N.J. Admin. Code § Executive Order No. 277 (2021)
Governor Philip D. Murphy
Executive Order No. 277 (2021)
An Order Launching New Jersey's Health Care Cost Benchmark Program
Issued: December 21, 2021.
Effective: December 21, 2021.
WHEREAS, access to affordable quality health care is critical to the physical, mental, and economic wellbeing of the residents, families, communities, and businesses in the State; and
WHEREAS, health care and prescription drug cost growth continue to be a challenge nationwide and for New Jersey residents, families, and employers, including the State, and threaten to outpace the growth of the State's economy and residents' wages; and
WHEREAS, the steadily increasing costs of health care and prescription drugs have limited access to quality health care for lower- and middle-income residents and elderly residents alike; and
WHEREAS, the novel Coronavirus disease 2019 (COVID-19) pandemic and the economic fallout it has caused have underscored the importance of equitable and affordable access to quality health care services, treatments, and prescription drugs, while also highlighting inequalities in health outcomes and critical disparities in health care and coverage access, particularly with respect to minority communities and the underserved; and
WHEREAS, at a time when many of our residents have been impacted by job loss and housing and food insecurity, access to more affordable, quality health care has never been more critical; and
WHEREAS, planning for improved consumer affordability, health care quality, integration of health care delivery, reform of payment systems to reward value, cost transparency, and taxpayer savings, achieved through coordination among State agencies, is essential to effectively manage costs and improve health care delivery; and
WHEREAS, the growth of health care expenditures affects the State's budget as a significant portion of State revenue is used to fund public employee and retiree benefits and Medicaid benefits; and
WHEREAS, there is a growing recognition that the efforts to advance affordability, accessibility, and transparency in the health care system are aided and informed by incorporation of whole-person systems change, and that alignment of alternative payment models can improve quality and reduce the cost of care; and
WHEREAS, it is the policy of this State, as a key part of its efforts to improve health care affordability, accessibility, and transparency, that New Jersey must pursue opportunities Administration-wide and across the public and private sectors to improve health outcomes while reducing the rate of growth of health care costs; and
WHEREAS, on May 30, 2018, the State enacted the "New Jersey Health Insurance Premium Security Act," P.L. 2018, c. 24, establishing a reinsurance program to reimburse insurers for certain high-cost claims in the insurance market, lowering premiums compared to what they would have been without the program; and
WHEREAS, on June 1, 2018, the State enacted the "Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act ("the Act")," P.L. 2018, c. 32, in which the Legislature declared that it is in the public interest "to reform the health care delivery system in New Jersey to enhance consumer protections, create a system to resolve certain health care billing disputes, contain rising costs"; and
WHEREAS, this Act requires providers and insurers to provide detailed disclosures regarding out-of-network charges, restricts the amount a provider may charge in excess of a deductible, copayment, or coinsurance amount applicable to in-network services pursuant to the covered person's health benefits plan, and implements an arbitration process for out-of-network billing disputes between insurance carriers and providers; and
WHEREAS, on June 28, 2019, the State enacted P.L. 2019, c. 141, authorizing the Commissioner of the Department of Banking and Insurance ("DOBI") to operate a State-Based Health Exchange in New Jersey, through which residents who do not have coverage from an employer or other program may enroll in minimum essential coverage, and to oversee the State-Based Health Exchange "to ensure the best interests of and protection for consumers of the State"; and
WHEREAS, on January 16, 2020, the State enacted a package of bills that codify into State law the basic protections of the Affordable Care Act, which include establishing protections for no-cost preventative care and contraception, prohibiting exclusions for pre-existing conditions, allowing children to stay on their parents' plan until age 26, and incorporating mental health and maternity care as part of essential benefits; and
WHEREAS, on January 21, 2020, the State enacted P.L. 2019, c. 472, limiting cost sharing for prescription drugs under certain health plans; and
WHEREAS, on July 31, 2020, the State enacted P.L. 2020, c. 61, continuing the repealed federal Health Insurance Tax as the New Jersey Health Insurer Assessment, the revenue generated from which is used for the purposes of increasing affordability in the individual market and providing greater access to health insurance to the uninsured; and
WHEREAS, in 2020, the Office of Health Care Affordability and Transparency ("the Office") was formed to help guide the Administration's work on health care affordability and price transparency; and
WHEREAS, the Office works with the DOBI, the Department of Health ("DOH"), the Department of Human Services ("DHS"), and the Department of the Treasury ("Treasury") to advance affordability, accessibility, and transparency in the health care system; and
WHEREAS, on January 28, 2021, I signed Executive Order No. 217, creating an Interagency Health Care Affordability Working Group ("Working Group") consisting of representatives from the DOBI, the DOH, the DHS, the Treasury, and the Division of Consumer Affairs to advise the State on the development of a health care cost growth benchmark and related activities to ensure access to high-quality, affordable, and equitable health care for all New Jerseyans; and
WHEREAS, the Working Group made recommendations for appointments to a Health Care Advisory Group ("Advisory Group"), to serve at the pleasure of the Governor, pursuant to Executive Order No. 217 (2021) that included health care providers, insurers, employers, consumer advocates, and health care policy leaders to advise the Working Group on the development and implementation of a health care cost growth benchmark; and
WHEREAS, the Working Group and Advisory Group have met within their respective groups at least monthly for more than nine months to develop and advise on the development of the health care cost growth benchmark program; and
WHEREAS, the meetings of the Working Group and Advisory Group have resulted in a framework for a health care cost growth benchmark program, which will promote increased transparency and accountability for health care spending and slow the rate of health care spending growth to make it more affordable and sustainable for families, individuals, employers, and the State; and
WHEREAS, stakeholder involvement through the Advisory Group resulted in a stakeholder compact ("the compact") that memorializes a collective commitment to the health care cost growth benchmark program; and
WHEREAS, the compact establishes a strong, collaborative foundation for the State, providers, and carriers to work toward attaining the health care cost growth benchmark by setting forth stakeholders' commitment to participate in the data collection, verification, analysis, and reporting processes led by the DOBI, and the ongoing efforts to understand the underlying health care cost drivers in New Jersey; and
WHEREAS, a health care cost growth benchmark program will assess health care cost growth for all New Jersey residents with coverage through commercial plans, the Medicaid and Medicare programs, and the State Employee Health Benefits Program ("SHBP") and School Employees' Health Benefits Program ("SEHBP"); and
WHEREAS, the Commissioner of DOBI has access to claims data under various provisions of law, including but not limited to N.J.S.A. 17B:30-30, N.J.S.A. 17B:30-31, N.J.S.A. 52:17B-199, N.J.A.C. 11:24-3.8, N.J.A.C. 11:23-3.2, and N.J.A.C. 11:24B-2.8, which data can help assess performance relative to a health care cost growth benchmark to further the State's policy of improving health outcomes and reducing the rate of growth of health care costs; and
WHEREAS, monitoring the implementation of a health care cost growth benchmark is necessary to establish transparency and accountability for rising health care costs; and
WHEREAS, a concrete target for limiting health care cost increases will promote collaborative actions by health insurers, healthcare providers and others, and inform effective public policy strategies, to improve health care affordability, accessibility, and transparency for all New Jerseyans;
NOW, THEREFORE, I, PHILIP D. MURPHY, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
N.J. Admin. Code Executive Order No. 277 (2021)