provide the Legislature with adequate, and independent documentation defining the social and financial impact and medical efficacy of the proposed mandate.

b. In addition to the respective powers, functions, and duties assumed by or granted to the New Jersey Health Coverage Reform Board pursuant to subsections b. and c. of section 1 of this act, the New Jersey Health Coverage Reform Board shall review bills introduced in either House of the Legislature which require an insurer to offer or provide a mandated health benefit and shall report their findings to the Legislature pursuant to the provisions of this section and section 3 of this act.

c. Whenever a bill containing a mandated health benefit is introduced in the Legislature, the chairman of the standing reference committee to which the bill or resolution has been referred in the House in which it was introduced shall request the New Jersey Health Coverage Reform Board to prepare a written report that assesses the social and financial effects and the medical efficacy of a proposed mandated health benefit.

d. Not later than the 120th day after the request for review is received, the board shall complete its review and provide the written report to the members of the standing reference committee to which the bill has been referred. If the board requests an extension prior to the 120th day after the date of the request for review, the chairman of the standing reference committee to which the bill had been referred may grant an extension for the board to complete its review of the bill. The standing reference committee shall not consider or vote upon the bill until: the board completes its review and provides its written report to the members of the committee; the 121st day after the date the request for that review was received; or the designated day in the case of an extension.

e. If the standing reference committee of the House in which the bill was introduced determines that a bill proposing a mandated health benefit is of such an urgent nature that it would seriously impair the public health to wait for the board to issue its report, then it may vote to release the bill.

f. If the presiding officer of the House in which the bill was introduced determines that the bill is of such an urgent nature that it would seriously impair the public health to wait for the board to issue its report, the presiding officer shall so notify in writing the chairman of the standing reference committee to which the bill has been referred and the board of that determination, and the House may consider and vote upon the bill.

g. No bill requiring an insurer to offer or provide a mandated health benefit shall be reported by the standing reference committee to which it has been referred unless the written report of the board has been provided to the members of the standing reference committee, except as provided in subsections d., e. and f. of this section.

h. The board, at the request of a sponsor of the bill or any member of that standing reference committee, may amend or revise its report with respect to any bill which is amended by either House after having been reported by the standing reference committee to which it was referred in the House in which it was introduced. If a report has been issued by the board on a proposed mandated benefit within the previous three years, the board shall not be required to produce a new report on the same proposed mandated benefit unless requested to do so by the chairman of the standing reference committee to which the bill has been referred. In the case where there are several mandated health benefits bills to be reviewed by the board, the presiding officer of the House in which the bill was introduced, or his designee, shall consult with the board to determine the order of priority for review of the mandated health benefits bills.

i. For the purposes of this section and section 3 of this act:

"Mandated health benefit" or "mandate" means a benefit or coverage which is required by law to be offered or provided by an insurer including: coverage for specific health care services, treatments or practices; direct reimbursement to specific health care providers; or the offering of specific health care services, treatments or practices.

"Urgent nature" means a health condition where an individual's life would be in imminent danger without expeditious consideration of the mandated health benefit.

3. The review of proposed mandated health benefits by the New Jersey Health Coverage Reform Board required pursuant to section 2 of this act shall include, at a minimum and to the extent that information is practicable and available, the following:

a. The social impact of mandating the health benefit which shall include:

(1) The extent to which the proposed mandated health benefit and the services it would provide are needed by, available to and utilized by the population of New Jersey;

(2) The extent to which insurance coverage for the proposed mandated health benefit already exists, or if no coverage exists, the extent to which the lack of coverage results in inadequate health care or financial hardship for the affected population of New Jersey.

(3) The demand for the proposed mandated health benefit from the public and the source and extent of opposition to mandating the health benefit;

(4) Relevant findings bearing on the social impact of the lack of the proposed mandated health benefit; and

(5) Such other information with respect to the social impact as the board deems appropriate.

b. The financial impact of mandating the health benefit which shall include:

(1) The extent to which the proposed mandated health benefit would increase or decrease the cost for treatment or service;

(2) The extent to which similar mandated health benefits in other states have affected charges, costs and payments for services;

(3) The extent to which the proposed mandated health benefit would increase the appropriate use of the treatment or service;

(4) The impact of the proposed mandated health benefit on total costs to health care insurers and on administrative costs;

(5) The impact of the proposed mandated health benefits on total costs to purchasers and on benefit costs;

(6) The impact of the proposed mandated health benefits on the total cost of health care within New Jersey; and

(7) Such other information with respect to the financial impact as the board deems appropriate.

c. The medical efficacy of mandating the health benefit which shall include:

(1) Where the proposed mandated health benefit would mandate coverage of a particular treatment or therapy, the recommendation of a clinical study or review article in a major peer-reviewed professional journal;

