The FY26 State Budget included language that required both the State members and Public Employee members of the Plan Design Committee (PDC) to submit proposals to achieve $100 million in recurring savings during the first six months of the Plan Year 26 to the actuary (AON). The deadline to submit the proposals was July 31.  

The PDC members representing the Administration proposed the following measures:   

• Eliminate all current plans and replace them with two plans – a modified Unity PPO plan and a modified Tiered Network plan.  
• Modify prescription drug co-pays across all plans. 
• Retain all current SHBP state plans and increase the deductibles and out-of- pocket maximum amounts across all plans for both in-network and out-of-network care. 
• Implement spousal surcharge of $50/month for members with spouses who have access to other health benefits coverage through their own employers but uses the SHBP plan. 
• Eliminate the Medicare Supplement plans and migrate State members to the Medicare Advantage PPO15 plan option. 
• Expand the pending Centers of Excellence Pilot Program to include two more covered procedures (routine colonoscopies and one other procedure from a list of possible options) and change the member cost-share in years one and two of that Pilot Program to incentivize utilization of the Center of Excellence providers. 

The PDC members representing the labor unions proposed the following measures:  

• Implement reference-based pricing limiting payments to healthcare providers to 200% of Medicare and Medicaid Service allowances. 
• Hiring an independent auditor to review the cost of 50% of all claims – in- and out-of-network and at least 50% of out of state claims. 
• Provide incentives to lower cost plans including High-Deductible Health Plans by offering lower employee contribution rates and increased Health Saving Plans (HSP) and Health Reimbursement Arrangements (HRA). 
• Plan-wide site neutral payments should be mandated by the PDC and State Health Benefits Commission so that medical practices that are affiliated with hospitals bill as a primary or specialist office and not a hospital. 
• Implement Center of Excellence for certain surgical procedures as well as expanding the program to cover routine procedures such as colonoscopies and cataract surgeries. 
• Provide incentives for the utilization of the Center of Excellence in year one, then implement higher tiered copays if the procedure is done at a non-Center of Excellence provider for each procedure in year 2 and year 3.  
• The actuary will analyze and recommend rates for medical carriers based on each respective carrier’s claims and trend data and will report revised premium rate recommendations for each respective Third-Party Administrator (TPA) for PY26. 
• Conduct a reverse auction of prescription drug contracts with a recurrence every two years. 
• Audit all net prices for the top 100 highest-priced medications to ensure all available discounts and maximum rebates are being applied and identify high-cost medications to negotiate the purchase directly from manufacturer. 
• Implement policy by PDC to audit all medications on a quarterly basis for new rebates and discounts and review newly FDA-approved medications to be added to the formulary. 
• Evaluate all medications charged through the medical side of the program to determine savings if charged through prescription drug side.
• As part of formulary management, the PDC must have two formulary advisors, one for general pharmaceuticals and one to assist with specialty medicines.  

Both parties did agree to similar measures in handling the cost of GLP-1 medications, including, but not limited to, excluding medications or limiting early refills for weight loss use only and limiting use to those with a BMI of 35 or greater. Additionally, recommendations were made to implement a three-tiered co-pay option based on price and brand and to provide counseling services and assessments to achieve better improved health results for members.  

The next step is for AON to determine if any proposals or combination achieved recurring and verifiable savings of $100 million in the first six months of Plan Year 26.  

As more information becomes available, the League will provide updates.  

Contacts: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112, and Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.