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Legislature Takes Another Look at Database of Health-Insurance Claims

Andrew Kitchenman | December 16, 2013

Industry lobbyist questions bill’s benefits while advocates tout transparency, efficiency

herb conaway
Assembly Health and Senior Services Committee Chairman Herb Conaway Jr. (D-Burlington) is interested in creating an insurance claims database.

Six months after state officials decided against building a database that would include a record of all health insurance claims, the Legislature is gearing up to explore the issue again.

Supporters contend that it is needed to make healthcare more transparent and efficient by pulling together information about how much each health service costs, enabling policymakers to find ways to improve the quality of healthcare and providing useful information for consumers who are picking up more and more of the tab for medical costs.

Opponents contend that the usefulness of such databases in states where they exist has not been proven. And they say it would create unnecessary costs for both state government and insurers – in fact, New Jersey officials cited projected operating costs when they decided against pursuing federal funds to help establish a database.

The issue of differences between prices charged by healthcare providers was highlighted earlier this year when the Centers for Medicare and Medicaid Services released a database of hospital charges.

Private claim data also is being gathered by private groups like FAIR Health.

Assembly Health and Senior Services Committee Chairman Herb Conaway Jr. (D-Burlington) said he is interested in including an all-payer claims database in a bill that would also address healthcare quality and efficiency.

While Conaway said he isn’t ready to introduce such sweeping legislation, he recently held a hearing on a more limited bill, A-1834, that would require insurers to report every claim they handle. The committee discussed the bill on December 12, but didn’t take action.

Conaway said the database would help determine how much different healthcare services should cost.

“If you don’t measure and analyze (claims), one thing I do know is that we will never have a good understanding of what costs ought to be,” said Conaway, who is a primary care doctor.

Conaway said the claims information could also be used for targeted anti-smoking campaigns or other public health efforts.

Wardell Sanders, president of the New Jersey Association of Health Plans, an insurance industry trade group, had a number of objections to Conaway’s plan.

He said health insurers already use claims data in a wide variety of ways, such as analyzing inappropriate prescribing patterns for opiates. Sanders said the 13 states with all-payer claims databases have yet to produce evidence that the information helps control healthcare costs.

“The creation of these databases, the running of these databases, costs money,” Sanders said, adding that it could cost the state $1 million annually, with additional costs for each insurer.

Sanders pointed out that the Affordable Care Act requires insurers to pay 80 percent to 85 percent of their premiums in claims. The administrative costs of gathering and submitting information to a claims database would cut into their remaining premium revenue, he said.

Sanders also expressed concern that states have been requiring more and more data to be included in the databases, without having plans for how to use the extra information. Insurers would like to see all states have the same standards for the information they require, Sanders said.

“You really need to figure out how can we use this, how do we plan to use that, and then execute that plan,” Sanders said. He also raised a concern that some states have sought information from insurers that the insurers aren’t even tracking, such as geographic and racial demographics of healthcare providers.

Sanders also raised a more technical concern about how the bill was written, describing it as being “tacked on” to current state regulations that require insurers to pay claims promptly.

Conaway said doctors are willing to address insurers’ concerns about providers who are “outliers” in charging unusually high amounts. He said the database would help in gathering that information.

The New Jersey Hospital Association supports the database bill.

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