REPORT DECEMBER 2020 STATE ALL-PAYER CLAIMS DATABASES Tools for Improving Health Care Value Part 1: How States Establish an APCD and Make It Functional Douglas McCarthy Senior Research Advisor The Commonwealth Fund ABSTRACT TOPLINES ISSUE: All-payer claims databases (APCDs) can facilitate state efforts By aggregating data on patient to control the rising cost of health care and increase its value. By services that insurers and public programs pay for, all-payer aggregating data on the health care services that health insurers and claims databases can aid states’ public programs pay for, they offer a broader perspective on cost, service efforts to control rising costs and utilization, and quality than any single entity can provide. An increasing increase the value of health care. number of states are creating or are implementing APCDs. GOALS: Synthesize experiences and lessons learned from the creation An effective all-payer claims and implementation of eight diverse, state-level APCDs, including their database requires buy-in from intended uses, formation, governance, funding, staffing, use of vendors, key stakeholders in a state, a suitable governance structure, sources and types of data collected, linkages with other data, analytic sustainable funding, realistic capabilities, and privacy practices. implementation timeframes, and METHODS: Interviews with APCD staff and stakeholders and a review of adherence to data quality and documentary evidence. privacy standards. KEY FINDINGS AND CONCLUSIONS: State approaches to APCD development varied from governmental initiatives and public-private partnerships to voluntary efforts. Successful implementation requires engaging with stakeholders; establishing salient use cases; determining a suitable governance structure; securing sustainable funding; setting realistic implementation goals and timeframes; and ensuring data quality and analytic rigor while protecting data privacy. State All-Payer Claims Databases: Tools for Improving Health Care Value PART 12 INTRODUCTION the Medicaid and Medicare programs (Exhibit 1).3 Another Identifying and addressing the drivers of high health care 11 states have indicated strong interest in doing the same. costs are more important than ever. Growth in health In several states, stakeholders such as health care systems, care spending has been a major component of growth in purchasers, and researchers have voluntarily created APCDs.4 state budgets, which are being strained by a decline in tax This report, the first in a two-part series, summarizes the revenues during the COVID-19 pandemic.1 The high cost of health care is also reducing employers’ ability to maintain experiences of eight state APCDs. The purpose is to inform health insurance benefits, especially during an economic states what to consider when creating an APCD, and help downturn, and continues to burden consumers with out-of- states realize the potential of their APCD. Study sites pocket expenses that compete with other basic needs.2 (Exhibit 2) were selected to exemplify diverse approaches and contexts for implementing an APCD as well as the Controlling health care spending and ensuring its challenges and benefits of doing so (see the section, value require having systemwide information on costs, “How This Study Was Conducted”). The APCDs, which utilization, and quality of services that no single purchaser have been in operation for four to 17 years, were also or payer can produce. To construct a more comprehensive picture of the health care delivered to their residents, 21 selected to highlight advanced uses of data (as described states have created or are implementing all-payer claims in the companion report). This series builds on existing databases (APCDs) to collect and aggregate information research,5 including a previous case study examining how on payment Exhibit 1 for health services from commercial health Massachusetts leverages data generated by its APCD to insurers, some self-insured employee benefit plans, and inform a statewide cost-containment agenda.6 State Activity on All-Payer Claims Databases Exhibit 1. State Activity on All-Payer Claims Databases Existing In Implementation Strong Interest Existing Voluntary Effort Study Sites State Agency -Maine -Minnesota -New Hampshire -Utah Administrator Under State Authority -Arkansas -Colorado -Virginia Voluntary Collaborative -Wisconsin Source: Adapted from The APCD Council with permission. © 2009-2020 University of New Hampshire, The APCD Council, National Association of Health Data Organizations. All Rights Reserved. commonwealthfund.org Source: Adapted from The APCD Council (permission forthcoming). © 2009-2020 University of New Hampshire, The APCD Council, Report, National2020 December Association of Health Data Organizations. All Rights Reserved. State All-Payer Claims Databases: Tools for Improving Health Care Value PART 13 Exhibit 2. APCD Study Sites and Governance APCD APCD Administrator Type of Organization State Authority* Arkansas Center for Health Health policy organization Arkansas Insurance Department Arkansas All-Payer Improvement (ACHI) affiliated with state academic Claims Database medical center Colorado All-Payer Center for Improving Value in Multi-stakeholder nonprofit Colorado Department of Health Claims Database Health Care (CIVHC) organization Care Policy and Financing Maine Health Care Maine Health Data Organization Independent state agency MHDO board of directors Claims Database (MHDO) appointed by governor Minnesota Health Minnesota Department of State agency Minnesota Department of Care Claims Reporting Health (MDH), Health Economics Health System Program New Hampshire Insurance State agency NHID: Authority for data New Hampshire Department (NHID) in collection Comprehensive Health partnership with the N.H. Care Information DHHS: Authority for data Department of Health and System releases Human Services (DHHS) Utah Department of Health State agency Health Data Committee Utah All-Payer Claims (UDOH), Office of Health Care appointed by governor and Database Statistics reporting to UDOH Virginia All-Payer Virginia Health Information (VHI) Multi-stakeholder nonprofit Virginia Department of Health Claims Database organization Wisconsin Health Information Multi-stakeholder nonprofit Wisconsin Department of Health WHIO Intelligence Bank Organization (WHIO) organization Services *Note: Authority means a statutory or contractual authority to collect, use, and/or release health