New Jersey-2018-A3057-Introduced

An Act establishing the Office of Health Transformation and supplementing Title 30 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares:

a. The State is the largest purchaser of health care services in New Jersey, with combined federal and State expenditures for Medicaid totaling $14.5 billion in fiscal year 2016.

b. Medicaid is the largest health insurer in the country, covering more than 70 million people.

c. The combined cost of New Jersey's many health care programs, of which Medicaid is only one, totals nearly $20 billion annually.

d. New Jersey's Medicaid program is administered by the Division of Medical Assistance and Health Services in the Department of Human Services, but the Departments of Health, Children and Families, and Banking and Insurance, as well as other divisions and agencies within State government all play vital roles in the provision of Medicaid-funded programs and services to eligible individuals in New Jersey.

e. A single office dedicated to strategic planning for the State's public health care system is essential to ensure that individuals in need continue to receive high quality healthcare services and that the value received for public healthcare dollars spent is maximized.

f. Leveraging State health care purchases, standardizing health care quality performance measures, and assessing the use of alternative payment models through the development of demonstration projects will help drive improvements in the quality and value of public health care programs, and ensure that the State is benefitting from innovations in healthcare whenever feasible.

2. a. There is established in the Executive Branch of State Government the Office of Health Transformation. For the purpose of complying with Article V, Section IV, paragraph 1 of the New Jersey Constitution, the office is allocated within the Department of the Treasury; but, notwithstanding that allocation, the office shall be independent of any supervision or control by the department or by any board, officer or employee thereof. The Office of Health Transformation shall serve strategic planning, advisory, coordination, communication, and contract review and development functions in its mission to drive improvement in State healthcare program performance and value, including, but not limited to, the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.) and the NJ FamilyCare Program established pursuant to P.L.2005, c.156 (C.30:4J-8 et al.).

b. The Office of Health Transformation shall have the following general duties, powers, and responsibilities:

(1) to establish a single, comprehensive strategic plan for the coordinated, efficient administration of public healthcare policy and spending, including, but not limited to, the Medicaid and NJ FamilyCare Programs, that examines policies and expenditures across departments, divisions, agencies, and programs to determine ways to improve performance and leverage purchasing power;

(2) to review the current contract between the Division of Medical Assistance and Health Services in the Department of Human Services and managed care organizations that provide services to persons who are eligible for Medicaid or NJ FamilyCare, which review shall include:

(a) referring to industry best practices or contracts executed by other states with Medicaid managed care organizations, as appropriate;

(b) documenting instances in which the present contract is unenforceable, inconsistent, duplicative, outdated, or ambiguous, and the reasons therefor; and

(c) documenting instances in which the present contract does not set forth requirements by provider type for managed care organizations but does set forth requirements for fee-for-service providers by provider type;

(3) to develop a draft contract for future use, based on the results of the review by the office of the current contract, that is updated, clear, and enforceable, and which specifies requirements by provider type for managed care organizations;

(4) to facilitate and coordinate communication with and among the departments, divisions, and agencies that provide Medicaid-funded services or programs to facilitate the Office of Health Transformation's strategic planning, and contract review and development functions;

(5) to consult with the Division of Pension and Benefits in the Department of the Treasury to determine the feasibility of consolidating expenditures, including, but not limited to, those made by the State Health Benefits Program and the School Employees' Health Benefits Program with other State health care program expenditures to achieve economies of scale;

(6) to call upon any department, division, or agency of State government to provide such information, resources, or other assistance as the office deems necessary to discharge its functions and to fulfill its responsibilities pursuant to this act. Each department, division, and agency of this State shall cooperate and furnish the office with the information and assistance necessary to accomplish its mission;

(7) to assess the State's strategy for pharmaceutical procurement in order to identify alternative procurement strategies that could leverage the State's purchasing power to reduce costs. Such assessment shall including an analysis of the feasibility of: using a single process for all State pharmaceutical procurement, including that undertaken by the State Health Benefits Program and the School Employees' Health Benefits Program; requiring information from managed care organizations to enable the Division of Medical Assistance and Health Services to ensure that pharmaceutical pricing in the Medicaid program is consistent with that required by applicable federal regulation; and utilizing other strategies to achieve savings in State pharmaceutical expenditures;

(8) to establish a single set of standardized measures of the quality of healthcare to be utilized for all State healthcare programs, including Medicaid and NJ FamilyCare, that simplifies, consolidates, and harmonizes the healthcare quality measures that are currently reported through State, federal or other initiatives;

(9) to coordinate, with the Division of Medical Assistance and Health Services in the Department of Human Services, the development and implementation of a one-year demonstration project that utilizes an episode-of-care payment model for one or more conditions or medical events to be identified by the office and for which healthcare services are provided through the Medicaid program, as provided by subsection c. of this section; and

(10) to coordinate and develop, with the Division of Medical Assistance and Health Services in the Department of Human Services, a means by which to monitor and evaluate the use of value-based payment and alternative payment models in other states or programs over time to assess their effectiveness and potential applicability to the State Medicaid program. Such monitoring and evaluation shall include, but is not limited to, consultation with individuals experienced in, or potentially affected by, the use of value-based or alternative payment models, including representatives of: the healthcare quality improvement industry, acute care hospitals, consumer advocacy groups, patients with chronic conditions, managed care organizations operating in the State, physicians that provide services through a Patient Centered Medical Home, behavioral health providers, certified Medicaid accountable care organizations, and others, as deemed appropriate by the office. The office shall submit, no later than 24 months following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a report to the Governor and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1) on its findings, including any recommendations concerning the use of value-based payment and alternative payment models in the State Medicaid program.

c. (1) The demonstration project implemented pursuant to paragraph (9) of subsection b. of this section shall be designed to improve the coordination of healthcare services by providers and to reward providers by sharing any cost savings realized in the episode-of-care payment model compared to the same course of treatment when provided in a fee-for-service or managed care plan payment model, between the State and the provider or group of providers.