(2) Where the proposed benefit would mandate coverage of the services provided by an additional class of practitioners, the results of at least one professionally accepted, controlled trial comparing the medical results achieved by the additional class of practitioners and the practitioners already covered by benefits;

(3) The results of other research;

(4) The impact of the proposed coverage on the general availability of health coverage in New Jersey; and

(5) Such other information with respect to the medical efficacy as the board deems appropriate.

d. The effects of balancing the social, economic and medical efficacy considerations which shall include, but not be limited to:

(1) The extent to which the need for coverage outweighs the costs of mandating the health benefit; and

(2) The extent to which the problem of coverage may be solved by mandating the availability of the coverage as an option under health coverage.

e. An analysis of information collected from various sources, including but not limited to:

(1) a State data collection system;

(2) the Departments of Health and Insurance;

(3) health planning organizations;

(4) proponents and opponents of the proposed health benefits mandate who shall be encouraged to provide appropriate documentation supporting their positions. The board shall examine such documentation to determine whether:

(a) the documentation is complete;

(b) the assumptions upon which the research is based are valid; (c) the research cited in the documentation meets professional standards;

(d) all relevant research respecting the proposed mandated benefit has been cited in the documentation; and

(e) the conclusions and interpretations in the documentation are consistent with the data submitted; and

(5) such other data sources as the board deems appropriate. In analyzing information from the various sources, the board shall give substantial weight to the documentation provided by the proponents and opponents of the mandate to the extent that such documentation is made available to them.

4. Section 9 of P.L.1992, c.161 (C.17B:27A-10) is amended to read as follows:

9. a. There is created the New Jersey Individual Health Coverage Program. All carriers subject to the provisions of this act shall be members of the program. The program shall be administered by the board established pursuant to this section until the effective date of P.L. , c. (C. ) (pending in the Legislature as this bill), at which time the New Jersey Health Coverage Reform Board established pursuant to section 1 of P.L. , c. (C. ) (pending in the Legislature as this bill) shall assume all powers, functions and duties of the board.

b. Within 30 days of the effective date of this act, the commissioner shall give notice to all members of the time and place for the initial organizational meeting, which shall take place within 60 days of the effective date. The board shall consist of nine representatives. The commissioner or his designee shall serve as an ex officio member on the board. Four members of the board shall be appointed by the Governor, with the advice and consent of the Senate: one of whom shall be a representative of an employer, appointed upon the recommendation of a business trade association, who is a person with experience in the management or administration of an employee health benefit plan; one of whom shall be a representative of organized labor, appointed upon the recommendation of the A.F.L.-C.I.O., who is a person with experience in the management or administration of an employee health benefit plan; and two of whom shall be consumers of a health benefits plan who are reflective of the population in the State. Four board members who represent carriers shall be elected by the members, subject to the approval of the commissioner, as follows: to the extent there is one licensed in this State that is willing to have a representative serve on the board, a representative from each of the following entities shall be elected:

(1) until December 31, 1999, a health service corporation or a domestic mutual insurer which converted from a health service corporation in accordance with the provisions of sections 2 through 4 of P.L.1995, c.196 (C.17:48E-46 through C.17:48E-48). After that date, a domestic mutual insurer which, either directly or through a subsidiary health maintenance organization, is primarily engaged in the business of issuing health benefits plans;

(2) a health maintenance organization;

(3) a mutual health insurer of this State subject to Subtitle 3 of Title 17B of the New Jersey Statutes; and

(4) a foreign health insurance company authorized to do business in this State.

In approving the selection of the carrier representatives of the board, the commissioner shall assure that all members of the program are fairly represented.

Initially, two of the Governor's appointees and two of the carrier representatives shall serve for a term of three years; one of the Governor's appointees and one of the carrier representatives shall serve for a term of two years; and one of the Governor's appointees and one of the carrier representatives shall serve for a term of one year. Thereafter, all board members shall serve for a term of three years. Vacancies shall be filled in the same manner as the original appointments.

c. If the initial carrier representatives to the board are not elected at the organizational meeting, the commissioner shall appoint those members to the initial board within 15 days of the organizational meeting.

d. Within 90 days after the appointment of the initial board, the board shall submit to the commissioner a plan of operation and thereafter, any amendments to the plan necessary or suitable to assure the fair, reasonable, and equitable administration of the program. The commissioner may disapprove the plan of operation, if the commissioner determines that it is not suitable to assure the fair, reasonable, and equitable administration of the program, and that it does not provide for the sharing of program losses on an equitable and proportionate basis in accordance with the provisions of section 11 of this act. The plan of operation or amendments thereto shall become effective unless disapproved in writing by the commissioner within 45 days of receipt by the commissioner.

e. If the board fails to submit a suitable plan of operation within 90 days after its appointment, the commissioner shall adopt a temporary plan of operation pursuant to section 9 of P.L.1993, c.164 (C.17B:27A-16.2). The commissioner shall amend or rescind a temporary plan adopted under this subsection, at the time a plan of operation is submitted by the board.