care claims data. Source: Author’s analysis. CREATING A STATE APCD thereby strengthening markets.8 Others view an APCD as Creating a state APCD involves identifying its intended a tool to enhance the ability of states to oversee insurance uses, garnering support for its formation, defining a markets, public coverage programs, and public health. APCDs are often regarded as a rich source of data for governance structure, securing funding for its development health care research and health system improvement. and operation, employing staff, and (in most cases) contracting with an information technology (IT) vendor. Some states have an expansive vision for their APCDs, the goal being to support health system change (Exhibit 3). However, with limited resources it can prove difficult Intended Uses to fulfill many different purposes. Several interviewees Proponents of state-level APCDs offer a variety of recommended that organizers focus on key use cases motives for their creation.7 Some appeal to information that will appeal to state policymakers and other primary transparency in the belief that disclosing and highlighting users by reflecting a clear vision for data-driven decision- variation in the utilization, cost, and quality of services making. Careful planning is needed to ensure that enabling will equip employers to purchase care based on its value legislation, technical infrastructure, and potential data and stimulate consumers to be more cost-conscious, sources will support the range of intended uses.9 commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 14 Exhibit 3 Strategic Exhibit Vision 3. Strategic for the Vision Colorado for the APCD Colorado APCD 3. 2. Effecting Change Through Sustainable TRIPLE AIM-Related Programs Business Model Increasing awareness and value Redesign How Care Is Public Awareness Change How Care Is through Delivered Through Transparency Paid For growing use of data and analytics 1. CIVHC Data & Analytics to Inform Opportunities to Effect Change & Consumer Decision-Making Source: Center for Improving Value in Health Care (CIVHC). Formation Source: Center for Improving Value in Health Care (CIVHC). transparency. Industry influence and privacy concerns Developing and implementing the studied APCDs led the state to use the APCD in a more limited way, required from one to three years. The impetus often supporting research and evaluation by the state health came from broader state health care reform initiatives department. that convinced governors and legislators of the need for comprehensive and objective data on health system Authority and Governance performance. Nevertheless, proponents sometimes had Seven of the eight study states, by law, vest oversight to overcome concerns raised by the health care industry, authority for their APCDs in state rule-making agencies — such as the hidden cost of a mandate to submit claims or including insurance and health departments, a Medicaid objections to the disclosure of proprietary information, agency, and an independent state authority (Exhibits as well as resistance from dominant market players 1 and 5). These agencies have the authority to mandate concerned about the increased competition that might submission of health care claims data by health insurers. result from publishing health care prices. The state agencies administer their APCDs in four of these seven states. The other three states contract with The route that states took to establishing an APCD was independent administrators, which include a university- not always straightforward. It often involved persuasion based policy institute and nonprofit organizations with by influential “champions,” political compromises, multistakeholder boards that include state-appointed and an unpredictable iterative process. Virginia, for officials.10 In the eighth state, Wisconsin, the APCD is example, initially allowed insurers to voluntarily submit governed by a voluntary organization, made up of private claims data. Later, to expand the APCD’s scope, the state stakeholders and state agencies. This fulfills a statutory mandated claims submission. In contrast, Minnesota’s requirement for an APCD while relying on contractual APCD was first envisioned as a tool to advance and voluntary submission of claims data. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 15 State-authorized APCDs typically have state-appointed • Appropriations. Most study sites receive core advisory committees to promote public accountability, operating funds through state appropriations. Several such as by guiding the scope of data collection, states get federal help supporting their APCD with a ensuring compliance with privacy laws, and reviewing match of the state’s Medicaid funding.11 Virginia and the appropriate­ness of data releases (see Exhibit 4). Colorado initially depended on private sources of Stakeholders on these bodies also serve as an important support and only later obtained a state appropriation source of input to help ensure that the administration and after demonstrating the value of the APCD. uses of the APCD remain responsive to constituent needs. • Industry assessments. The Maine Health Data Organization (and its APCD) is supported by a state- Funding mandated annual assessment on health care providers APCD administrators reported a wide range of annual and health plans based on net patient revenue, operating costs that may reflect variation in the scope of premiums written, or a flat dollar amount.12 Industry their missions and capabilities as well as differences in stakeholders are major users of APCD data, which their budgeting and accounting methods (Exhibit 5). Some means they easily realize the value of this support. state officials contend that a relatively lean operation • Contracts and fees. Most study sites charge customers allows an APCD to achieve its objectives in a nimble and — enough to recover their costs, at least — for custom cost-efficient manner. Other leaders say that realizing the datasets, nonpublic reports, and data analyses.13 A full potential of an APCD requires ongoing investment few offer subscriptions to the database, to users with in operational, analytic, and reporting capabilities and the sophistication to make effective use of raw data expertise. Funding sources include state appropriations, and protect its security. Some sites offer discounts to industry contributions, contracts and data use or licensing nonprofit organizations and/or academic researchers fees, and government and private grants. that meet certain criteria. 