Another Case Before Supreme Court Could Influence Health Care Reform

King v. Burwell, the case challenging federal subsidies for health insurance, isn’t the only health care case pending before the U.S. Supreme Court with the potential for national repercussions.

A Vermont case involving claims data reporting could play a significant role in government efforts to collect and analyze health care data, a process many believe will lead to policies that can improve care and reduce the cost of delivering it.

Over the past decade, a growing number of states have established state-sponsored, all-payer claims database systems — known as APCDs — to collect and analyze information from health insurers, hoping to use the information to guide payment reform efforts.

So far 16 states have established mandatory, state-sponsored APCD systems. More than 30 other states — including California — are considering or pursuing some form of APCD information gathering. The California Legislature is considering a bill — SB 26 by Sen. Ed Hernandez (D-West Covina) — that would establish a statewide APCD.

In Vermont — one of the 16 states with a mandatory statewide system — APCDs have hit a roadblock. Liberty Mutual Insurance, a multistate employer operating a self-insured health plan for its employees, refused to divulge information in Vermont, contending that the federal Employee Retirement Income Security Act of 1974 supersedes the Vermont law. A U.S. District Court rejected Liberty Mutual’s position, but the insurer appealed and won in the 2nd U.S. Circuit Court of Appeals.

Liberty Mutual contends that claims data reporting is already required of self-insured plans under ERISA and that Vermont’s laws interfered. Vermont appealed to the U.S. Supreme Court, which is now considering whether it will hear the case — Gobeille v. Liberty Mutual Insurance Company. Al Gobeille is chair of the Green Mountain Care Board, the organization created by the state legislature to collect and analyze data.

The U.S. solicitor general’s office last week recommended that the Supreme Court decline the case. A decision from the Supreme Court is expected next month.

Some legal and health care experts, including Bridget Asay, solicitor general of Vermont who is representing the state, contend the case could have significant influence on information-gathering efforts throughout the country.

“If the Supreme Court does not take the case and the Second Circuit’s decision is left in place, we think it will have a substantial impact on the development of APCDs,” Asay said in an email response to questions from California Healthline.

“The Second Circuit’s decision does not bind California, or other states outside of the circuit’s jurisdiction. But states making (or considering making) long-term investments in APCDs may well take the decision into account in deciding whether to move forward and in designing programs,” Asay said.

Health care experts said a court victory by Liberty Mutual may cause other self-funded employer plans — including those already willingly participating — to reconsider their cooperation with APCDs.

Joseph Smith, president of West Health Policy Center, said having data from self-funded plans is important, but states shouldn’t wait to get all claims before launching APCDs.

“States have found important value in having the ERISA plan claims. Including claims from self-funded employers provides a more accurate picture of health care utilization, cost and quality in each state. That being said, states should not wait for every payer in the market to be on board to start their APCDs. The state’s APCD can grow incrementally, once critical mass has been built and others see how their sector might benefit,” Smith said.

West Health Policy Center, a national organization aimed at improving the country’s health care system, is working with the APCD Council to help states develop standardized reporting measures.

“Our research has shown these databases can lower health care spending,” Smith said. “Every state, including California, should be pursing increased health care price transparency because better information leads to better decisions.”

Self-Funded Coverage Increasing

Although the Liberty Mutual case deals exclusively with self-funded plans by employers, data from those plans is important to the success of APCDs, stakeholders say.

Over the long term, if self-funded plans do not participate in APCDs, health care reform will suffer,” Asay said. “Comprehensive, accurate data about the health care market is crucial for developing evidence-based policies and for evaluating the success of reforms. That’s why we have urged the Supreme Court to take the case and reverse the Second Circuit,” Asay added.

There are indications that self-insured employer plans are increasing. According to Deloitte research, more than two-thirds (68.5%) of enrollees nationally in employer-sponsored plans with 50 or more participants were enrolled in self-funded plans. An argument could be made that a Liberty Mutual victory in Vermont could inspire more employers wanting to avoid reporting claims data to move toward self-funded plans.

Asay said purchasers of health coverage — self-funded or not — have a stake in health reform efforts.

“I’m not sure that this case would impact overall trends regarding participation in self-insured plans. But self-insured plans are paying for health care, and should have a strong financial incentive to support reforms that can help control costs and improve the quality of care. That’s the goal of Vermont’s database and of APCDs generally,” Asay said.

West Health Policy Center’s Smith said the Vermont case probably won’t have a big effect on movement toward self-funded plans.

“The outcome of this case should not have a big influence on this trend as larger factors (e.g., the Affordable Care Act, employers seeking greater value for their employers and greater control of costs) are more significant in driving the trend toward self-insurance. Interestingly, our collaborators at the APCD Council are seeing more and more employers wanting health care cost and quality information from APCDs to be more readily available,” Smith said.

California Voluntary Effort Under Way

A fledgling, voluntary APCD effort has been operating in California for a little more than two years. The California Healthcare Performance Information System was launched as a public benefit corporation at the end of 2012 to serve as a voluntary multi-payer claims database. It started and still resides under the wings of the Pacific Business Group on Health, a public-private partnership aimed at improving the health care system for large purchasers of health coverage.

Designated as a CMS-qualified entity in February 2013, CHPI has gathered two years’ worth of data from three large insurers in California — Anthem Blue Cross of California, Blue Shield of California and United Healthcare of California.

The first CHPIS public report on physician-level quality ratings is expected later this year. If California lawmakers vote to establish a mandatory statewide database, CHPIS’ fate is uncertain.

CHPIS officials declined to comment on the Vermont case.

Categories: Insight, Insurance