Makes various changes to SHBP governance and administration.

S4516

SENATE, No. 4516

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 22, 2026

Sponsored by:

Senator� JOSEPH A. LAGANA

District 38 (Bergen)

Senator� BRITNEE N. TIMBERLAKE

District 34 (Essex)

Co-Sponsored by:

Senators Polistina, Cruz-Perez, Mukherji, Johnson, Gopal,
McKnight, Burgess, McKeon, Tiver and Zwicker

SYNOPSIS

���� Makes various changes to SHBP governance and
administration.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning the plan
administration of the State Health Benefits Program and amending P.L.1961, c.49
and P.L.2011, c.78.

����
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
]

13

members
as follows
:

����
(1)
the State
Treasurer; the Commissioner of Banking and Insurance; the Chairperson of the
Civil Service Commission
; and the Commissioner of Health, 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) one member appointed by the Governor who shall
represent local government employers;

����
(3) one member appointed by the Governor who shall represent
higher education employers;

����
(4) three members appointed by the Public Employee Committee of
the New Jersey AFL-CIO who are members of each of the three public employee
organizations affiliated with the New Jersey AFL-CIO with the largest number of
employees participating in the State Health Benefits Program;

����
(5) one member appointed by the public employee organization that
is not affiliated with the New Jersey AFL-CIO, that represents the largest
number of police officers in this State;

����
(6) one member appointed by the public employee organization that
is not affiliated with the New Jersey AFL-CIO, that represents the largest
number of firefighters in this State;

����
(7) one member from the State Troopers Fraternal Association; and

����
(8) one member, who shall be a non-voting member, appointed by a
majority vote of the commission members appointed pursuant to paragraphs (1)
through (7) of this subsection, who shall have expertise in the administration
and design of health care plans, shall not represent an employee or employer
organization, and shall not be employed in a managerial or consultant capacity
with a provider or administrator of health care services, supplies, insurance
or pharmaceuticals. �If the members of the commission appointed pursuant to
paragraphs (1) through (7) of this subsection are unable to agree on the
selection of the 13th member, the dispute shall be referred to the Public
Employee Relations Commission. �The members of the commission appointed
pursuant to paragraphs (1) through (3) of this subsection shall submit to the
Public Employee Relations Commission the names of two individuals who satisfy
the stated criteria, along with their resumes, and the members of the
commission appointed pursuant to paragraphs (4) through (7) of this subsection shall
submit to the Public Employee Relations Commission the names of two individuals
who satisfy the stated criteria, along with their resumes. �The Public Employee
Relations Commission shall select one individual, from among the four names
submitted, to serve as the 13th member of the commission.

����
The members of the commission appointed pursuant to paragraphs (1)
through (3) of this subsection shall designate a co-chair. �The members of the
commission appointed pursuant to paragraphs (4) through (7) of this subsection shall
designate a co-chair.

����
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 paragraphs (2), (3), and (8) of this
subsection shall serve for a term of three years; and the members appointed
pursuant to paragraphs (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 (8) of this subsection shall be for three
years. �However, the members designated as co-chairs pursuant to 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.

����
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 authorized membership.� Seven
members of the commission shall constitute a quorum for the transaction of
business.

����
[
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 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 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) Members
of the commission shall be fiduciaries of the plan participants and
beneficiaries, meaning that members shall be legally obligated to act in the
best interests of participants and beneficiaries, shall manage the plan and its
assets with prudence, skill, and diligence, and shall be transparent and honest
in all their dealings involving the plan.

����
(3) 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 and shall have the authority to set limits on the rates of
reimbursements to hospitals or other health care providers. �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.

����
(4) The
commission shall ensure that audits are performed as required by section 17 of
P.L.2008, c.89 (C.52:14-17.27a), that claims reviews are performed as specified
in section 6 of P.L.1961, c.49 (C.52:14-17.30), and establish requirements for
review of in-State and out-of-State medical claims.� Actions of the commission
resulting from such audits and claims reviews shall require a majority vote of
the authorized membership of the commission to be approved.

����
(5) 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 co-chairs
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
co-chairs may take into account whether legitimate requests for information
have been provided as soon as is practicable and in a usable format.� The
co-chairs 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.