1#$$- Arkansas APCD Governance Structure Exhibit 4. Arkansas APCD Governance Structure & #'' !(&&#'%&#, #')&#%&("#( #((*$& !!,& !"'(' (*&'( #(*'$&, $""(( $""(( & #'' #(&$& !("%&$*"#( "#'(&($& Source: Arkansas Center for Health Improvement. commonwealthfund.org ',))#&**&+)')$+!%()'-%&+ Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 16 • Grants. Most of the study states have received federal, state, or private grants to fund the development or enhancement of their APCDs To manage a quality database, you and/or to create analytic capability and reports have to work in tandem with your in support of various time-limited projects of vendor to provide oversight, quality interest to funders.14 control, local knowledge, and expertise to define business rules Staffing and identify where improvement The wide variations in APCD staffing (Exhibit 5) may can and should be made. reflect differences in the scope of supported use cases, the number of data submitters and data requests, Ana English varying approaches to using vendors and in-house CEO, Colorado’s Center for Improving Value in staff for data management, and the extent of data Health Care quality assurance and customer relations activities. Several APCD leaders emphasized the need for dedicated staff resources and expertise to ensure the Wisconsin relies on contractual and voluntary submission accuracy, consistency, and reliability of data. of claims data, which means that its APCD does not always obtain all key data elements from all submitters.16 All Information Technology Vendors study APCDs also incorporate claims data from their state Medicaid program and the traditional Medicare program.17 Seven of the APCD states contract for data management and/or analytics with external IT vendors (Exhibit 5). Utah The U.S. Supreme Court ruled in 2016 that the Employee relies in part and Arkansas relies entirely on in-house IT. Retirement Income Security Act (ERISA) exempts private APCD leaders emphasized selecting a vendor that can meet employers’ self-insured health plans from state laws operational goals, being willing to change vendors when requiring claims data submission to APCDs.18 States necessary, and not becoming overly reliant on vendors. can and typically do require data submission from self- insured public employers not subject to ERISA including APCD FEATURES: LOOKING INSIDE THE BOX cities, counties, schools, and the state’s own employee The utility and integrity of an APCD depends on the benefit plan (which may include state universities).19 To sources and types of data it collects, the data linkages encourage voluntary submission of claims by private it supports, the analytic tools it employs, the ways it employers and purchasing coalitions, some states protects data privacy, and restrictions on the use and disseminate opt-in forms and educate employer groups disclosure of its data. on the value of participation. Through such efforts, a few states have been able to maintain data on a sizable share of self-insured lives.20 Sources of Data State APCDs collect claims data from multiple payers (Exhibit 5), which requires building and managing effective Types of Data Collected working relationships with data submitters. The seven All study sites collect medical and pharmacy insurance study states that rely on statutory authority for data claims data in specified formats as well as eligibility and collection require most commercial health insurers and enrollment data about the individuals covered by the Medicare Advantage plans doing business in the state to insurance plan (Exhibit 6).21 Five of the eight study states submit claims data on state residents to their APCDs.15 also collect dental insurance claims data. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 17 Exhibit 5. APCD Characteristics and Features STATE ORGANIZATION CONTEXT FORMATION RESOURCES FUNDING SOURCES VENDOR State Rank or State NPO Staff Budget Grade Agency/Organization Staff (FTEs) Ensuring Data Is Available for Use Nonprofit Under State Contract University Under State Conract State Executive Branch Agency Expanded Medicaid Under ACA Insurance Market Competition Healthcare Price Transparency Years for APCD Development Health System Performance Independent State Agency Agency Budget (millions) Years APCD in Operation Federal Medicaid Match APCD Budget (millions) Date APCD Operational Industry Contributions APCD Core Staff (FTEs) State Appropriation Date APCD Created Fees and Contracts Grants Arkansas X 47 26 17 D Y 2014 2016 2 4 2.2 10.0 $1.8 $7.0 X X X X In house Colorado X 9 12 1 B Y 2010 2012 2 8 12.0 26.6 $4.2 $5.3 X X X X HSRI/NORC Maine X 12 17 4 A Y 2003 2003 1 17 NA 7.0 NA $2.0 X X HSRI/NORC Minnesota X 3 14 10 C Y 2008 2009 1 11 10.5 25.0 NA NA X X Onpoint New Hampshire X 10 32 37 A Y 2003 2005 2 15 1.5 NA $1.2 NA X X Milliman/HSRI Utah X 11 36 11 D Y 2006 2009 3 11 3.5 6.0 $0.8 $1.7 X X X X Milliman Virginia X 29 5 14 C Y 2012 2013 1 7 2.6 12.0 $1.4 $9.0 X X * X X Milliman Wisconsin X 12 1 35 F N 2007 2008 1 12 7.0 7.0 NA NA X SymphonyCare COUNT 3 1 1 3 6 4 1 6 6 7 AVERAGE 17 18 16 C Y 2008 2009 2 11 5.6 13.4 $1.9 $5.0 MEDIAN 12 16 13 C Y 2008 2009 1.5 11 3.5 10.0 $1.4 $5.3 DATA SUBMISSION STATE DATA SOURCES DATA TYPES DATA LINKAGES ANALYTICS AUTHORITY Type Authority Claims Other Registries (e.g., cancer, immunizations) Self-Insured Employers (voluntary) Risk Adjustment or Risk Scoring Provider Financial Performance Provider or Health Plan Quality Workers Compensation Claims Vital Records (births/deaths) Episode or Case-Mix Grouper Alternative Payment Models Prescription Drug Rebates Electronic Health Records Medicare Fee-for-Service Reference-Based Pricing Voluntary/Contractual Insurance Department Provider Resource Use Commercial Insurers Geographic Variation Medicare Advantage Hospital Encounters Health Department Statutory Mandate Pharmacy Claims Medicaid Agency Low-Value Care Medical Claims Dental Claims Medicaid Other Arkansas X X X X X X X X X X X X X X X X X X Colorado X X X X X X X X X X X X X * * X X X X X X Maine X X X X X X X X X X X X X * * X X X X X X X Minnesota X X X X X X X X X X X X X New Hampshire X X X X X X X X X X X X X X Utah X X X X X X X X X X X X X X X X X * X Virginia X X X X X X X X X X X X X X X X X Wisconsin X X X X X * X X X X * X X X X X COUNT 7 1 2 3 1 2 8 8 8 7 8 8 8 5 1 1 1 6 2 4 2 2 1 8 8 8 6 5 2 Source: Author’s analysis. Notes: NA = Not Available; NPO = Nonprofit Organization. Operational Date = the year when the APCD began receiving claims from data submitters. Staffing = APCD reflects approximate portion of full-time equivalent (FTE) agency or organizational staff time devoted to core APCD operational duties (not counting vendor staffing). APCD Budget = the portion of agency or organizational funding dedicated to core APCD operations; states may not be strictly comparable due to differences in budgeting and accounting. Data Submission = Arkansas and Virginia were created under a voluntary claims submission model and subsequently gained authority for mandatory data submission. Funding = Virginia was funded through industry contributions prior to receiving a state appropriation in 2019; Wisconsin received state grants for APCD development and tasks but no longer receives state funding. Linkages = Registry and EHR data have been linked with Colorado APCD data in exploratory studies; Maine plans to link vital records and registries pending legislative authorization; Wisconsin plans to link APCD and EHR data through a collaborative venture. Analytics: Maine includes external users of APCD data; Utah plans to acquire a low-value care analytic tool pending funding. See “How This Study Was Conducted” for notes on State Rank or Grade. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 18 Several states also collect, and maintain separately, nonclaims data to support extended use cases. The more transparency there is in • Alternative payment models. Following the lead of prescription drug pricing, the more Massachusetts and Oregon, Colorado is collecting we’ll be able take targeted action information on insurers’ use of alternative payment to help reduce the costs of these models, such as capitation, to track value-based payment and better estimate total health care life-supporting medications. ... The spending. report issued last year by the Maine • Prescription drug pricing. Maine recently required Health Data Organization is a pharmaceutical manufacturers to report cost powerful tool that lets Mainers and information when the price of a prescription drug officials know what pharmaceutical increases by more than 20 percent.22 The state may companies are charging patients. request additional component cost information from wholesale distributors and pharmacy benefit Maine Senator Eloise Vitelli managers to understand cost drivers along the drug supply chain. Colorado requires insurers to report the aggregate dollar amount of prescription drug Data Linkages rebates granted by pharmaceutical manufacturers.23 APCD administrators and stakeholders are exploring Policymakers can use this information to pinpoint opportunities to link claims with other types of data to drivers of rising drug costs and assess whether capture a more complete record of patient populations, regulation of industry practices is warranted.24 risk factors, and services provided as well as to allow a • Provider financial performance. Maine and Virginia fuller understanding of the relationships between costs collect information on the financial performance and the quality and outcomes of care (Exhibits 5 and 7). of hospitals in their states, which allows a broader understanding of their operating efficiency and Some linkages do not require fully identifiable data. For profitability. example, standardized data on quality of care can be linked by provider with average or median negotiated prices from the APCD, to offer insight on value in Exhibit 6. Medical Claims Data Elements transparency tools. APCD and census data can be linked Collected by the Maine APCD at the ZIP code level to study how socioeconomic factors • Type of product (e.g., HMO, POS, indemnity) (e.g., race, ethnicity, income) and social determinants of • Type of contract (e.g., single, family) health (e.g., housing) influence health care utilization and • Coverage type (e.g., self-funded, individual, small group) spending.25 Hospital encounter data, such as the records of • Dates (e.g., birth, service, paid) patients who are uninsured or pay for care out of pocket, • Patient demographics (e.g., age, gender, residence, can fill gaps in APCD data. relationship to subscriber) In states that collect and allow protected uses of • Service codes (e.g., revenue, diagnosis, procedure, drug) identifiable data by their APCD, claims may be linked by • Service/prescribing provider individual to other data systems—such as birth and death • Billing provider records—in studies subject to protocols to protect patient • Plan payments and member copay, coinsurance, privacy. Similarly, clinical data from electronic health deductible amounts records (e.g., the results of blood tests to control diabetes) • Facility/bill type and disease registries (e.g., cancer stage and survival Source: Maine Health Data Organization information) can augment claims data to construct a more commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 19 Exhibit 7 Example of APCD Data Linkages Exhibit 7. Example of APCD Data Linkages Socio- Census Economic APCD Data Risk (by zip code) Factors Diabetes Electronic Costs & APCD Health Quality of Records Care Cancer Cancer Treatment APCD Registry Costs & Outcomes Source: Author’s analysis. APCD = All-Payer Claims Database. Source: Author’s analysis. APCD = All-Payer Claims Database. complete treatment history including the costs of care and episode-based payments and referral networks that its outcomes.26 provide patients with higher-quality and lower-cost care. While feasibility studies have demonstrated that linked datasets offer potential analytic synergies, interviewees Protecting Data Privacy cautioned that technical, administrative, and legal States undertake a variety of measures to prevent the hurdles must be surmounted to establish durable ongoing unauthorized use or disclosure of protected health linkages—especially when data sources are maintained information, such as a requirement that data recipients by separate organizations with potentially disparate sign and comply with a data use agreement specifying missions and goals.27 permitted uses of the data.29 Some states provide data submitters with software to “hash” patient identifiers Analytics into a key code so that records can be linked over time The potential of an APCD is more fully realized through while maintaining patient anonymity. Other states collect analytic tools that allow rigorous uses of data (Exhibit 5; identified