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State Decides Against Building All-Payer Claims Database

Supporters say consumer access to insurance information would make healthcare more efficient and effective

Assemblyman Troy Singleton (D-Burlington).
Assemblyman Troy Singleton (D-Burlington).

State insurance officials won’t seek a federal grant that would have enabled New Jersey to create a database of all health insurance claims, citing the long-term costs of maintaining the system.

Department of Banking and Insurance (DOBI) officials decided against applying for the grant by a June 17 deadline to notify federal officials whether the state would pursue the funds.

“The department weighed the grant amount against the possible additional cost to set it up, the inherent annual additional costs to maintain and protect the data and finally the value of the database over the long term,” DOBI spokesman Marshall McKnight wrote in a statement.

A bill, (A-3603) advancing in the Legislature would have required the state to create the database, which is intended to provide more information about how health services in the state are used and delivered.

Database supporters say it would show how much healthcare providers are paid, help make healthcare delivery more efficient, and make more information available during payment negotiations between consumers, providers and insurers.

They expressed confidence yesterday that the database will be created in the future, calling it a necessary step toward building a healthcare system that is driven by consumer choices. They said consumers must understand how much insurers pay providers in order to make well-informed choices.

“We’re disappointed,” said Linda J. Schwimmer, vice president of the New Jersey Health Care Quality Institute, adding that state officials clearly took the proposal seriously. “It’s not a question of whether or not, it’s just a question of when this will happen. There will be greater transparency and data sharing -- we can’t have a consumer-driven healthcare market without it.”

Along with the state, insurance industry representatives had expressed concern about the cost of maintaining the database.

In addition, insurance companies view this information as proprietary and carefully scrutinize it to determine how much to offer to providers. Larger insurers have built up larger amounts of this valuable data, which they are eager to keep private.

McKnight said the state “conducted intensive due diligence” to explore the feasibility of applying for the grant before deciding against it.

The state previously received federal grants to review insurance rates, McKnight noted, adding that the U.S. Department of Health and Human Services has determined that New Jersey’s rate review system is effective in both the individual and small employer markets.

They also noted a Rutgers Centers for State Health Policy report which found that other states are paying between $200,000 and $1.5 million annually to maintain and analyze all-payer claims databases.

Bill sponsor Assemblyman Troy Singleton (D-Burlington) said he remains hopeful that stakeholders and legislators “will be able to rally around a consensus” in favor of the database.

“It’s critically important that we get our arms around this issue of healthcare costs,” Singleton said, adding that he was disappointed by the decision to not pursue the grant.

“I’m not sure there will ever be an opportunity like this again,” Singleton said. “I firmly believe the state would have saved more in the long run by creating a more efficient delivery of healthcare.”

Singleton said he wasn’t sure whether he would sponsor a separate bill to pursue a section of the database legislation that would establish an arbitration process to resolve payment disputes between providers and insurers.

Schwimmer said the “big data” analysis that would be made possible by the database would lead to improvements in quality and safety.

“We are going to keep working on this issue and try to form a private-public partnership” to advance the cause, Schwimmer said.

Karen Pollitz, a senior fellow with the Henry J. Kaiser Family Foundation, also predicted that New Jersey would see the benefits of building a database in the future, noting that other states have had them for years.

Along with healthcare prices, a database “lets you see utilization patterns,” Pollitz said. “It gives you very rich information. It’s not just the prices.”

New Jersey kept an all-payer claims database before the early 1990s reforms that deregulated health insurance in the state, noted Princeton University healthcare economist Uwe Reinhardt. Reinhardt led a commission appointed by former Gov. Jon S. Corzine that recommended creation of a database.

Reinhardt pointed to a state law that limits the amount providers can charge uninsured residents with low to medium incomes, capping those bills at 15 percent above the Medicare payment levels. He initially wanted to recommend basing those charges on the average paid by all private insurers, but that information was not available without the database.

“I think at some point, Americans will get fed up with this,” Reinhardt said, adding that lack of public information contributes toward payments being divorced from quality, cost or patient satisfaction, allowing payers with the least amount of bargaining power to be charged the highest amounts for healthcare.

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