����
(6) Whenever
the commission remains at an impasse on a matter before the commission for more
than 30 days, the provisions of subsection b. of section 55 of P.L.2011, c.78
(C.52:14-17.27b) shall be followed, unless by majority vote the commission
extends the time within which to render a decision on a matter before it.

����
(7) In
consultation with the program actuary, the State Health Benefits Commission
shall develop plan designs for the State Health Benefits Program.� 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) If the
anticipated premiums of one or more of the State Health Benefits Program health
plans as recommended by the program actuary will 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.� Matters under this paragraph shall not be
subject to the provisions of section 55 of P.L.2011, c.78, (C.52:14-17.27b).

(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 remains at an impasse on a matter before the
commission pursuant to the timeframes set forth in paragraph (6) of subsection
c. of section 3 of P.L.1961, c.49 (C.52:14-17.27), other than on a matter
concerning such actions and plan modifications as may be necessary to
appropriately manage costs as provided under paragraph (8) of subsection c. of
section 3 of P.L.1961, c.49 (C.52:14-17.27), 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 the commission is
unable to agree on the selection of an arbitrator, the co-chairs of the
commission shall submit a request to the Public Employment Relations Commission
to appoint an arbitrator with subject matter expertise in the dispute.� 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 arbitrator shall issue a decision within 60 days from
the commencement of the arbitration.� The decision shall be provided to the
commission promptly and made available to the public within 10 days
thereafter.� By majority vote, the commission may extend the 30-day period
within which to reach a resolution following the commencement of arbitration
and may extend the 60-day period within which an arbitrator is required to
issue a decision.

����
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.� Section 5 of P.L.1961,
c.49 (C.52:14-17.29) is amended to read as follows:

���� 5.� (A)� The contract or
contracts purchased by the commission pursuant to subsection b. of section 4 of
P.L.1961, c.49 (C.52:14-17.28) shall provide separate coverages or policies as
follows:

���� (1)�� Basic benefits which
shall include:

���� (a)�� Hospital benefits,
including outpatient;

���� (b)�� Surgical benefits;

���� (c)�� Inpatient medical
benefits;

���� (d)�� Obstetrical benefits;
and

���� (e)�� Services rendered by an
extended care facility or by a home health agency and for specified medical
care visits by a physician during an eligible period of such services, without
regard to whether the patient has been hospitalized, to the extent and subject
to the conditions and limitations agreed to by the commission and the carrier
or carriers.

���� Basic benefits shall be
substantially equivalent to those available on a group remittance basis to
employees of the State and their dependents under the subscription contracts of
the New Jersey "Blue Cross" and "Blue Shield" Plans. Such
basic benefits shall include benefits for:

���� (i)��� Additional days of
inpatient medical service;

���� (ii)�� Surgery elsewhere than
in a hospital;

���� (iii) X-ray, radioactive
isotope therapy and pathology services;

���� (iv)� Physical therapy
services;

���� (v)�� Radium or radon therapy
services;

and the extended basic benefits
shall be subject to the same conditions and limitations, applicable to such
benefits, as are set forth in "Extended Outpatient Hospital Benefits
Rider," Form 1500, 71(9-66), and in "Extended Benefit Rider" (as
amended), Form MS 7050J(9-66) issued by the New Jersey "Blue Cross"
and "Blue Shield" Plans, respectively, and as the same may be amended
or superseded, subject to filing by the Commissioner of Banking and Insurance;
and