data but require that it be encrypted and that see the companion report for details on such uses). For disclosures are restricted to comply with privacy laws example, several states use episode-of-care “grouper” tools based on specific uses and assurances. Maine, for example, to report on the bundled cost of common procedures such defines three levels of data disclosure, with increased as knee or hip replacements, including services that are oversight and restriction at each level: 1) de-identified typically received before and after the procedure (Exhibit 8).28 Bundled costs offer a useful way for consumers to data; 2) a limited dataset that includes some identifiers compare providers when deciding where to receive necessary for research; and 3) a fully identified dataset elective procedures. These tools can also be used by limited to purposes of public health or health care stakeholders to assess the opportunity for developing treatment, payment, and operations. commonwealthfund.org Report, December 2020 Exhibit 8 Example ofClaims State All-Payer Episode-of-Care Analysis Databases: Tools for Improving Health Care Value PART 110 Exhibit 8. Example of Episode-of-Care Analysis Colonoscopy Episode Payment = $1,800* Pre-Procedure Procedure Cost Post-Procedure Costs associated with care Costs associated with the procedure include all Costs associated with care after before the procedure (tests, facility, provider, and ancillary (lab tests, the procedure (physical therapy, doctor’s visits, etc.) medications administered, etc.) fees medications, follow-up visits, etc.) Pre-Episode Trigger Procedure Post-Acute Care $200 Code $1,400 $200 7 days prior ICD-9 or CPT code indicating colonoscopy in 30 days after index outpatient or professional setting discharge date Source: Center for Improving Value in Health Care. *Note: Numbers displayed were developed for this example and do not reflect actual costs. Data Restrictions 1. Engage with Stakeholders. APCD leaders were Many states, for various reasons, restrict the use or unanimous in highlighting the importance of disclosure of some data elements or types of data. For engaging with their stakeholders—including data example, New Hampshire permits the use of Medicaid submitters and users, and those affected by the APCD’s *Note: Numbers displayed were developed for this example and do not reflect actual costs. data only for research purposes approved by the state’s use—through formal and informal means. “Initial Medicaid director. Minnesota prohibits Source: Center for Improving the identification Value in Health Care. and ongoing stakeholder engagement is critical to of specific providers or payers in analyses using APCD data. addressing challenges regarding legislation, funding, Virginia and Wisconsin normalize payment amounts to technology and staffing,” says Michael Lundberg, CEO prevent the comparison of providers based on negotiated of Virginia Health Information. “We believe that data rates, while still allowing the analysis of regional averages moves at the speed of trust and not only do we have in cost and of differences by type of insurance or payer.30 to be good stewards of the data, but we must also Maine prohibits data recipients from computing the ratio continually cultivate and build trust in our work with of billed charges to amounts paid for a type of service the partners and stakeholders we support,” says Ana rendered by any individual health care payer, facility, or English, CEO of Colorado’s Center for Improving Value practitioner. Each of these restrictions limits the utility of in Health Care. the APCD in ways that prospective data users must assess 2. Determine a Suitable Governance Structure. Unique in relation to their specific needs and purposes. contextual factors in each state will shape decisions about governance. State agency administration INSIGHTS AND LESSONS LEARNED of an APCD offers a consistent approach to state Establishing an effective state APCD requires engaging data collection efforts and may promote a holistic with stakeholders to obtain their support, determining scheme for using data resources. An independent a suitable governance structure, securing sustainable APCD administrator or authority can be a neutral funding, setting realistic implementation timeframes, convener of stakeholders, one step removed from and maintaining the APCD’s integrity by ensuring data political influence. While a voluntary approach quality and analytic rigor while protecting data privacy may offer a feasible way for some states to create an and objectivity. APCD, it involves a trade-off between flexibility and commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 111 data completeness; in Arkansas and Virginia the voluntary model was a stepping stone to a state-authorized model that improved As part of each APCD study, we data completeness. Whatever approach is 31 are assessing data quality and taken, states should consider that complex looking for potential improvement arrangements can create challenges for efficient opportunities. administration of an APCD. 3. Secure Sustainable Funding. The mission and Stefan Gildemeister Director of Health Economics, Minnesota purposes of an APCD will determine what Department of Health funding approaches are feasible and prudent. Colorado found that it could not sustain a robust APCD solely on grants and data licensing fees while pursuing a mission emphasizing the public states adopt common data submission standards. In good and the state’s interests. Consequently, it has any event, states and other funders should realize that pivoted toward acquiring state funding to support creating an APCD represents a long-term investment, a large portion of its operating costs. In contrast, the the value of which may take several years to bear fruit. Wisconsin Health Information Organization has funded its APCD from industry fees and subscriptions 5. Create Processes to Maintain the APCD’s Integrity. in support of health system performance APCD administrators stress the importance of the improvement rather than a public policy agenda. Few quality and timeliness of APCD data and, to serve the other APCDs have used this approach. growing demand for information, their own analytic capacity.33 “We initially thought everyone was just Commentators say that state APCDs are generally going to want datasets. The reality is that there is a underfunded and under-resourced for the task that very limited group of individuals and researchers states have set for them.32 Indeed, some APCD leaders that can analyze complex claims data. So, we’ve had say they are “scratching the surface” or “touching the to build internal analytic skills and tools to analyze tip of the iceberg” in terms of the APCD’s potential. the data. And the more that we’re working with the The current economic downturn is constraining state data, the more we’ve come to realize where we have budgets, which is putting state funding for APCDs at gaps and opportunities to improve the data,” says risk. State APCDs will be challenged to demonstrate Colorado’s English. their relevance by contributing vital information to help guide shifts underway in the health care system. 