Supreme Court May Undermine State Transparency Efforts

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Over the years there have been several studies demonstrating this disconnect between medical costs and quality of care. A Health Affairs Blog post authored by Jonathan Skinner, David Goodman and Elliot Fisher in analyzing a recent report provides links to others done over the years. Then there’s a study by Castlight Health showing the cost of mammograms in Los Angeles ranging from $86-to-$954–the pricing disparity in other cities such as Dallas and New York were even greater.

Advocates assert that medical pricing transparency will lower insurance premiums by promoting competition among medical providers and allowing consumers to shop for the lowest cost quality care. Payers like large employers, insurers and the government, could also use this information to negotiate lower charges for health care services.

Yet America’s health care system is amazingly opaque when it comes to pricing. As Steven Brill reported in his Time Magazine cover story, so is the method providers use to set their prices.Cost effectiveness leaves the room when there’s little rhyme or reason for how physicians and hospitals set prices.

Key to effective pricing transparency is meaningful data and lots of it. As the National Association of Health Underwriters puts it, the need is for “current, accurate, unbiased and relevant data” available in “a format and process that is user-friendly.” Which is why 18 states have laws requiring self-insured companies and other payers to contribute patient claims data to a pricing database.

Some of these self-insured companies, however, are pushing back. They fear the costs of complying with differing state requirements. Liberty Mutual Insurance Company is one of those companies. They sued the state of Vermont claiming the state could not demand claims data from them because ERISA denies them the power to do so.

The Second Circuit Court of Appeals agreed with the company. The case, Gobeille v. Liberty Mutual Insurance Company (often referred to in the media as Liberty Mutual v. Gobielle) is now before the Supreme Court, which heard oral arguments on December 2, 2015. Tyler Vandeventer and Jason Ottomano provide specifics concerning the case and the arguments on Cornell University Law School’s Legal Information Institute site.

The Supreme Court’s decision in this case will have a significant impact on pricing transparency and, consequently, the affordability of health care coverage. Without claims data, cost comparisons simply aren’t possible. This isn’t the case of garbage in, garbage out. This is nothing in, nothing out.

The Court’s decision will also clarify how states can interact with self-funded plans under ERISA. This too could have far-reaching impacts.

There are many more high-profile cases before the Supreme Court than Gobeille v. Liberty Mutual. None of those, however, are likely to have a greater impact on transparency and the cost of health insurance.

No date for a decision in Gobielle v. Liberty Mutual has been set.

A version of this post appeared on my LinkedIn page.