(2) Managed care organization participation in the demonstration project shall be made mandatory by contract.

(3) The Commissioner of Human Services shall apply for such State plan amendments or waivers as may be necessary to implement the provisions of this act and to secure federal financial participation for State Medicaid expenditures under the federal Medicaid program.

(4) The office shall collect data during the course of the demonstration project in order to assess whether the project results in demonstrable savings and improved healthcare outcomes as measured by standard healthcare quality measures.

(5) The office shall submit, within 180 days of the end of the demonstration project, a report on its findings, including recommendations concerning expansion of the demonstration project, to the Governor and the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1).

d. As used in this section, "episode of care" means a payment model in which a provider or group of providers that provide health care services to a person receives a single, previously negotiated, bundled payment, which is set at less than the total current payment in a fee-for-service or managed care model, as applicable, and that includes all physician, inpatient, and outpatient care that the patient received in the course of being treated for the specific condition or medical event.

3. The Governor shall appoint an Executive Director of the Office of Health Transformation, who shall have expertise in healthcare policy and finance. The executive director shall have the power to employ staff within the limits of funds appropriated or made available therefor, and shall have broad authority to coordinate communication between, and request and receive information from, any department, division, or agency of the State in furtherance of the mission of the office.

4. This act shall take effect immediately.

STATEMENT

This bill establishes the Office of Health Transformation in the Department of the Treasury. For the purpose of complying with Article V, Section IV, paragraph 1 of the New Jersey Constitution, the office is allocated within the Department of the Treasury; but, notwithstanding that allocation, the office would be independent of any supervision or control by the department or by any board, officer or employee thereof. The office would serve strategic planning, advisory, coordination, communication, and contract review and development functions to drive improvement in State healthcare program performance and value, including the Medicaid and NJ FamilyCare programs.

The Office of Health Transformation would have the following duties, powers, and responsibilities:

� to establish a single, comprehensive strategic plan for the coordinated, efficient administration of public healthcare policy and spending, including, but not limited to, the Medicaid and NJ FamilyCare Programs, that examines policies and expenditures across departments, divisions, agencies, and programs to determine ways to improve performance and leverage purchasing power;

� to review, as detailed in the bill, the current contract between the Division of Medical Assistance and Health Services in the Department of Human Services and managed care organizations that provide services to persons who are eligible for Medicaid or NJ FamilyCare;

� to develop a draft contract for future use, based on the results of the review by the office of the current contract between the division and managed care organizations, that is updated, clear, and enforceable, and which specifies requirements by provider type for managed care organizations;

� to facilitate and coordinate communication with and among the departments, divisions, and agencies that provide Medicaid-funded services or programs;

� to consult with the Division of Pension and Benefits in the Department of the Treasury to determine the feasibility of consolidating expenditures, including, but not limited to, those made by the State Health Benefits Program and the School Employees' Health Benefits Program with other State health care program expenditures to achieve economies of scale;

� to call upon any department, division, or agency of State government to provide such information, resources, or other assistance as the Office of Health Transformation deems necessary to discharge its functions and to fulfill its responsibilities;

� to assess, as detailed in the bill, the State's strategy for pharmaceutical procurement in order to identify alternative procurement strategies that could leverage the State's purchasing power to reduce costs;

� to establish a single set of standardized measures of the quality of healthcare to be utilized for all State health care programs;

� to coordinate, with the Division of Medical Assistance and Health Services in the Department of Human Services, the development and implementation of a one-year mandatory Medicaid demonstration project that utilizes an episode-of-care payment model for one or more conditions or medical events to be identified by the office, and to report to the Governor and the Legislature on the results of the demonstration project within 180 days of the end of the project;

� to coordinate and develop, with the Division of Medical Assistance and Health Services in the Department of Human Services, a means by which to monitor and evaluate the use of value-based payment and alternative payment models in other states or programs over time to assess their effectiveness and potential applicability to the State Medicaid program. The monitoring and assessment shall include consulting with individuals experienced in, or potentially affected by, the use of value-based or alternative payment models, and the office is to submit its findings, including any recommendations concerning the use of value-based payment and alternative payment models in the State Medicaid program to the Governor and the Legislature, no later than 24 months following enactment of this bill.

The bill also provides that the Governor appoint an Executive Director of the Office of Health Transformation who is to have expertise in healthcare policy and finance. The bill provides that the executive director may employ staff within the limits of funds appropriated or made available, and would have broad authority to coordinate communication between, and request and receive information from, any department, division, or agency of the State in furtherance of the mission of the office.

This bill implements certain recommendations of the Medicaid 2.0 Report authored by the New Jersey Health Care Quality Institute, and would take effect immediately upon enactment.