Editor’s Note: Welcome to the latest edition of the Manatt State Cost Containment Update, a digital publication produced with generous support from the Robert Wood Johnson Foundation and in collaboration with the Peterson-Milbank Program for Sustainable Health Care Costs. This Manatt series, which will be released quarterly through 2022, shares the latest updates on state cost growth benchmarking programs and other data-driven initiatives states are undertaking to contain health care cost growth. In each edition, Manatt will feature a “deep dive” topic that shares new cross-cutting developments as states seek to evolve and advance their cost growth benchmarking programs to meet new regulatory and landscape needs. In our newest issue, summarized below, Manatt examines opportunities for states to leverage All Payer Claims Databases (APCDs) and other key data assets to supplement state benchmarking programs. Click here to read our full February spotlight on APCDs.
Leveraging APCDs and Other Data Assets
The takeaway. State benchmarking programs may leverage other data resources—including APCDs, private claims databases, and federal and state survey data—to provide policymakers, regulators, consumer advocates and researchers with important context for findings (e.g., who bears the burden of cost growth) and allow results to be as actionable as possible (e.g., specific providers or drugs contributing to cost growth).
What it is. State cost growth benchmarking programs are data-driven, transparency-focused cost-containment initiatives that measure resident health care spending growth in relation to established targets. Payers and providers that exceed targets may be subject to public inquiry or penalty.
States collect benchmarking data directly from public and private payers operating in their states, monitoring health care spending across all lines of business. Payers may be asked to segment spending data by service category, key populations or product types; attribute spending to providers who may influence patient service utilization; or supplement “core” reporting with contextual information such as premium cost growth, Alternative Payment Methodology (APM) adoption rates, and member cost-sharing growth to help states better understand cost drivers across payers and populations.
Payer submissions, typically delivered in a set of summative tables with aggregate data (i.e., not person-level information), are sourced from a combination of their administrative (claims/encounter) data and financial data (non-claims-based payments) to present a complete, timely and verifiable accounting of health care spend. Payers may be required to have an accountable person at their organizations (e.g., CEO, chief actuary) certify that the data presented is valid to the best of their knowledge.
States may also use APCDs to better understand health care market cost trends. APCDs are large-scale databases that collect health care claims and encounter data from public and private payers across most lines of business, with the notable exceptions of the private self-insured (unless voluntarily reported) and Medicare fee-for-service (unless manually integrated by the state from Centers for Medicare & Medicaid Services (CMS) files).1
Claims/encounter data can be a rich source of information, including person-level detail on patient diagnosis; the service delivered; the provider delivering the service; and the amount paid for delivery, by both the payer and patient. APCDs also collect other administrative information from payers to supplement and contextualize claims data, including enrollee demographic characteristics (e.g., age, ZIP code) and characteristics of enrollees’ coverage types and details (e.g., network characteristics, plan premiums). APCDs can provide health services researchers with large sample sizes; person-, provider- and service-level detail; and the ability to follow patient populations/panels over time (i.e., longitudinal information), making them valuable and powerful—if at times unwieldy—data assets.2
Unfortunately, APCD data cannot replace payer benchmarking data reporting, contrary to a common myth in health data circles. However, benchmarking and APCD data analyses can be paired to great effect. Benchmarking data is uniquely capable of identifying cross-market concerns, while APCD data can be used to add context and detail to findings, making them more actionable for policymakers, regulators, advocates and researchers.
What it means. While benchmarking data can provide important insights into aggregate, year-over-year cost growth trends by state, payer, provider (often), service category and population group, states can derive additional insights by pairing benchmarking data and findings with analyses of other data assets, such as APCDs.3 Six of the eight states that have a benchmarking program established or actively in development also have an APCD—including Washington, Oregon, Massachusetts, Delaware, Connecticut and Rhode Island—though analytic coordination across the two data assets varies considerably.4
While having an APCD allows for more robust analyses of health care trends, states may also use private claims data assets—such as data from the Health Care Cost Institute (HCCI) or FAIR Health—to better understand their health care spending trends.
State-level survey data has been widely used to understand health care cost growth and consumer affordability by many states, including Massachusetts, Oregon and Connecticut.
States may also use the Medical Expenditure Panel Survey (MEPS) Insurance Component (IC), which fields questionnaires to private- and public-sector employers to collect data on the number and types of private health insurance plans offered, benefits associated with these plans, annual premiums, annual contributions by employers and employees, eligibility requirements, and employer characteristics.5 For many states that do not have health insurance premium reporting as part of their benchmarking data collection process, the MEPS-IC provides similar premium cost growth data—though with a lag of at least two years—that provides insight into how employees and employers are directly confronting cost growth in local markets.
What happens next. As benchmarking programs continue to proliferate and mature, additional opportunities will emerge to examine how states are pairing their data with other assets to reinforce findings and other novel use cases.
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1 APCD Council, FAQs. Available here: https://www.apcdcouncil.org/frequently-asked-questions
2 “Overview of All-Payer Claims Databases,” Agency for Healthcare Research and Quality. Available here: https://www.ahrq.gov/data/apcd/index.html
3 Other informative data assets that states have used include hospital discharge data, payer expenditure reports, provider financial reports, and surveys of employers and households.
4 Nevada is planning for APCD development, pending the release of federal funds to support establishment.
5 The Medical Expenditure Panel Survey, Insurance/Employer Component. Agency for Healthcare Research and Quality. Accessed December 22, 2021. Available here: https://meps.ahrq.gov/survey_comp/Insurance.jsp