S-296 (Vitale, Gill), S-634 (Gill, Vitale), S-635 (Gill, Vitale) Legislation concerning tiered networks in health benefits plans

On behalf of the New Jersey Business & Industry Association (NJBIA), we appreciate your efforts as health care policy leaders to bring together health care professionals, health insurers and business leaders to work towards responsible, innovative changes to our health care system that will begin to lower costs while improving the quality of care we receive. NJBIA represents 20,000 members, with over 85 percent of our members employing fewer than fifty employees. Our member companies employ over one million workers in New Jersey.

The Association places a strong and consistent focus on the quality and affordability of health insurance in New Jersey. The cost of providing health coverage to employees is one of the most significant challenges facing employers today. It is consistently ranked the number one problem facing our members in our annual NJBIA Business Outlook Survey.

In our 2014 Health Benefits Survey, the cost of health insurance was the top challenge facing the majority of our members, with 71 percent indicating it was one of their top concerns. NJBIA members want to provide health benefits as a way to attract and keep good employees, but have specific concerns about health care and rising health benefits costs. The survey found that 45 percent of our member companies lowered profits, 35 percent limited raises for employees and 22 percent delayed investments in order to afford to provide this benefit for employees. It is very important to find and develop ways to bring these costs under control.

There has been a growing recognition in the discussions around health care related issues that fee-for-service health care, where patients pay for the number of health care services performed, rather than for the quality and outcomes achieved by treatment, is a primary factor driving up costs. Today, our members often pay for more health care services than they need because many of those services are duplicative or disjointed.

The Association recognizes that the current health care system needs to be better coordinated, more consistent, and less costly, and reward those who follow this approach. Innovative, successful, patient-centered, value-based collaborations between health insurers and doctors and hospitals have been established that tie payment to better patient outcomes.

In the past several years, health benefits plans with tiered networks or narrow networks have been developed as a way to provide quality health benefits with lower costs and more choice to consumers – our employers and employees. In some versions of tiered network health benefits plan design, for a reduced premium, consumers can select different levels of cost-sharing (i.e. deductibles, co-insurance and/or copayments) depending on the tier of the provider.

Several tiered and narrow network products also utilize value-based reimbursement and/or contracting models which again have the potential to allow employers to reduce both health care coverage costs and system-wide health care spending. Affordability is critical and preserving lower-cost health plan benefit design for employers and consumers is a top priority, especially for the small business purchasers who make up the bulk of the state-regulated health insurance market.

NJBIA believes that transparency, disclosure and consumer education are important aspects in the transformation of healthcare. Dissemination of information on how tiered networks are established, providers are included in tiers, and the cost-sharing requirements, permit employers and employees to be more discerning in their healthcare decisions and choices.

These processes should be balanced and fair, and lead to enhanced innovations in the New Jersey healthcare marketplace. With respect to the bills under consideration today, NJBIA believes they are a step in the right direction, especially with respect to disclosure of selection criteria and determination of tier placement to providers, and clear descriptions to consumers about cost sharing in S-296 and S-634.

However, we respectfully request additional review and stakeholder input due to concerns that both S-634 and S-635 could cause delays in bringing lower cost health benefits plans to New Jersey consumers. Specifically, the proposed substitute for S-634 establishes a process for providers to appeal their tier placement by an insurer, at the same time that the insurer’s network plan is under review by the Department of Banking and Insurance. This bill and S-635 also require certification of network adequacy by the Department of Health, which could prolong the overall review process. These processes could also add costs to the overall health care system, which would ultimately impact our member’s ability to continue offering health benefits to their employees.

Thank you very much for this opportunity and for your consideration of our comments and concerns.