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USC-Brookings Schaeffer on Health Policy

What can be done to improve all-payer claims databases?

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Editor's Note:

This analysis is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a partnership between Economic Studies at Brookings and the University of Southern California Schaeffer Center for Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.

An all-payer claims database (APCD) is a system that collects health care claims and related data from all (or nearly all) entities that pay for health care services in a geographic area, including private and public health plans. Today, 23 states have APCDs, another five states have more limited efforts, and several more are considering creating one. APCDs are valuable tools for virtually anyone with a stake in the health care system — including consumers, employers, health care providers, insurers, researchers, and policymakers — to understand and improve the system. However, as we discuss in a new report, today’s APCDs have important limitations, which action by federal policymakers could resolve.

Limitations of Today’s All-Payer Claims Databases

The most prominent challenge facing state APCDs arises from a 2016 Supreme Court decision, Gobeille v. Liberty Mutual Insurance Co. In that decision, the Court held that states may not require data collection from non-governmental self-insured group health plans (that is, private employer plans in which the employer bears the risk for enrollee health care claims itself). Because these plans represent about one-third of all covered people, the Court’s decision created a large gap in state APCDs.

Other limitations arise from the fact that each state makes its own decisions about whether to create an APCD and how to operate it. Issues include: challenges in combining data from multiple states, which makes it hard to compare experiences across states; the lack of an automatic mechanism for making data available to federal policymakers; and the fact that operating a patchwork of state databases forfeits potential economies of scale. Further, about half of the U.S. population lives in a state without an APCD.

Federal Policy Options to Help APCDs Reach Their Potential

Should they wish to, federal policymakers have administrative and legislative options that could redress the limitations of current APCDs:

  • Enable state collection of self-insured data. Federal policymakers can directly restore the ability of state APCDs to collect data from self-insured plans by enacting legislation. Alternatively, the Supreme Court’s decision in Gobeille described a legal pathway by which the federal government could authorize states to collect these data without new legislation. In either case, policymakers could choose to limit the ability to collect data from self-insured plans to state APCDs that met certain conditions, like collecting data in a uniform format to reduce administrative burden on payers or providing adequate researcher access to the data.
  • Create a national APCD. The federal government could build a national database that would collect data from all payers in all states. Policymakers and researchers could then access this comprehensive dataset, subject to appropriate privacy safeguards. Data from a national APCD could also be shared with states. This would require that states modify their existing systems but would free them from the burden of collecting data themselves.

Such a system would require careful attention to privacy and data security concerns. A national APCD could adopt procedures like those that govern existing federal health care databases. These could include barring users from disclosing anything other than aggregated results, requiring rigorous data security practices, limiting access to only data elements required for planned analyses, and mandating that work is done in a secure computing environment controlled by the federal government.

The federal government likely has the authority to create a national APCD without new legislation, but such an initiative is more likely to be successful if Congress directs and funds the work. Policymakers could also consider housing this initiative within a nonprofit, rather than a federal agency, as proposed in legislation recently considered in the Senate Health, Education, Labor, and Pensions Committee.

  • Expand state APCD coverage, while integrating their data. Policymakers could also pursue a hybrid approach that would expand, improve, and integrate state databases. In this model, policymakers would: 1) authorize state APCDs to collect self-insured data; 2) provide grants to states to encourage creation of new APCDs; and 3) require states to collect data through a standardized process and share data with a federal clearinghouse, similar to the existing one for state hospital encounter data. The clearinghouse could support research projects that require data from multiple states and facilitate use of data by federal policymakers. However, it is still unlikely all states would create databases, and each state would still need to invest in its own infrastructure for collecting and maintaining claims data. The federal government likely already has the authority to pursue this approach, but such an initiative is more likely to be undertaken with congressional support.

Assessing the Options to Move Forward

Among these options, creating a national APCD has important advantages. With a small investment of resources relative to total U.S. health care spending, policymakers could create a tool that offers a comprehensive picture of the health care system that no existing data source can come close to matching, thereby accelerating efforts to better understand and ultimately improve American health care. While efforts to expand the number of state APCDs and integrate existing APCDs could also improve the current situation and might encounter less stakeholder opposition, they would not provide as comprehensive or complete a resource as a national APCD. Short of these larger, more impactful projects, the federal government could advance understanding of our health care system by restoring states’ ability to collect self-insured data, a fairly simple undertaking that will make existing APCDs more useful and comprehensive.

The full paper is available here.

The Initiative is a partnership between the Economic Studies program at Brookings and the USC Schaeffer Center for Health Policy & Economics, and aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.

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