Are States Losing Key Tools for Health Reform?
Engaged in multi-payer payment reforms? Seeking information about the cost of care? About the rate of opioid prescribing? Assessing carriers to generate needed revenue to support state activities like vaccines for children? You might soon hit a federal stoplight. The Supreme Court’s recent decision in Gobeille v Liberty Mutual, which denied the state’s ability to mandate claims submission from self-funded ERISA health plans, may have started us down a slippery slope that could limit states’ broader health reform activities of states. It’s not just about data collection anymore.
Will Gobeille open the door for ERISA reinterpretation and narrow state options?
In Self-Insurance Institute of America Inc. v Snyder et al., the 6th Circuit ruled that a Michigan tax on all health plans was not in conflict with ERISA. The case was appealed to the Supreme Court and was recently remanded back to the 6th Circuit, asking that court to reconsider it’s ruling in light of Gobeille. This signals a new day in ERISA – and a potential reconsideration of the longstanding interpretation of ERISA established in New York State Conference of Blue Cross & Blue Shield Plans v Travelers Ins. Co. 514 U.S. 645 (1995). That decision allowed the state’s hospital rate setting law to continue despite imposing some additional costs on ERISA plans. There the Court allowed a state’s action because that action did not affect the plan’s benefit design or restrict the plan from designing a uniform benefit. The Travelers decision has long informed court decisions and allowed states some discretion so long as their actions do not impose burdens on the administration, uniformity, and benefit design of ERISA plans. At issue in Snyder is whether Travelers will continue to inform the Court’s decisions or whether applying Gobeille will narrow its broader interpretation.
The Michigan Health Insurance Claims Act was enacted to replace a six percent tax on managed care plans with a one percent across-the-board tax on all health carriers and third party administrators. It raises up to $400 million annually for the Michigan Medicaid program. If the 6th Circuit, in its next, post-Gobeille review, concludes that the tax is pre-empted under ERISA, Michigan stands to lose a significant funding source. Other states currently generate funding through assessments on health plans to support the operation of state based exchanges, All-Payer Claims Databases(APCD), and vaccine for children programs. (See Table) While each of these assessments has different origins and purposes, should there be a ruling that Michigan’s assessment violates ERISA, there could be significant impact on revenue generating strategies in states.
If a decision in Synder results in revisiting and overruling Travelers, this could open the door to further challenges to state initiatives particularly around all payer payment reforms and other cost containment strategies. Historically states have faced ERISA challenges in managed care regulation, provider payment mandates, and any willing provider laws. States engaged in reforms should keep a watchful eye on the 6th circuit and craft policy proposals with careful consideration of ERISA implications. And since it will be the Gobeille decision that could trigger new Court rulings that more broadly affect states, what happens next in state APCD policy bears scrutiny.
What happens to APCDs and Transparency Post-Gobeille?
States need claims data as they advance payment and delivery reforms, and work to compare costs of care across payers and over time as reforms unfold. APCDs fill a critical need for accurate data about the cost of care. While claims data are available through a variety of health plan voluntary efforts and regional collaboratives, APCDs are unique in their transparency and accountability as publicly created entities that collect data from all payers, as well as validate and report it. They are able to provide detailed analysis at the payer and provider level. This single, credible, and accountable source of data about health care costs and utilization can provide public access to information that informs health policy, health care purchasing, and consumer choice. And it assures policymakers a single source of credible data, instead of the “dueling data” sources that confound, rather than enlighten policy deliberations.
The future of APCDs, and the public accountability they provide, has come into question since the Gobeille decision that struck down the capacity of APCDs to require claims reporting by self-funded ERISA plans. Can APCDs be effective without all claims, particularly since self- funded plans cover the majority of employees who have employer-sponsored insurance? Can APCDs secure voluntary reporting from self-funded plans given the value they provide to employers? If so, is a voluntary system adequate to assure comprehensive data? Given ERISA’s “savings clause”, can APCD laws writ large be saved from the reach of the Gobeille decision? And can ERISA plans that are purchased as fully insured products regulated by states continue to be mandated to report? Can third party administrators be licensed by the state? With questions rising to the surface, APCDs report that some carriers are suspending claims submissions while these issues are addressed.
APCDs are works in progress. More needs to be done to standardize reporting requirements and improve timeliness. This work is underway among the state APCDs. Importantly, more states have expressed interest in developing APCDs but are trying to understand the post-Gobeille pathway that allows states to continue to collect all payer claims.
In the Gobeille decision, the Court suggested one possible remedy to assure the continued public reporting of health claims data. In the majority opinion, Justice Kennedy wrote that it is the Secretary of Labor, not the states, who is authorized to administer reporting requirements by plans governed by ERISA. He suggested, but did not conclude, that the Department of Labor could support reporting requirements like that in Vermont. In concurrence, Justice Breyer went further suggesting that the Department could either establish a federal reporting system which states could access, or establish federal standards for reporting and certify states for compliance.
In collaboration with the APCD Council, NASHP has convened a Post-Gobeille Work Group of state officials and legal experts, and reached out to the Department of Labor to explore options available to them to help address the reporting challenges. We will continue our work and report here on our progress. Stay tuned.