At first glance, a recent Supreme Court ruling on cost transparency appears to be a setback for all-payer databases. But is that really what the case is about?
On March 1, 2016, the Supreme Court ruled in Gobeille v. Liberty Mutual Insurance Company that the state of Vermont can't force health insurers to reveal data about how much they pay for medical claims. Specifically, the Court said that a 2005 Vermont data collection law aimed at improving the quality of health care did not apply to self-funded insurance plans, which are most commonly used by large companies, and violated the US Employee Retirement Security Act (ERISA).
The 6-2 decision was a victory for Liberty Mutual, which runs a self-insured plan administered by Blue Cross Blue Shield of Massachusetts. Liberty Mutual had said that ERISA exempted it from the Vermont law and argued that such requirements put an undue burden on insurers to meet multiple standards in different states, which ERISA was intended to prevent — a concept known as preemption. The Court agreed. The ruling will likely affect similar laws in 17 other states.
The upshot of this decision is that states can not require health insurers to contribute their data to all-payer databases, which in turn means that these databases may not be as robust or complete as they might otherwise be. This might appear to be a roadblock on the way toward greater cost transparency, but in fact it’s probably more like a speed bump, if even that. In our view, cost transparency is here to stay, and the Court tacitly acknowledged that as well.
It’s important to realize that from the Court’s perspective, this is simply a case about preemption — in other words, it’s about whether the power of the states is preempted by federal laws, like ERISA. In this case, the Court felt that the federal law held sway. The ruling in no way prevents or discourages insurers from contributing data voluntarily to all-payer databases, nor does it rule out the prospect of a law similar to Vermont’s being enacted at the federal level. Either way, cost transparency is a trend that is likely to continue, as greater transparency is in the best interest of payers, providers, and consumers.
Justice Ruth Bader Ginsberg, who wrote the dissenting opinion, emphasized the substantive importance of Vermont’s law, stating that all-payer databases “serve compelling interests, including identification of reforms effective to drive down health care costs, evaluation of relative utility of different treatment options, and detections of instances of discrimination in the provision of care.”
In fact, the trend everywhere is toward more openness.
Economic dynamics are forcing health care to become consumer centric. In the past five years monthly premiums have risen 24 percent, according to a report from the Kaiser Family Foundation. Worse, the average deductible — the amount people must pay before insurance coverage starts—has increased 67 percent over the same period.
As a 2014 story in Modern Healthcare reported, major health players UnitedHealthcare, Aetna, and Humana announced a partnership to create a payment database available to the public for free. Blue Cross Blue Shield has also created its own payer database with all 36 of its member companies contributing data.
“Experts say cost transparency is being spurred by a number of developments in the health care sector,” wrote Modern Healthcare. “The trend towards high-deductible plans is giving consumers … an incentive to understand how much health care costs and to utilize it more efficiently. In addition, the launch of exchanges under the ACA [Obamacare] has brought … attention to the difficulties faced by individuals in shopping for health insurance.”
If anything, the Court’s ruling underscores the need for employers to offer a cost transparency solution, and Rally® is committed to providing this service. Our Rally ConnectSM platform brings together payers and providers to show accurate costs for various services. It also offers a doctor search tool, giving consumers much-needed insights to help them find the best care at the right price.
For more on how cost transparency and doctor search are creating a prime opportunity for health care payers and providers to better serve and engage their members, check out our new white paper, “Embracing Clarity.” It offers three key recommendations for helping to align patients, payers, and providers in their joint efforts to control costs and improve health outcomes.