Horizon Blue Cross Blue Shield: Compromise legislation, S-2/A-5129 (Vitale / Prieto, Muoio,Vainieri Huttle, Mukherji, Caputo), regarding the use of Horizon Blue Cross Blue Shield’s excess reserves, corporate governance structure, and enhanced financial reporting was passed by the Legislature late Monday night and signed by the Governor. The agreement reached by legislative leadership, Senator Vitale and Horizon executives was also acceptable to the Governor, enabling final passage of the $34.7 million Fiscal Year 2018 state budget, A-5000/S-18 (Schaer / Sarlo), as well.
The new Horizon law establishes an appropriate range of reserves requiring a minimum of 550 percent of Risk-Based Capital (RBC) reserves and a maximum cap of 725 percent. If reserves exceed the cap, the company must develop a plan, approved by the Department of Banking and Insurance (DOBI), to use the surplus to benefit Horizon’s customers, which may include reducing future premiums. Annual independent audits will determine the reserve level. Under a prior proposal, a public process for determining excess reserves had no set minimum or maximum, and excess funds could have been utilized to improve and promote the health of all New Jersey residents, rather than only Horizon subscribers.
The law expands Horizon’s Board of Directors from 15 to 17 members, with 11 members appointed by Horizon, four by the Governor, and two new public members with a background in healthcare, finance or insurance, appointed by the Senate President and Assembly Speaker, respectively. The prior proposal would not have expanded the number of board members, but would have reduced Horizon’s appointments to eight, with three members elected by the Horizon subscribers.
The bill clarifies Horizon’s mission to provide affordable and accessible health insurance and promote the integration of the healthcare system for its subscribers. To meet this mission, the company is required annually to file detailed financial reporting information, including executive compensation, to be posted on DOBI’s website. The bill also requires the department to post the annual financial statements of all health insurers doing business in New Jersey on its website.
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Out-of-Network: On Monday, June 26, S-1285 (Vitale, Weinberg, Cruz-Perez), was heard and released by the Senate Budget Committee and then included on the Senate Board list for June 29. This was a victory for business, but the work is not over yet. The bill was not considered by the full Senate because legislators there and in the Assembly were focused on negotiations over the Horizon proposal. The Assembly version, A-1952 (Coughlin, Schaer, Singleton, Lampitt) was amended by the full Assembly the same day to be identical to the Senate bill, clearing the way for final passage.
NJBIA has joined together with a broad coalition of stakeholders—consumer groups, public employee unions, trade unions and other employer associations—to enact balanced and effective out-of-network reforms. This bill addresses the ever-increasing healthcare costs for “surprise” medical bills and is necessary not only for employers, employees and all consumers, but also for the state to realize savings in the public employee health benefits plans.
The amended legislation establishes requirements for price transparency and disclosure by healthcare providers and insurance carriers so it’s easier for consumers to understand potential out-of-network costs. It also establishes a “baseball style” arbitration process for the payment of “surprise” medical bills that can occur inadvertently or in emergency situations when someone receives treatment from a healthcare provider or at a facility that is not in the person’s health plan network. Under a prior version, the maximum out-of-network payment rate was set at 250 percent of the Medicare rate.
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