Premera Blue Cross’ lobbying leads to dropped health database requirement

Lobbying behind closed doors, Washington’s largest health insurance company persuaded Republicans in the state Senate to gut a widely supported bill that aimed to reveal health care price and quality information to consumers.

The battle pits Premera Blue Cross against a broad coalition representing just about everyone who buys, uses, provides or shapes health care: small and large businesses, consumer advocates, tribes, hospitals, doctors, nurses, the governor, the insurance commissioner, the agency that governs insurance for state employees and the poor, and even Premera’s competitors.

That coalition seeks more than sunlight on the industry’s finances; it also backs a comprehensive new statewide plan to change the way the industry operates.

The battle focuses on House Bill 2572, which passed the state House of Representatives and came up for a hearing Thursday in the Senate Health Care Committee. After some fiery testimony, committee Chairwoman Randi Becker, R-Eatonville, stripped the bill’s most controversial section and passed it on to the Ways and Means Committee for further action. She did so without explanation. A lobbyist for Premera stepped to the microphone and thanked her, but said little about the reasons for his gratitude.

The controversy involves the original bill’s provision to create an “all payer claims database.” Loaded with statewide health insurance claims, the database would allow people to compare what health care actually costs and how well it turns out – procedure by procedure, hospital by hospital. It would answer questions like these: What would a knee replacement or childbirth cost, and who does it best?

So far, 14 states have created such databases, and the systems are operational in at least 10.

Rep. Eileen Cody, D-West Seattle and the bill’s sponsor, said, “My goal is to make sure people can see who are the lowest-cost and highest-quality providers.”

Medical costs for common procedures vary in Washington – by as much as 500 percent from one provider to another. So says the Washington Health Alliance, which has operated a claims database containing information only from insurers who submitted information voluntarily. HB 2572 would have made it mandatory for insurers to submit their data.

Businesses in favor

Big businesses such as Boeing and Alaska Airlines support creation of the database because they hope it would help them identify a path to cost-effective care for their employees. Boeing, for example, rattled Seattle-area hospitals when its health plan began offering to fly cardiac patients to the Cleveland Clinic in Ohio, which has been praised for the cost and quality of its care.

Small businesses support a claims database, as well.

At Thursday’s hearing, the fiercest comments came from Patrick Connor of the National Federation of Independent Business. NFIB fought the Affordable Care Act, Connor noted, and often aligns with Republicans. But on this issue, he told Becker, “It is very, very frustrating … each time we come forward asking for more transparency, more access to information, the concerns of the health insurance carriers about not wanting to participate seem to trump those of the consumers who desperately need more good information to help control health care costs.”

His organization checked with insurance carriers in states that operate claims databases, and the carriers “have no complaints,” Connor said.

Referring to objections Premera has raised in its closed-door lobbying with legislators, Connor said: “Not one of these Chicken Little complaints about price setting, price fixing, about … privacy, have come to pass.”

Premera’s view

Contacted by The Spokesman-Review, Premera spokesman Eric Earling explained the company’s point of view: “We support transparency. We’d like to see more of it.” But, he said, price information is not “actionable” for a particular consumer unless it is presented together with information about the consumer’s own coverage details such as deductibles and co-pays.

In addition, it would be “complicated, potentially expensive and time consuming” to create a claims database and comply with its data submission requirements, he said. Meanwhile, he said, his company is busy trying to comply with existing requirements of the federal Affordable Care Act.

Finally, Earling said, the rates Premera has agreed to pay to its networks of health care providers are “proprietary.” If providers such as hospitals could see the full range of reimbursement rates, Earling said, they might use the information to demand higher payments, ultimately driving health care costs up instead of down. So, he said, Premera is working to show the cost of care only to its own customers.

That argument provoked a response from state Sen. Karen Keiser, D-Kent, who has worked for several years to create a state health claims database: “They’re capturing a customer first before they tell them what the costs are. If you can’t get information, then something is very wrong with the market.”

Healthy competition is missing

Dorothy Teeter, director of the state Health Care Authority, oversees health insurance for state employees and those on Medicaid. According to Teeter, “we don’t have a competitive marketplace in health care.” When consumers shop for an automobile, they can obtain information about quality and price. But when consumers shop for a knee replacement, “you don’t actually know the price of something or the quality of the outcome.”

“When you blind people to the actual prices, what you are doing is the opposite of a healthy marketplace,” Teeter said. “Then you are hampering a shift of the market … to a sweet spot of price and quality.”

With Teeter at the helm, the state has already won a $3.4 million federal grant to begin creating a claims database. Without the provisions Becker stripped from HB 2572, the database could proceed but it would only contain information from insurance carriers that choose to participate. That, Teeter said, would provide an incomplete and potentially inaccurate picture of the health care market.

The battle over the database, however, is only one item in a much larger reform agenda aimed directly at health care’s high cost.

The agenda is described in a 278-page state Health Care Innovation Plan that emerged in December and was funded by a $1 million federal grant. Nineteen states created plans like this one, and now these states, including Washington, are seeking federal implementation grants that could be as large as $50 million per state.

Backers of the plan represent a who’s-who of Washington state: insurers such as Group Health and Molina, hospital systems such as Providence and University of Washington Medicine, big employers such as Boeing, and reformers such as the Bill and Melinda Gates Foundation.

Savings predicted

The plan projects $730 million in savings over three to five years. It aims to replace fee-for-service medicine with an “accountable” payment system. Fee-for-service is said by critics to make care more expensive; the more tests and procedures a provider conducts, the more money the provider makes. An “accountable” payment system would create comprehensive networks of care providers and pay by the number of patients covered, with financial rewards for providers who provide lower costs with better health outcomes.

Teeter’s agency, according to the plan, will lead the way. Counting Medicaid clients and state employees, her agency oversees health coverage for 1.7 million people, a fourth of Washington’s population. Today, 90 percent of the health care providers for those residents are paid on a fee-for-service basis. By 2019, the plan calls for 80 percent of state-financed health care and 50 percent of the commercial market to switch from fee-for-service to outcomes-based payment.

A claims database, Teeter contends, would shine a light on the current system’s inefficient pricing and create market pressure for change.