Justices Urged to Save State Health Databases

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By Jacklyn Wille

Nov. 30 — More than 40 industry groups, states and individuals are urging the U.S. Supreme Court to protect states' efforts to collect health claims data from health plans funded by employers.

These so-called All-Payer Claims Databases have proliferated in the past decade, with at least 18 states implementing one, and a dozen more states exploring the possibility of doing so. In general, these databases collect information from parties that pay for medical services—such as insurance companies—about services provided to state residents in order to assist policy makers in improving health outcomes, controlling costs and promoting research.

These databases hit a major roadblock in 2014, when the U.S. Court of Appeals for the Second Circuit barred Vermont from forcing employers that fund their own health insurance plans to turn over the required data. In a split ruling, the Second Circuit found that Vermont's attempt to collect data from self-insured plans encroached on federal law regulating employee benefit plans and was therefore preempted (24 DER EE-7, 2/5/14).

The U.S. Solicitor General advised the high court not to wade into this dispute . But the justices agreed to review the case and will hear oral arguments Dec. 2 (125 DER 125, 6/30/15). In the lead-up to these arguments, the high court received 16 amicus briefs—a relatively high number for a case under the Employee Retirement Income Security Act—many of which touted the virtues of All-Payer Claims Databases like the Vermont program in question.

‘Powerful Insights.'

In its brief, Vermont defended its database as yielding “powerful insights about quality of care, cost, and accessibility.”

Many other groups echoed this sentiment, describing at length the value of All-Payer Claims Databases like Vermont's.

For instance, a brief filed by 17 states that sponsor such databases said the “principal reason” for establishing a database is to provide policy makers with information they can use to develop programs that improve health-care quality while lowering costs.

According to another brief, these databases allow policy makers to learn about health-related issues they otherwise wouldn't be informed about, such as which providers have the highest prices, how far residents travel for medical services and how health-care outcomes vary for people of different income levels.

Further, these databases can answer questions about the quality of care—such as whether diabetic patients are receiving nationally recommended treatments—much better than data from individual medical providers, according to industry groups representing hospitals and medical colleges. This provides “unprecedented research and policy opportunities” for improving the health-care system, the groups alleged.

Complete Data Needed

Many of the groups filing briefs in support of Vermont's database emphasized that the utility of such databases would be compromised if self-funded health plans were excused from submitting their data.

Self-insured plans cover nearly 60 percent of workers with health insurance, which is a large population to exclude, the solicitor general said in its brief.

According to Vermont—and echoed by the AARP and other groups—excluding these plans would skew the data, because individuals covered by such plans tend to be younger and healthier than the population as a whole.

Harvard Law School's health policy center raised similar concerns in its brief, noting that data available from Medicare and Medicaid is of limited utility, because those programs cover populations older and sicker than other groups.

For their part, the groups representing hospitals and medical colleges asserted that hospitals have long been using their own patient data in attempting to develop treatments, manage chronic illnesses and target care to underserved populations. However, their efforts are frustrated by their inability to access data from across the spectrum of a patient's medical care, as only health insurers have this “broad range of data,” the groups said.

Databases Foster Transparency 

Several briefs—including that of the hospital industry groups—brought up the transparency goals advanced by many databases, with states like Maine, New Hampshire and Colorado creating “consumer-facing websites that report information about price and outcomes at various health care providers.”

On that point, the brief filed by several state government industry groups included an anecdote about a six-year-old girl whose mother saved $500 on a minor procedure after using New Hampshire's health data website to determine that the procedure would be cheaper at a hospital 20 minutes farther away than the one closest to her home.

According to New Hampshire, this transparency fosters competition among medical providers, which drives down costs for consumers.

Another brief—filed by the National Association of Health Data Organizations—argued that even employers that sponsor self-insured health plans have “long advocated” for this type of increased transparency, which it said “produces better informed employer-purchasers and employee-consumers, while enabling data-driven cost containment, advocacy, and policymaking.”

Other Benefits 

The American Medical Association used its brief to point out that All-Payer Claims Databases can also provide an important check on insurance companies by hampering their ability to manipulate data or set artificially low reimbursement rates, which has been a long-standing problem in the insurance arena, it said.

Another potential benefit of these databases is their ability to aid states in their efforts to combat disparities in health treatments and outcomes based on racial, income or other demographic lines, according to the brief filed by Connecticut's health database.

Burden of Compliance 

Both the briefs defending these databases and those arguing against them discussed the burden associated with compliance.

According to a number of pro-database briefs, the Vermont law requires only the formatting and submission of data already collected in the ordinary course of business. Much of this data has already been standardized pursuant to the Health Insurance Portability and Accountability Act, and any associated burden is likely to fall on third-party administrators rather than employers, the writers argued.

Briefs on the other side of the debate viewed the compliance burden much differently. For example, the insurance company involved in the dispute, Liberty Mutual, argued that the state-run databases subject ERISA plans to complex and varying reporting requirements that require different types of data at different intervals, depending on the state.

The American Benefits Council raised similar concerns, saying that each state's database is “distinctive” and calibrated to match the state's “idiosyncratic policy goals.”

According to the brief filed by Blue Cross Blue Shield, complying with a single state's reporting requirements “can require several full-time employees on an open-ended basis, as well as significant financial outlays associated with support provided by outside vendors.”

Taking a somewhat different tack, the National Coordinating Committee for Multiemployer Plans took issue with the assertion that the data requested by Vermont had been collected in the ordinary course of business. According to the association, multiemployer plans regularly collect only 70-80 percent of the data requested by Vermont, having “no need to collect” the remainder. Requiring these plans to do so could force them to invest in new software, staff and training, the association contended.

Other Objections 

The American Benefits Council also accused these databases of “commandeering” ERISA plans “into the service of the States, turning them into laboratories in which States collect data for their own purposes.” This undermines ERISA's requirement that benefit plans operate for the exclusive purpose of providing benefits to workers and their beneficiaries, the group alleged.

With respect to the ERISA preemption question, Blue Cross Blue Shield argued that ERISA itself—as amended by the Affordable Care Act—requires plans to report medical claims data similar to that required by the Vermont database. Because ERISA already required such reporting, state laws attempting to do the same were necessarily preempted, the insurer argued.

Call For Clarification 

Briefs on both sides of the debate urged the court to use this case to clarify its ERISA preemption analysis.

Both Blue Cross Blue Shield and the New England Legal Foundation asked the court to get rid of the presumption against preemption, while the brief filed by law professor Edward A. Zelinsky of the Benjamin N. Cardozo School of Law, New York, went a step further and asked the court to create a presumption in favor of preemption.

Finally, the American Medical Association encouraged the justices to clarify that ERISA preemption applies only to laws that seek to regulate the relationships between traditional ERISA entities, such as plans, participants and plan sponsors.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com