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Health Insurers Stop Providing Cost Data to States

By Erin Mershon, CQ Roll Call

April 12, 2016 -- Some employer-sponsored insurance plan officials are refusing to give states information about health care costs, after a Supreme Court decision last month struck the states' power to compel those insurers to participate.

Plans that provide health insurance in Colorado, Utah, Maryland, Minnesota, and Oregon have dropped out or stopped sending cost data to state programs in recent weeks, officials in those states told CQ Roll Call. Advocates say the states' databases, which rely on submissions from all insurers to shed light on the cost of care, are an important tool in bringing down health care prices.

Many of the 12 states with the databases required participation from all insurers. But in a 6–2 decision in Gobeille v. Liberty Mutual Insurance Company, the Supreme Court ruled that self-funded employer plans—which cover about half the nation's employees—don't have to participate, because a federal law governing those plans (PL 93-406) takes precedence. Under a self-funded plan, employers typically pay the medical claims of their workers, with some administrative help from an insurance company, rather than paying an insurer to assume the risk of covering the personnel.

"It's starting," said Al Gobeille, chairman of the Vermont Green Mountain Care Board, who brought the legal case to the Supreme Court. "They're making a statement. . . . It's not helpful to the health of the populations where their employees live."

Most states with databases are seeing at least some employer-run plans drop out, said Trish Riley, executive director of the National Academy for State Health Policy (NASHP), which is convening a group of administrators to work on this issue. Officials in the other states with databases didn't respond to inquiries by Tuesday afternoon.

"Given how big a part of the database self-funded plans are, this is a very big deal," Riley said, adding that even some plans not subject to the Supreme Court exemption have dropped out of participation, citing the decision. "There's a real need for clarity on what Gobeille does and doesn't say."

Employers' Perspective

Employers who use self-funded plans have said they don't oppose efforts to collect the data or lower health care costs. Rather, they oppose the costs associated with complying with the data collection, and fear a scheme under which they might be forced to submit different data sets to individual states.

"Most employers are all for some kind of national database and more transparency about what's going on and what are we paying for in health care, but they are concerned about having to spend the time and these administrative dollars on all kinds of requirements," said Steve Wojcik, vice president of public policy at the National Business Group on Health, which represents employers. He said he hadn't heard from any companies interested in dropping out since the Supreme Court ruling.

Proponents, however, argue that because most of the data from self-funded plans comes from commercial insurers, with which the employers contract to administer their plans, submitting the information shouldn't be too big a burden for the self-funded plans. Commercial insurers that are taking on the risk of covering workers are already legally obligated to submit their claims data under the state laws establishing many of the databases.

Norman Thurston, director of Utah's Office of Health Care Statistics, also said it isn't the employers who have not submitted the data, but the insurance companies that administer the benefits for them through the self-funded plans. He said plan administrators were evaluating what they need to submit, and some were "understandably cautious about submitting data" not legally required of them.

"It is our hope that the business community will continue to see the value of participating in the [database], even when it is voluntary, and that their administrators will continue to support and encourage businesses to participate," he said in an email.

Minnesota's state health economist also emphasized that it was the plan administrators, not the employers themselves, who had stopped submitting the plans' data.

Colorado database officials, meanwhile, said they're optimistic about convincing employers to continue to participate in the so-called all-payer claims database, and are considering an advertising and educational campaign to make their case. In that state, self-funded plans were able to opt out even before the court decision.

"We anticipate that once we really start promoting that to them full force, we will continue to have people voluntarily submit and we'll probably get back some of the people who decided to opt out," said Cari Frank, a spokeswoman for that database.

Protecting their Rights

Many of the database officials and other advocates believe self-funded employer plans are pulling out of the programs to make a statement about their rights under the federal law in question, the Employee Retirement Income Security Act, known by its acronym ERISA. The law regulates certain private insurance plans that aren't otherwise regulated by state insurance commissioners.

"They believe there's an iron wall around ERISA and they don't want to be parties to anything that reduces the exemption they have from state administration of their benefit program," David Lansky, chief executive officer of the Pacific Business Group on Health, told reporters at a briefing in Cleveland last week. "Whenever the ERISA flag is waved, they have a pretty strong reaction to that issue."

Raising the stakes is a high-profile court case in Michigan, in which self-funded plans sued Republican Gov. Rick Snyder for a tax levied on health care claims. The plans argued they should be exempt from the state tax because of the federal law, though they lost on appeal. The Supreme Court asked the Sixth Circuit Court of Appeals to reconsider that decision last month in light of its Gobeille decision.

Wojcik disagreed that the self-funded plans were leaving the databases in an effort to protect their rights under ERISA, saying it was more likely the employers wanted to avoid the financial burden of the reporting requirements.

Moving Forward

Advocates of the databases are hoping the Department of Labor will intervene with regulations that would require the plans to submit claims data at the federal level, which could be turned over to states for their own projects.

Riley, the NASHP director, said she has spoken with Labor officials about the issue and was told the agency is in the process of reviewing its authority and interest in the issue.

"This caught them by surprise, too," she said. "They're doing a full review of what their scope is, and once they complete that review, we hope to sit down with them about this."

A Labor Department spokesman did not comment.

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