f. The plan of operation shall establish procedures for:

(1) the handling and accounting of assets and moneys of the program, and an annual fiscal reporting to the commissioner;

(2) collecting assessments from members to provide for sharing program losses in accordance with the provisions of section 11 of this act and administrative expenses incurred or estimated to be incurred during the period for which the assessment is made;

(3) approving the coverage, benefit levels, and contract forms for individual health benefits plans in accordance with the provisions of section 3 of this act;

(4) the imposition of an interest penalty for late payment of an assessment pursuant to section 11 of this act; and

(5) any additional matters at the discretion of the board.

g. The board shall appoint an insurance producer licensed to sell health insurance pursuant to P.L.1987, c.293 (C.17:22A-1 et seq.) to advise the board on issues related to sales of individual health benefits plans issued pursuant to this act.

(cf: P.L.1995, c.196, s.6)

5. Section 12 of P.L.1992, c.162 (17B:27A-28) is amended to read as follows:

12. There is created a nonprofit entity to be known as the New Jersey Small Employer Health Benefits Program. All carriers issuing health benefits plan policies and contracts in this State shall be members of this program. The program shall be administered by the board of directors established pursuant to section 13 of P.L.1992, c.162 (C.17B:27A-29) until the effective date of P.L. , c. (C. )(pending in the Legislature as this bill), at which time the New Jersey Health Coverage Reform Board shall assume all powers, functions and duties of the board pursuant to section 1 of P.L. , c. (C. )(pending in the Legislature as this bill).

(cf: P.L.1993, c.162, s.6)

6. This act shall take effect immediately.

STATEMENT

This bill creates the New Jersey Health Coverage Reform Board to consolidate the functions of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program under one board.

Under the provisions of the bill, the newly created New Jersey Health Coverage Reform Board assumes all of the powers, functions and duties of the boards of directors of the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program. Additionally, the bill authorizes the New Jersey Health Coverage Reform Board to collect, hold, place in escrow, invest, refund, reimburse, and otherwise spend or dispose of funds raised through assessments of member carriers, in accordance with the purposes of current law with respect to the New Jersey Individual Health Coverage Program and the New Jersey Small Employer Health Benefits Program.

The bill provides that initially the current members of both boards will continue to serve as members of the newly created board. Members would be replaced as their terms expire, so that the membership of the new board would eventually be comprised of nineteen members as follows:

► three representatives of small employers, at least one of whom represents minority small employers;

► one representative of a hospital;

► one representative of organized labor;

► one licensed health insurance producer;

► one physician licensed to practice medicine and surgery in this State;

► one member of the public, who is covered by an individual or small employer health benefits plan;

► nine representatives of carriers, including one representative of a health service corporation; two representatives of HMOs, one offering small employer health benefits plans and one offering individual health benefits plans; five representatives of insurers offering small employer health benefits plans; and one representative of an insurer offering individual health benefit plans; and

► the Commissioner of Insurance and the Commissioner of Health, or their designees, who shall serve ex officio.

The bill requires the new board to adopt a plan of operation, subject to the approval of the Commissioner of Insurance, within 90 days of its initial meeting. Until such time as the new plan of operation is adopted, the board would operate under the existing plans of operation of the New Jersey Individual Health Coverage Program and the Small Employer Health Benefits Program, as applicable.

The bill provides that, in addition to the powers, duties and functions assumed by or otherwise granted to the New Jersey Health Coverage Reform Board, the board is authorized to review all bills proposing mandated health benefits.

Under the bill, a "mandated health benefit" is defined as a benefit or coverage which is required by law to be offered or provided by an insurer including: coverage for specific health care services, treatments or practices; direct reimbursement to specific health care providers; or the offering of specific health care services, treatments or practices.

The bill provides that no bill requiring an insurer to offer or provide a mandated health benefit shall be reported by the standing reference committee to which it has been referred unless a written report has been provided to the members of the standing reference committee to which the bill has been referred, except that the committee may report the bill if the committee does not receive a written report from the board within 120 days of the committee's request that the board review the bill if the chairman of the committee has not granted the board an extension in which to complete its review, or in a case where the committee determines that the bill is of such an urgent nature, that to wait for the board's report would seriously impair the public health. Also, in a case where the presiding officer of the House in which the bill was introduced determines that the consideration of the bill is of such an urgent nature that to wait for the board's report would seriously impair the public health, the presiding officer may so notify the board and the chairman of the standing reference committee, and the House may consider and vote upon the bill.

In the course of reviewing the proposed mandated benefit, the board would assess the social and financial impact of the mandate, the medical efficacy of mandating the health benefit, the effects of balancing the social, economic and medical efficacy considerations, and provide an analysis of the information collected from various sources.

Consolidates individual and small employer health benefits programs under one board; expands duties of board to include review of proposed mandated health benefits.