Bill Text: NJ A5374 | 2026-2027 | Regular Session | Introduced
Bill Title: Requires SHBP and SEHBP to adopt certain cost-saving measures.
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced) 2026-09-10 - Introduced, Referred to Assembly State and Local Government Committee [A5374 Detail]
Download: New_Jersey-2026-A5374-Introduced.html
Sponsored by:
Assemblyman CODY D. MILLER
District 4 (Atlantic, Camden and Gloucester)
Assemblyman DAN HUTCHISON
District 4 (Atlantic, Camden and Gloucester)
SYNOPSIS
Requires SHBP and SEHBP to adopt certain cost-saving measures.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning cost-saving measures for the State Health Benefits Program and the School Employees' Health Benefits Program and supplementing P.L.1961, c.49 and P.L.2007, c.103.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Notwithstanding any other law, rule, or regulation to the contrary, the School Employees' Health Benefits Plan Design Committee shall develop new plan options that shall be required to meet defined affordability standards, including reasonable limitations on actuarial value and out-of-pocket costs, and coverage for preventative and chronic care. The committee shall consider alternative plan designs, innovative cost-containment strategies, affordability measures, and any other recommendations designed to improve efficiency, sustainability, and long-term cost stabilization within the program. Prior to the implementation of any material plan changes, the committee shall consult with all relevant collective bargaining representatives and shall conduct a workforce impact analysis to evaluate the effects of any proposed changes on employee recruitment and retention. Such analysis shall be made public prior to the implementation of any proposed changes.
2. Notwithstanding any other law, rule, or regulation to the contrary, following the termination of contracts of third-party administrators servicing the School Employees' Health Benefits Program in effect as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), contracts for third-party administrators servicing the School Employees' Health Benefits Program shall not exceed four years. At the end of any four-year contract, such contracts may be renewed or renegotiated following a competitive bidding process as required by law and regulation.
3. a. Within 180 days of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the School Employees' Health Benefits Commission shall develop requirements for all third-party administrators servicing the School Employees' Health Benefits Program, which shall include, but shall not be limited to:
(1) reference-based pricing that sets certain limits on payments to hospitals and medical providers based on a certain percentage of Medicare reimbursement rates, which shall be implemented initially as a pilot program for selected services or geographic regions, as determined by the commission;
(2) a comprehensive analysis of the costs of the various plans provided by the third-party administrator, including hospital pricing;
(3) a detailed analysis of claims experience data, which shall be compiled and analyzed in a manner that complies with the privacy requirements of the federal "Health Insurance Portability and Accountability Act of 1996," Pub.L.104-191, and related regulations, and which shall be made fully available to the State in a standardized format;
(4) the sources of any significant cost increases experienced during past or current plan years and any anticipated cost increases forecasted to occur in future plan years;
(5) performance-based contracting standards that shall include measurable benchmarks and enforcement mechanisms; and
(6) where appropriate, provisions addressing the cost of prescription drugs, which shall include, but need not be limited to, requirements for pass-through pricing, rebate transparency, audit authority, and fiduciary responsibility for pharmacy benefit managers.
Any relevant information under this subsection shall be made publicly available on an Internet dashboard, which shall include, but shall not be limited to, cost trends, utilization data, and pricing comparisons.
b. The commission shall require annual reports to be prepared by third-party administrators servicing the School Employees' Health Benefits Program detailing the information required pursuant to subsection a. of this section. The commission shall analyze the reports provided by the third-party administrators and shall provide a report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), that shall include, but shall not be limited to, all information contained in the reports from the third-party administrators, proposed strategies for containing health care costs, potential procurement reforms, pricing benchmarks, and approaches used by other states. A standing reference committee of each house of the Legislature shall hold a hearing on an annual basis to address the reports provided.
c. The commission shall establish cost growth benchmarks that set annual targets and shall implement corrective measures if such targets are exceeded.
4. Notwithstanding any other law, rule, or regulation to the contrary, the State Health Benefits Plan Design Committee shall develop new plan options that shall be required to meet defined affordability standards, including reasonable limitations on actuarial value and out-of-pocket costs, and coverage for preventative and chronic care. The committee shall consider alternative plan designs, innovative cost-containment strategies, affordability measures, and any other recommendations designed to improve efficiency, sustainability, and long-term cost stabilization within the program. Prior to the implementation of any material plan changes, the committee shall consult with all relevant collective bargaining representatives and shall conduct a workforce impact analysis to evaluate the effects of any proposed changes on employee recruitment and retention. Such analysis shall be made public prior to the implementation of any proposed changes.
5. Notwithstanding any other law, rule, or regulation to the contrary, following the termination of contracts of third-party administrators servicing the State Health Benefits Program in effect as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), contracts for third-party administrators servicing the State Health Benefits Program shall not exceed four years. At the end of any four-year contract, such contracts may be renewed or renegotiated following a competitive bidding process as required by law.