���� (2)�� Major medical expense
benefits which shall provide benefit payments for reasonable and necessary
eligible medical expenses for hospitalization, surgery, medical treatment and
other related services and supplies to the extent they are not covered by basic
benefits. The commission may, by regulation, determine what types of services
and supplies shall be included as "eligible medical services" under
the major medical expense benefits coverage as well as those which shall be
excluded from or limited under such coverage. Benefit payments for major
medical expense benefits shall be equal to a percentage of the reasonable
charges for eligible medical services incurred by a covered employee or an
employee's covered dependent, during a calendar year as exceed a deductible for
such calendar year of $100.00 subject to the maximums hereinafter provided and
to the other terms and conditions authorized by this act. The percentage shall
be 80 percent of the first $2,000.00 of charges for eligible medical services
incurred subsequent to satisfaction of the deductible and 100 percent
thereafter. There shall be a separate deductible for each calendar year for (a)
each enrolled employee and (b) all enrolled dependents of such employee. Not
more than $1,000,000.00 shall be paid for major medical expense benefits with
respect to any one person for the entire period of such person's coverage under
the plan, whether continuous or interrupted except that this maximum may be
reapplied to a covered person in amounts not to exceed $2,000.00 a year.
Maximums of $10,000.00 per calendar year and $20,000.00 for the entire period
of the person's coverage under the plan shall apply to eligible expenses
incurred because of mental illness or functional nervous disorders, and such
may be reapplied to a covered person, except as provided in P.L.1999, c.441
(C.52:14-17.29d et al.). The same provisions shall apply for retired employees
and their dependents. Under the conditions agreed upon by the commission and
the carriers as set forth in the contract, the deductible for a calendar year
may be satisfied in whole or in part by eligible charges incurred during the
last three months of the prior calendar year.

���� Any service determined by
regulation of the commission to be an "eligible medical service"
under the major medical expense benefits coverage which is performed by a duly
licensed practicing psychologist within the lawful scope of psychologist practice
shall be recognized for reimbursement under the same conditions as would apply
were such service performed by a physician.

���� (B)� The contract or contracts
purchased by the commission pursuant to subsection c. of section 4 of P.L.1961,
c.49 (C.52:14-17.28) shall include coverage for services and benefits that are
at a level that is equal to or exceeds the level of services and benefits set
forth in this subsection, provided that such services and benefits shall
include only those that are eligible medical services and not those deemed
experimental, investigative or otherwise not eligible medical services. The
determination of whether services or benefits are eligible medical services
shall be made by the commission consistent with the best interests of the State
and participating employers, employees, and dependents. The following list of
services is not intended to be exclusive or to require that any limits or
exclusions be exceeded.

���� Covered services shall
include:

���� (1)�� Physician services,
including:

���� (a)�� Inpatient services,
including:

���� (i)��� medical care including
consultations;

���� (ii)�� surgical services and
services related thereto; and

���� (iii) obstetrical services
including normal delivery, cesarean section, and abortion.

���� (b)�� Outpatient/out-of-hospital
services, including:

���� (i)��� office visits for
covered services and care;

���� (ii)�� allergy testing and
related diagnostic/therapy services;

���� (iii) dialysis center care;

���� (iv)� maternity care;

���� (v)�� well child care;

���� (vi)� child immunizations/lead
screening;

���� (vii) routine adult physicals
including pap, mammography, and prostate examinations; and

���� (viii) annual routine
obstetrical/gynecological exam.

���� (2)�� Hospital services, both
inpatient and outpatient, including:

���� (a)�� room and board;

���� (b)�� intensive care and other
required levels of care;

���� (c)�� semi-private room;

���� (d)�� therapy and diagnostic
services;

���� (e)�� surgical services or
facilities and treatment related thereto;

���� (f)�� nursing care;

���� (g)�� necessary supplies,
medicines, and equipment for care; and

���� (h)�� maternity care and
related services.

���� (3)�� Other facility and
services, including:

���� (a)�� approved treatment
centers for medical emergency/accidental injury;

���� (b)�� approved surgical
center;

���� (c)�� hospice;

���� (d)�� chemotherapy;

���� (e)�� diagnostic x-ray and lab
tests;

���� (f)�� ambulance;

���� (g)�� durable medical
equipment;

���� (h)�� prosthetic devices;

���� (i)��� foot orthotics;

���� (j)��� diabetic supplies and
education; and

���� (k)�� oxygen and oxygen
administration.

���� (4)�� All services for which
coverage is required pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.), as
amended and supplemented. Benefits under the contract or contracts purchased as
authorized by the State Health Benefits Program shall include those for mental
health services subject to limits and exclusions consistent with the provisions
of the New Jersey State Health Benefits Program Act.

