Employers Still Struggle to Access Insurers’ Health Cost Data

Health plan sponsors continue to argue that insurers are hiding valuable cost information from them despite a federal mandate against contract provisions limiting access to such data.

The Consolidated Appropriations Act of 2021 (H.R. 133) required employer- and union-sponsored health plans—as well as health insurance companies—to attest by the end of 2023 that their plan agreements don’t contain “gag clauses” that put restrictions on providing information about the cost or quality of medical services.

“The vast majority of insurers and third party administrators attested for their group health plan clients,” between Dec. 27, 2020, and Dec. 31, 2023, a spokesperson for the Centers for Medicare & Medicaid Services said in an email.

Employer-sponsored plans are beginning to use data from hospitals and health plans to compare the prices they pay and design more efficient plans that meet quality goals, said Marilyn Bartlett, owner of consulting firm MJBartlett LLC.

“You’re also starting to see employees of employer-sponsored health plans starting to ask questions,” she said.

But many plan sponsors say insurers often refuse to turn over their claims data, leading to government investigations.

The departments of Health and Human Services, Labor, and the Treasury “have received complaints from plans or their representatives in which the plans assert that even if their provider agreements do not contain any prohibited gag clauses, they are not able to obtain pricing or quality data from their issuer or third party administrator,” the CMS spokesperson said. “The Departments take such complaints very seriously and are investigating accordingly.”

Several major health insurers, including UnitedHealthcare, Aetna, Cigna, and Elevance, didn’t respond to a request for comment.

The tension adds to a push in Congress and some states to tighten the legal requirements ensuring health plans have access to their data.

The House Committee on Education & the Workforce recently requested information from the employee health benefits community on ways to strengthen the Employee Retirement Income Security Act to lower costs and improve the quality of care. The federal ERISA laws govern most employer-sponsored health plans.

Potential changes the committee asked for comments on include clarifying the extent to which fiduciary responsibilities are applied to insurers, brokers, third party administrators, pharmacy benefit managers, and other service providers.

‘Asked for Years’

“I’ve asked for years for information” on claims data, Kevin Lyons, director of member benefits for the New Jersey State Policemen’s Benevolent Association, said in an interview. “They just won’t give it to me,” he said, referring to the plan’s insurer, Horizon Blue Cross Blue Shield of New Jersey. “They fight us tooth and nail.”

Lyons testified at a House Energy and Commerce subcommittee hearing in January that plans such as his need to access their claims data to check the accuracy of payments made to medical providers, which can sometimes far exceed billed amounts.

Health Care Service Corp., a Blue Cross Blue Shield health insurer that covers Illinois, Montana, New Mexico, Oklahoma, and Texas, also declined to provide data directly to the RAND Corp. for employer plans that wanted to participate in an upcoming study comparing employer-paid prices to Medicare rates, Ted Barrall, a Houston employer and board member of the Houston Business Coalition on Health, said in an email.

HCSC discussed the possibility of allowing a data warehouse to provide the information, but that would have entailed a $20,000 fee, Barrall said. “I have requested a change to our contract to allow for this data release,” but it’s too late to participate in the current study, he said.

HCSC didn’t respond to a request for comment.

Horizon spokesman Thomas Wilson said the health insurer works “closely with self-funded plan sponsors to support their data needs and comply fully with the law and regulations concerning transparency in claims data.”

Horizon provides “detailed reporting of claims” to New Jersey’s Division of Pensions and Benefits and to support independent state audits, Wilson said. The insurer doesn’t directly contract with the New Jersey State Policemen’s Benevolent Association, and Horizon’s contract to administer the state’s plan “allows disclosure of information about the plan only when specifically authorized by the State,” he said.

Challenges Mounting

Bartlett said “lawsuits coming to the forefront” over access to information are causing employers to pay more attention to how to use pricing databases.

For example, a proposed class action filed Feb. 5 in federal district court in New Jersey against Johnson & Johnson alleges the pharmaceutical giant mismanaged its employees’ drug benefits by paying too much.

Employers also have filed suits against their health insurance administrators for not providing claims data that would allow them to check pricing accuracy and design plans. In one such case, Kraft Heinz Co. accused Aetna Life Insurance Co. of wasting its money by paying fraudulent medical claims, but the matter was moved to arbitration.

Employers that have accessed their claims data have made significant progress in reducing costs.

Pacific Steel & Recycling, a Montana-based metal recycling company, reduced its health care spending from $812 per employee per month in 2013 to $581 per employee per month in 2022, not including prescription drugs, after auditing its claims data, said CEO Jeff Millhollin.

The company—which covers about 2,200 workers and family members—decreased its annual health care bill from $8 million in 2014 to less than $3.5 million in 2018 by entering into direct contracts with hospitals and other providers that base prices on a percentage of Medicare payment rates, Millhollin said.

The company doesn’t use a health insurer, but rather a consultant and a third party administrator, he said.

“Before we switched to reference-based repricing, it was the only part of our business that we had no control over what we were spending,” Millhollin said. “It boggles my mind that the people that are actually writing the checks and paying the bills can’t see what they’re paying for.”

Hodgenville, Ky.-based Lincoln National Bank cut health-care costs from about $1 million in 2019 to $550,000 in 2023 for its 115 employees by using its claims data to switch from being fully-insured to self-funding, said Griffin Meredith, the bank’s secretary and CEO of insurance broker Commonwealth Insurance Partners.

Like Pacific Steel, Lincoln National Bank entered direct contracts with medical facilities that based payments on a percentage of Medicare rates, Meredith said. The bank also doesn’t work with a health insurer, and employees who see providers that the bank contracts with don’t pay anything, he said.

Having access to claims data is necessary, and hospitals and drug companies could operate more efficiently as a result, Meredith said. “The only people who don’t want the transparency are those who are making money in the dark,” he said.

Contract Tweaks

Bartlett, who counsels employers on contracting with third party administrators, pharmacy benefit managers, and consultants, says health plans should avoid provisions giving PBMs sole discretion to determine which pharmacies are considered network pharmacies.

That may exclude pharmacies that would accept better terms and thus lower costs for health plans, she said.

She also counseled against plan administrator contracts that say employers “shall, under no circumstances, seek recovery of overpayment from network providers,” or contain provisions allowing claims payments to include fees paid to affiliated vendors.

These types of contract clauses prevent plan sponsors “from really getting their data, doing their fiduciary role,” Bartlett said.