6. a. Within 180 days of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) the State Health Benefits Commission shall develop cost-stabilization and price transparency requirements for all third-party administrators servicing the State Health Benefits Program, which shall include, but shall not be limited to:
(1) reference-based pricing that sets certain limits on payments to hospitals and medical providers based on a certain percentage of Medicare reimbursement rates, which shall be implemented initially as a pilot program for selected services or geographic regions, as determined by the commission;
(2) a comprehensive analysis of the costs of the various plans provided by the third-party administrator, including hospital pricing;
(3) a detailed analysis of claims experience data that shall be compiled and analyzed in a manner that complies with the privacy requirements of the federal "Health Insurance Portability and Accountability Act of 1996," Pub.L.104-191, and related regulations, and which shall be made fully available to the State in a standardized format;
(4) the sources of any significant cost increases experienced during past or current plan years and any anticipated cost increases forecasted to occur in future plan years;
(5) performance-based contracting standards that shall include measurable benchmarks and enforcement mechanisms; and
(6) where appropriate, provisions addressing the cost of prescription drugs, which shall include, but need not be limited to, requirements for pass-through pricing, rebate transparency, audit authority, and fiduciary responsibility for pharmacy benefit managers.
Any relevant information under this section shall be made publicly available on an Internet dashboard which shall include, but shall not be limited to, cost trends, utilization data, and pricing comparisons.
b. The commission shall require annual reports to be prepared by third-party administrators servicing the State Health Benefits Program detailing the information required pursuant to subsection a. of this section. The commission shall analyze the reports provided by the third-party administrators and shall provide a report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), that shall include, but shall not be limited to, all information contained in the reports from the third-party administrators, proposed strategies for containing health care costs, potential procurement reforms, pricing benchmarks, and approaches used by other states. A standing reference committee of each house of the Legislature shall hold a hearing on an annual basis to address the reports provided.
c. The commission shall establish cost growth benchmarks that set annual targets and shall implement corrective measures if such targets are exceeded.
7. This act shall take effect 180 days after the date of enactment except that the School Employees' Health Benefits Commission, the State Health Benefits Commission, and the Division of Pensions of Benefits in the Department of the Treasury may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.
STATEMENT
This bill requires the State Health Benefits Program (SHBP) and the School Employees' Health Benefits Program (SEHBP) to adopt certain cost-saving measures.
The bill requires the State Health Benefits Plan Design Committee and the School Employees' Health Benefits Plan Design Committee to develop health plan options that will be required to meet defined affordability standards, including reasonable limitations on actuarial value and out-of-pocket costs, and coverage for preventative and chronic care. The committees will consider alternative plan designs, innovative cost-containment strategies, affordability measures, and any other recommendations designed to improve efficiency, sustainability, and long-term cost stabilization within the program. Prior to the implementation of any material plan changes, the committees must consult with all relevant collective bargaining representatives and conduct a workforce impact analysis to evaluate the effects of any proposed changes on employee recruitment and retention which will be made public prior to the implementation of any proposed changes.
The bill also requires that, following the termination of contracts with third-party administrators servicing the SHBP and SEHBP in effect as of the effective date of this bill, contracts for third-party administrators servicing the SHBP and SEHBP may not exceed four years. At the end of any four-year contract, such contracts may be renewed or renegotiated following a competitive bidding process as required by law and regulation.
The bill also requires the State Health Benefits Commission (SHBC) and the School Employees' Health Benefits Commission (SEHBC) to develop cost-stabilization and price transparency requirements for all third-party administrators servicing the SHBP and SEHBP, which must include, but will not be limited to:
(1) reference-based pricing that sets certain limits on payments to hospitals and medical providers based on a certain percentage of Medicare reimbursement rates, which will be implemented initially as a pilot program for selected services or geographic regions, as determined by the commission;
(2) a comprehensive analysis of the costs of the various plans provided by the third-party administrator, including hospital pricing;
(3) a detailed analysis of claims experience data, which will be compiled and analyzed in a manner that complies with the privacy requirements of the federal "Health Insurance Portability and Accountability Act of 1996," Pub.L.104-191, and related regulations, and which shall be made fully available to the State in a standardized format;
(4) the sources of any significant cost increases experienced during past or current plan years and any anticipated cost increases forecasted to occur in future plan years;
(5) performance-based contracting standards that will include measurable benchmarks and enforcement mechanisms; and
(6) where appropriate, provisions addressing the cost of prescription drugs which must include, but need not be limited to, requirements for pass-through pricing, rebate transparency, audit authority, and fiduciary responsibility for pharmacy benefit managers.
Any relevant information must be made publicly available on an Internet dashboard which must include, but need not be limited to, cost trends, utilization data, and pricing comparisons.
Under the bill, the SEHBC and SHBC will require annual reports to be prepared by third-party administrators servicing the SEHBP and SHBP detailing the information required by the bill.
Under the bill, the SHBC and SEHBC will be required to establish cost growth benchmarks which set annual targets and must implement corrective measures if such targets are exceeded.
The SHBC and SEHBC will require third-party administrators servicing the SHBP and SEHBP to prepare annual reports detailing the required information. The SHBC and SEHBC will analyze the reports provided by the third-party administrators and provide a report to the Governor and to the Legislature. This report must include, but will not be limited to, all information contained in the reports from the third-party administrators, proposed strategies for containing health care costs, potential procurement reforms, pricing benchmarks, and approaches used by other states. A standing reference committee of each house of the Legislature will hold a hearing on an annual basis to address the reports provided.
