How a State Law on Health Claims Transparency Can Serve as a Federal Model

With a growing national focus on finding ways to control ever-increasing health costs, greater transparency of claims data in the U.S. health care system might be a key to bending the cost curve downward. Yet in the national dialog on health reform, the importance of claims data transparency as an emerging solution in controlling health care costs largely has been overlooked.

Texas is the first state in the nation to pass a law requiring transparency of health plan claims data by insurance carriers that provide health coverage to employers. The law (HB 2015), enacted in June 2007, amended the Texas Insurance Code by establishing new claims information disclosure requirements for health insurance carriers that operate in and contract with employers in the state.By giving employers legal access to their health plan claims data, the statute recognizes that employers have a right to know how they spend their money on health care benefits for their employees.

The legislative history of the Texas statute acknowledges the problems encountered by employers in obtaining this data: "Despite the importance of this issue to a competitive health care market, most employers across the state are routinely unable to obtain timely and meaningful claims or loss experience information pertaining to their health plans." (H.B. 2015, Section 1215.002-03.)

The legislation, which became effective Jan. 1, 2008, calls for greater transparency through standardized disclosure of claims data, including protected data, by requiring group health insurers operating in Texas to release on request claims data to the employer or group policyholder.

Texas Law Requirements

Setting a new state standard, the Texas law requires an insurer to respond within 30 days after the date a written request for a report of claim information is received from a plan, plan sponsor or plan administrator. The claims information report is required to contain all information available to the insurer that is responsive to the request, such as:

• Aggregate paid claims experience by month.

• Employee census data.

• Total monthly premiums.

• Total dollar amount of pendant claims.

Insurers must provide a separate description and individual claims report when total paid claims exceed $15,000 in a 12-month period. Specific claims over $15,000 include a unique identifying number, characteristic or code for:

• The individual.

• The amounts paid.

• Dates of service.

• Applicable procedure codes and diagnosis codes.

Barrier to Claims Data Transparency

Employers seeking plan claims data can expect resistance from many insurers who raise concerns about possible exposure to liability for violation of privacy laws in connection with the release of claims and loss data. Insurance carriers—particularly insurers with bundled prescription and medical claims benefits—have been reluctant to carve out plan claims data from integrated benefit programs that typically are controlled by insurers. This common industry pushback has emerged as a barrier to transparency, depriving many employers access to valuable information from their health plans that can help them achieve significant cost control. The Texas legislation was enacted as an effort to overcome this barrier to transparency.

The Texas law requires an employer to provide the proper certification that appropriate plan amendments have been made by an authorized plan representative. This is required to ensure that proper privacy safeguards are in place in compliance with federal regulations and state insurance provisions.

On receipt of the report from the insurer, the employer may make a written request for additional information within 10 days for specified individuals. With respect to this request, the insurer is required to provide additional information relating to the prognosis or recovery if available for individuals in active case management. The most recent case management information, including any expected costs and treatment plans that relate to the claims of that individual. must be provided.

Caveat:An insurer is prohibited from disclosing protected health information (PHI) if disclosure of the information is prohibited under a state or federal law that imposes more stringent privacy restrictions than those imposed under the federal Health Insurance Portability and Accountability Act.

Because claims data are readily available from self-funded plans—55 percent of all U.S. private health plans are self-insured, according to the Kaiser Family Foundation—self-insured employers have an important advantage in controlling health costs.

Federal Efforts

While recent language in a U.S. House bill (H.R. 3200)—introduced during the 2010 health reform debate but not enacted—called for health plans to meet transparency standards established by the U.S. Health Choices Commission, the focus of this provision was on the need for greater transparency in how health care is delivered to patients as a solution to help contain health care spending. As Congress prepares its post-health reform oversight—with a focus on health cost control—claims data transparency might be added to the legislative agenda.

As the value of claims data becomes better known, the importance of transparency will attract greater attention. The competitive business edge will go to employers who use claims data and technology to manage their health plans just as they use technology in other operational aspects of their business. As Congress addresses the problem of health care costs, the Texas example might attract increased attention as a possible model for federal claims data transparency legislation.

George Pantos, Esq. is executive director of the Healthcare Performance Management Institute, a research andeducation organization dedicated to promoting the use of business technology and management principles that deliver better and more cost-effective health care benefits for employers,and was former general counsel to the Self-Insurance Institute of America (SIIA). He served as deputy undersecretary of commerce, U.S. Department of Commerce, and as a partner with the law firm of Vedder Price. He was a co-founder of The ERISA Industry Committee (ERIC).​