6. Learn from Other States. APCD leaders urge their colleagues to learn from one another’s experiences, 4. Set Realistic Implementation Goals and Timeframes. Leaders emphasized the need to decide in advance particularly from other states with similar objectives the purposes and products of the APCD. Because and common vendors. Several pointed to examples of vendors have improved their capabilities, new APCDs how sharing learning or approaches from state to state may benefit from faster implementation than in the had saved considerable effort.34 On the other hand, one past. Nevertheless, APCD leaders noted that even after APCD leader also advised taking care to consider the an APCD is technically operational, it takes time for need for adapting another state’s approach to meet the data submitters to set up data transfers as well as for unique circumstances of the home state. To advance APCD staff to refine processes to ensure data quality common goals with constrained resources, states may and build analytic capabilities. This process can be wish to examine the opportunity to purchase shared shortened for multistate and national insurers when services in support of their APCDs in future. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 112 HOW THIS STUDY WAS CONDUCTED Data Collection and Analysis: We conducted semistructured interviews with APCD leaders in each state and with select stakeholders (e.g., legislator, employer, Medicaid official) in some states. Interviews were recorded (with permission) and transcribed. Data derived from interviews and documentary sources were organized in cross-case displays for topical content analysis.35 Findings were validated and refined based on a comparison with other published literature and through review by interviewees. Site Selection: Based on a literature scan and expert advice, we selected eight states (Exhibit 1) whose APCDs are characterized by diverse approaches and contexts. The APCDs, which have been in operation for four to 17 years, were also selected to highlight relatively advanced uses of data. We excluded some states that are the subject of other research (Massachusetts, Rhode Island), that only recently implemented an APCD (Delaware), or that have a unique policy context (all-payer rate setting in Maryland). The states we chose represent the U.S.’s New England, Midwest, South, and West regions. Contextual Environments: Study states represent a variety of markets and public policies. Collectively, they tend to perform better than average among all states on rankings of health system performance (median 12; range 3 to 47), small group insurance market competition (median 16; range 1 to 36), and ensuring that information is available to the public (median 13; range 1 to 37), as well as on an assessment of health care price transparency laws (median grade C; range A to F). All but Wisconsin have expanded Medicaid under the Affordable Care Act. These factors suggest that most study states are amenable to adopting health reforms and policies to promote health system improvement, which may have influenced the creation of an APCD. State Ranking or Grade Ark. Colo. Maine Minn. N.H. Utah Va. Wisc. Average Median Health System Performance (1) 47 9 12 3 10 11 29 12 17 12 Insurance Market Competition (2) 26 12 17 14 32 36 5 1 18 16 Ensuring Data Is Available for Use (3) 17 1 4 10 37 11 14 35 16 13 Healthcare Price Transparency (4) D B A C A D C F C C Expanded Medicaid Under ACA (5) Y Y Y Y Y Y Y N Y Y Sources: (1) The Commonwealth Fund, Scorecard on State Health System Performance (2019) (1=highest performing state). (2 )Kaiser Family Foundation, State Health Facts: Small Group Insurance Market Competition, Rank on Herfindahl-Hirschman Index (1=most competitive market). (3) Center for Data Innovation, The Best States for Data Innovation (2017). The rank is a composite of nine indicators (1=best at making data available for public use). (4) Catalyst for Payment Reform and the Source on Healthcare Price and Competition, “2020 Report Card on State Price Transparency Laws,” 2020. (5) The Commonwealth Fund, Medicaid Expansion Status, 2019. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 113 NOTES 7. For a fuller discussion, see Erin Bartoloini and 1. The Urban Institute, “State and Local Expenditures: Rebecca Paradis, All Payer Claims Databases: How Have State and Local Expenditures Changed Unlocking the Potential (Network for Excellence in Over Time?” (Urban Institute, n.d.); Manatt Health, Health Innovation, Dec. 2014). “Understanding the Fiscal Impact of COVID-19, the 8. Research using data from the Massachusetts Economic Downturn, and Recent Policy Changes” APCD found that harnessing transparent price (Woodrow Wilson School of Public and International information to drive care to lower-cost providers Affairs, June 5, 2020). could produce significant savings; see Anna D. 2. The share of U.S. workers with out-of-pocket health Sinaiko, Pragya Kakani, and Meredith B. Rosenthal, care expenses (excluding premiums) greater than 10% “Marketwide Price Transparency Suggests Significant of their income increased from 10% in 2003 to 29% Opportunities for Value-Based Purchasing,” Health Affairs, 38(9) (Sept. 2019):1514-22. in 2018; see Sara R. Collins, Herman K. Bhupal, and Michelle M. Doty, Health Insurance Coverage Eight 9. For an in-depth guide to the creation of an APCD, Years After the ACA (The Commonwealth Fund, Feb. including its technical build, see Josephine Porter 2019). et al., All-Payer Claims Database Development Manual: Establishing a Foundation for Health Care 3. Some writers use the term Multi-Payer Claims Transparency and Informed Decision Making (The Database to reflect the fact that a database may not APCD Council and West Health Policy Center, Feb. include all payers. We use the term All-Payer Claims 2015). Database to reflect common usage and the aspiration of these tools. 