���� (C)� The contract or contracts
purchased by the commission pursuant to subsection c. of section 4 of P.L.1961,
c.49 (C.52:14-17.28) shall include the following provisions regarding
reimbursements and payments:

���� (1)�� In the successor plan,
the co-payment for doctor's office visits shall be $10 per visit with a maximum
out-of-pocket of $400 per individual and $1,000 per family for in-network
services for each calendar year. The out-of-network deductible shall be $100 per
individual and $250 per family for each calendar year, and the participant
shall receive reimbursement for out-of-network charges at the rate of 80
percent of reasonable and customary charges, provided that the out-of-pocket
maximum shall not exceed $2,000 per individual and $5,000 per family for each
calendar year.

���� (2)�� In the State managed
care plan that is required to be included in a contract entered into pursuant
to subsection c. of section 4 of P.L.1961, c.49 (C.52:14-17.28), the co-payment
for doctor's office visits shall be $15 per visit. The participant shall receive
reimbursement for out-of-network charges at the rate of 70% of reasonable and
customary charges. The in-network and out-of-network limits, exclusions,
maximums, and deductibles shall be substantially equivalent to those in the NJ
PLUS plan in effect on June 30, 2007, with adjustments to that plan pursuant to
a binding collective negotiations agreement or pursuant to action by the
commission, in its sole discretion, to apply such adjustments to State
employees for whom there is no majority representative for collective
negotiations purposes.

���� (3)�� "Reasonable and
customary charges" means charges based upon the 90th percentile of the
usual, customary, and reasonable (UCR) fee schedule determined by the Health
Insurance Association of America or a similar nationally recognized database of
prevailing health care charges.

���� (D)� Benefits under the
contract or contracts purchased as authorized by this act may be subject to
such limitations, exclusions, or waiting periods as the commission finds to be
necessary or desirable to avoid inequity, unnecessary utilization, duplication
of services or benefits otherwise available, including coverage afforded under
the laws of the United States, such as the federal Medicare program, or for
other reasons.

���� Benefits under the contract or
contracts purchased as authorized by this act shall include those for the
treatment of alcohol use disorder where such treatment is prescribed by a
physician and shall also include treatment while confined in or as an outpatient
of a licensed hospital or residential treatment program which meets minimum
standards of care equivalent to those prescribed by the Joint Commission on
Hospital Accreditation. No benefits shall be provided beyond those stipulated
in the contracts held by the State Health Benefits Commission.

���� (E)� The rates charged for any
contract purchased under the authority of this act shall reasonably and
equitably reflect the cost of the benefits provided based on principles which
in the judgment of the commission are actuarially sound. The rates charged shall
be determined by the carrier on accepted group rating principles with due
regard to the experience, both past and contemplated, under the contract. The
commission shall have the right to particularize subgroups for experience
purposes and rates. No increase in rates shall be retroactive.

���� (F)�� The initial term of any
contract purchased by the commission under the authority of this act shall be
for such period to which the commission and the carrier may agree, but
permission may be made for automatic renewal in the absence of notice of
termination by the commission. Subsequent terms for which any contract may be
renewed as herein provided shall each be limited to a period not to exceed one
year.

���� (G)� A contract purchased by
the commission pursuant to subsection b. of section 4 of P.L.1961, c.49
(C.52:14-17.28) shall contain a provision that if basic benefits or major
medical expense benefits of an employee or of an eligible dependent under the
contract, after having been in effect for at least one month in the case of
basic benefits or at least three months in the case of major medical expense
benefits, is terminated, other than by voluntary cancellation of enrollment,
there shall be a 31-day period following the effective date of termination
during which such employee or dependent may exercise the option to convert,
without evidence of good health, to converted coverage issued by the carriers
on a direct payment basis. Such converted coverage shall include benefits of
the type classified as "basic benefits" or "major medical
expense benefits" in subsection (A) hereof and shall be equivalent to the
benefits which had been provided when the person was covered as an employee.
The provision shall further stipulate that the employee or dependent exercising
the option to convert shall pay the full periodic charges for the converted
coverage which shall be subject to such terms and conditions as are normally
prescribed by the carrier for this type of coverage.

���� (H)� The commission may
purchase a contract or contracts to provide drug prescription and other health
care benefits or authorize the purchase of a contract or contracts to provide
drug prescription and other health care benefits as may be required to implement
a duly executed collective negotiations agreement or as may be required to
implement a determination by a public employer to provide such benefit or
benefits to employees not included in collective negotiations units.

