Senate Commerce Committee Statement to Senate, No. 2875 (State of New Jersey, May 13, 2024)

Summary

Senate Commerce Committee statement to Senate, No. 2875, with committee amendments, State of New Jersey, dated May 13, 2024. The committee reports favorably and with committee amendments Senate Bill No. 2875, which as amended makes certain changes to the minimum loss ratio requirements for the individual and small employer health insurance markets. The statement says the minimum loss ratio for the previous year is to be calculated based on a rolling average and that the Department of Banking and Insurance is to issue regulations for both markets. It says the committee amended the bill to provide that an activity counted as improving health care quality is to lead to measurable improvements in patient outcomes or patient safety, among other listed purposes.

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     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                  SENATE, No. 2875
                   with committee amendments



 STATE OF NEW JERSEY
                       DATED: MAY 13, 2024

     The Senate Commerce Committee reports favorably and with
committee amendments Senate Bill No. 2875.
     As amended, this bill makes certain changes to the minimum loss
ratio requirements for the individual and small employer health
insurance markets. Generally, a minimum loss ratio requires health
insurers to spend a certain portion of each premium dollar on claims
payment and on quality improvement. The remaining portion of each
premium dollar may be spent on administrative expenses.
     Under the bill, the 80 percent minimum loss ratio for the previous
year is required to be calculated based on a three-year rolling average.
In addition, the bill requires the Department of Banking and Insurance
to issue regulations for both the individual and small employer
markets:
     (1) requiring a health insurance carrier’s minimum loss ratio to be
calculated by aggregating the data for a three-year period which
includes the data for the previous calendar year whose minimum loss
ratio is being calculated, including three months of runout through the
first quarter of the subsequent year and the data for the two years
immediately preceding the year for which the minimum loss ratio is
being calculated;
     (2) requiring that the numerator of a carrier’s minimum loss ratio
for a minimum loss ratio reporting year to be the carrier’s claims paid
plus the carrier’s expenditures for activities that improve health care
quality;
     (3) requiring adjustments to be either included in or deducted from
incurred claims receipts related to the transitional reinsurance program
and net payments or receipts related to the risk adjustment; and
     (4) requiring that any new or increased State and federal taxes or
assessments be excluded from premiums for purposes of the minimum
loss ratio calculation.
                                   2

COMMITTEE AMENDMENTS:
    The committee amended the bill to provide that, to be included as
an activity that improves health care quality, the activity is to lead to
measurable improvements in patient outcomes or patient safety,
prevent hospital readmissions, promote wellness, or enhance health
information technology in a way that improves quality, transparency,
or outcomes.


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