10. The Colorado and Virginia APCDs are considered public-private partnerships because they were 4. The APCD Council, Interactive State Report Map, initially privately funded to carry out a legislatively accessed May 1, 2020. authorized public purpose. Maine’s ACPD was 5. Denise Love, William Custer, and Patrick Miller, developed by a legislatively authorized public- All-Payer Claims Databases: State Initiatives private partnership between a state agency—the to Improve Health Care Transparency (The Maine Health Data Organization (MHDO)—and Commonwealth Fund, Sept. 2010); Jennifer Ricards the nonprofit Maine Health Information Center and Lynn Blewett, Making Use of All-Payer Claims (now known as OnPoint Health Data); MHDO later Databases for Health Care Reform Evaluation assumed full authority for its operation. (U.S. Department of Health and Human Services, 11. For a detailed analysis of state approaches, see Tanya Office of the Assistant Secretary for Planning and Bernstein and Kristin Paulson, Funding for APCD’s Evaluation, July 2014); Stephanie Cohen and Lynn via CMS Medicaid Match: Examples from Two States Quincy, All-Payer Claims Databases: Unlocking Data (Freedman Healthcare, Feb. 20, 2018). to Improve Healthcare Value (Altarum Healthcare Value Hub, Sept. 2015); Josephine Porter and Denise 12. Virginia’s APCD was self-funded by industry Love, The ABCs of APCDs (California Health Care contributions under a voluntary claims submission Foundation, Nov. 2018). model until 2019, when the state appropriated funds to support a mandatory claims submission model. 6. Lisa Waugh and Douglas McCarthy, How the Massachusetts Health Policy Commission Is Fostering 13. The Wisconsin APCD is entirely funded by fees paid a Statewide Commitment to Contain Health Care to WHIO for products and services. Data submitters Spending Growth (The Commonwealth Fund, March are offered free or discounted access to some tools or 2020). data. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 114 14. Federal grants have been awarded to several 20. For example, the Colorado APCD included claims state APCDs through the Centers for Medicare data for 595,000 individuals covered by self-insured & Medicaid Services including the Center for employer plans in 2018, representing 31% of the Consumer Information & Insurance Oversight estimated number of self-insured lives in the state. Cycle III Rate Review Grants and the Center for Motivations for voluntary submissions vary. Some Medicare & Medicaid Innovation State Innovation employers wish to use APCD data for their own Model program and Transforming Clinical Practice analyses or to inform collective negotiations with providers or plans. Others participate out of a sense of Initiative. contributing to the common good. 15. States typically set a threshold for claims data 21. The APCD Council recently sponsored a collaborative submission, such as a minimum number of insured effort to define a Common Data Layout to minimize lives (e.g., 2,000 lives in Arkansas) or a minimum the burden on payers that submit data to APCDs in annual dollar amount of medical claims (e.g., $3 multiple states. Virginia has adopted the Common million in Minnesota). State residents may include Data Layout by statute and Colorado continues to dependents such as college students that live out of harmonize its data submission regulation with the state. layout. Some observers argue that states should strictly adhere to a common standard, while others contend 16. In Wisconsin, health plans that serve the state that states need flexibility to meet specific state policy employee benefit plan are contractually required to objectives. For example, Colorado requires health submit claims data on their enrollees to the APCD; plans to submit the “metal tier” of plans sold on the some other health plans as well as a coalition of self- state marketplace to allow research on associations insured employers also voluntarily submit data. between coverage, utilization, and costs. 17. State APCDs can obtain Medicare data for research 22. Maine Health Data Organization, Chapter 570, purposes through a state’s application to the Research Uniform Reporting System for Prescription Drug Data Assistance Center, or for use in provider Price Data Sets, effective Feb. 4, 2020. performance reporting by becoming certified as a Qualified Entity by the Centers for Medicare & 23. A forthcoming report from the Colorado APCD will Medicaid Services. WHIO plans to include Medicare describe how prescription drug rebates work, how they promote utilization of selected drugs, the size claims in the Wisconsin APCD by year end. of rebates, and their impact on trends in prescription 18. United State Supreme Court, Gobeille v. Liberty Mutual drug spending. Insurance Co., Inc. For an analysis of the ruling, see 24. For example, some states have enacted legislation Gregory D. Curfman, “All-Payer Claims Databases After requiring pharmacy benefit managers (PBMs) to Gobeille,” Health Affairs Blog, March 3, 2017. disclose whether prescription drug rebates are 19. Self-insured employers typically contract with retained by the PBM or passed through to insurers third-party administrators (TPAs) to manage their and consumers; see National Academy for State Health Policy, State Actions to Address Rising employee benefit plans. The TPA submits claims Prescription Drug Costs (Jan. 2020). data to the APCD on behalf of employer-clients that authorize them to do so. TPAs sometimes fail to 25. Victoria Udalova, “Enhancing Health Data (EHealth) comply with directives to submit data to APCDs, Initiative at the U.S. Census Bureau,” National requiring compliance efforts by APCD staff in Association of Health Data Organizations 34th cooperation with the employer. Annual Meeting (Nov. 7, 2019). commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 115 26. The Wisconsin Health Information Organization and 31. The number of insured lives included in the Virginia the Wisconsin Collaborative on Healthcare Quality APCD increased by approximately one million after are planning a joint venture to link claims data from the state mandated claims submission and expanded the APCD with clinical data from electronic health Medicaid. records to produce more accurate and comprehensive 32. Lovisa Gustafsson, Shanoor