���� (I)�� The commission shall
take action as necessary, in cooperation with the School Employees' Health
Benefits Commission established pursuant to section 33 of P.L.2007, c.103
(C.52:14-17.46.3), to effectuate the purposes of the School Employees' Health
Benefits Program Act as provided in sections 31 through 41 of P.L.2007, c.103
(C.52:14-17.46.1 through C.52:14-17.46.11) and to enable the School Employees'
Health Benefits Commission to begin providing coverage to participants pursuant
to the School Employees' Health Benefits Program Act as of July 1, 2008.

���� (J)�� Beginning January 1,
2012, the State Health Benefits Plan Design Committee shall provide to
employees the option to select one of at least three levels of coverage each
for family, individual, individual and spouse, and individual and dependent, or
equivalent categories, for each plan offered by the program differentiated by
out of pocket costs to employees including co-payments and deductibles.�
Notwithstanding any other provision of law to the contrary, the committee shall
have the sole discretion to set the amounts for maximums, co-pays, deductibles,
and other such participant costs for all plans in the program.� The committee
shall also provide for a high deductible health plan that conforms with
Internal Revenue Code Section 223.�

���� There shall be appropriated
annually for each State fiscal year, through the annual appropriations act,
such amounts as shall be necessary as funding by the State as an employer, or
as otherwise required, with regard to employees or retirees who have enrolled
in a high deductible health plan that conforms with Internal Revenue Code
Section 223.

����
(K) Any contract or
contracts purchased, or the extension of any contract entered into, by the
commission pursuant to subsection b. of section 4 of P.L.1961, c.49
(C.52:14-17.28) on and after the effective date of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill) shall require the third-party
administrator under contract to file with the commission reports, data,
schedules, statistics, or other information determined by the commission,
showing the reimbursement rates negotiated between third-party administrators
and providers for health care services and the amount paid for health care
procedures and services received by members.� The information provided shall be
in a format suitable for the commission to establish and maintain an
interactive, Internet-based price transparency dashboard that allows the
commission, participating employers, and members to view the health care prices
paid by the third-party administrator for health care services.� The dashboard
shall allow the commission and participating employers to sort the information
by geographic location, by health care provider, and by the specific health
care procedure or health care service.

(cf: P.L.2023, c.177, s.139)

���� 4. �This act shall take effect
immediately.

STATEMENT

���� This bill makes
various changes to State Health Benefits Plan (SHBP) governance and
administration.

State Health
Benefits Commission

���� The bill revises
the structure of the State Health Benefits Commission (SHBC) to include 13
members as follows:

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

���� (2) one member
appointed by the Governor who will represent local government employers;

���� (3) one member
appointed by the Governor who will represent higher education employers;

���� (4) three
members appointed by the Public Employee Committee of the New Jersey AFL-CIO
who are members of each of the three public employee organizations affiliated
with the New Jersey AFL-CIO with the largest number of employees participating
in the State Health Benefits Program;

���� (5) one member
appointed by the public employee organization that is not affiliated with the
New Jersey AFL-CIO, that represents the largest number of police officers in
the State;

���� (6) one member
appointed by the public employee organization that is not affiliated with the
New Jersey AFL-CIO, that represents the largest number of firefighters in the
State;

���� (7) one member
from the State Troopers Fraternal Association; and

���� (8) one member
who will be a non-voting member and who will be mutually agreed upon by the
majority vote of the membership of the commission.�

���� 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 and will have the authority to set
limits on the rates of reimbursements to hospitals or other health care
providers.� 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.�

���� The bill
establishes fiduciary responsibility of the commission to the plan participants
and beneficiaries consistent with the standards established in the Employee
Retirement Income Security Act of 1974 (ERISA).

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, other than on matters concerning such actions and plan
modifications as may be necessary to appropriately manage costs, 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 60 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.

Third-party
Medical Claims Reviewer Requirements

���� The bill directs
the SHBC to require the third-party medical claims reviewer to include claims
reimbursed to providers located in another state, along with other data, in an Internet-based
price transparency dashboard. �