Seervai, and David comparative reports on cost and quality of care at the Blumenthal, “The U.S. Can’t Fix Health Care Without provider level. For additional examples, see Jessica Better Price Data,” Harvard Business Review (May 30, Toth, “The Curious and Complementary Relationship 2019). of the CO APCD and Electronic Healthcare Data from UCHealth,” National Association of Health 33. With funding from the federal Agency for Healthcare Data Organizations 34th Annual Meeting (Nov. 6, Research and Quality, the National Association of 2019); Mia Hashibe et al., “Feasibility of Capturing Health Data Organizations sponsored a Data Quality Cancer Treatment Data in the Utah All-Payer Claims Forum and a Data Quality Benchmarking Pilot Database,” JCO Clinical Cancer Informatics (Oct. 2019), Project to help state APCDs assess their capabilities 3:1-10. and identify areas for improvement; see Current and Innovative Practices in Data Quality Assurance and 27. In Arkansas and Virginia, APCD administrators are Improvement (NAHDO, 2019). also responsible for managing their states’ Health Information Exchanges (HIEs), which may facilitate 34.The National Association of Health Data future efforts to link clinical and claims data. Organizations (NAHDO), a nonprofit membership organization, sponsors events and workgroups 28. Episode grouper tools used by study sites include to facilitate state-to-state learning about APCDs. Prometheus Analytics, Optum Symmetry Episode The APCD Council is a learning collaborative of Treatment Groups, and the Milliman MedInsight government, private, nonprofit, and academic Health Cost Guidelines Grouper. Some tools also organizations convened and coordinated by the report on preventable complications and their costs. Institute for Health Policy and Practice at the See National Quality Forum, Evaluating Episode University of New Hampshire and NAHDO. The Groupers (NQF, Sept. 5, 2014). Council offers a Learning Network to assist states in 29. For a detailed analysis of state approaches, see Alyssa the development and deployment of APCDs. Harrington, Releasing APCD Data: How States Balance 35. Mathew B. Miles and A. Michael Huberman, “Cross-Case Privacy and Utility (Freedman Healthcare, March Displays: Exploring and Describing,” in Qualitative Data 2017). Analysis, 2nd ed. (Sage Publications, 1994). 30. Virginia Health Information reports a standardized proxy reimbursement amount based on allowed amounts but masked using Milliman’s Global RVU methodology. The conversion factor reflects allowed and paid charges within the Commonwealth of Virginia—a blend of all the allowed dollars by all the contributing insurance carriers. commonwealthfund.org Report, December 2020 State All-Payer Claims Databases: Tools for Improving Health Care Value PART 116 ABOUT THE AUTHOR Maine Health Data Organization: Karynlee Harrington, Douglas McCarthy, M.B.A., is senior research advisor for the executive director Commonwealth Fund and president of Issues Research, Inc., Minnesota Department of Health: Stefan Gildemeister, Ph.D., in Durango, Colorado. He has supported the Commonwealth director, Health Economics Program; and Karl Fernstrom, Fund’s work on a high-performance health system since manager, Health Data Services Center 2002 through the development of chartbooks and scorecards on health system performance and case study research on Minnesota Health Action Group: Deb Krause, vice president promising practices and innovations in health care delivery. Mr. McCarthy’s 30-year career has spanned roles in government, Minnesota Legislature: Scott Jensen, state senator corporate, and nonprofit organizations, including the Institute National Association of Health Data Organizations: Norman for Healthcare Improvement and UnitedHealth Group’s Center Thurston, Ph.D., executive director; and Denise Love, consultant for Health Care Policy and Evaluation. He was a public policy fellow at the University of Minnesota’s Humphrey School of New Hampshire Department of Health and Human Services: Public Affairs and a leadership fellow of the Denver-based Mary Fields, CHIS project manager and business systems analyst Regional Institute for Health and Environmental Leadership. Mr. McCarthy serves on the boards of Colorado’s Center for New Hampshire Insurance Department: Tyler Brannen, Ph.D., Improving Value in Health Care and the Peak Health Alliance. director of Health Economics; and Maureen Mustard, director of Healthcare Analytics University of New Hampshire, Institute for Health Policy and Editorial support was provided by Paul Berk. Practice: Jo Porter, director and cochair, APCD Council; and Ashley Wilder, project director Utah Department of Health, Office of Health Care Statistics: ACKNOWLEDGMENTS Carl Letamendi, Ph.D., bureau director; and Sterling Petersen, analytics lead The author thanks Lovisa Gustafsson, vice president of the Controlling Health Care Costs program at the Commonwealth Virginia Health Information: Michael Lundberg, CEO; and Kyle Fund, for guidance on the project, and the Communications Russell, director of Strategy and Analytics staff for editing and production. The author is grateful to the following organizations and individuals for sharing information Wisconsin Health Information Organization: Dana Richardson, and insights for the reports: CEO; and Jim Auron, director of Customer Solutions Arkansas Center for Health Improvement: Joseph Thompson, M.D., president & CEO; and Craig Wilson, J.D., director of Health Policy For more information about this case study, Arkansas Insurance Department: Allen Kerr, former please contact: commissioner; and Lesia Carter, assistant director and APCD Douglas McCarthy liaison Senior Research Advisor The Commonwealth Fund Center for Improving Value in Health Care (Colorado): dmcmwf.org Ana English, CEO & president; Cari Frank, vice president of Communication and Marketing; and Kristin Paulson, J.D., vice president of Innovation and Compliance See the second report in this series for insight on Colorado Department of Health Care Policy & Financing: John the uses and benefits of APCDs. Bartholomew, chief financial officer Freedman Healthcare: Linda Green, executive vice president; See the companion state profiles for more and Jonathan Mathieu, Ph.D., senior consultant information on each state’s APCD. commonwealthfund.org Report, December 2020 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the author and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.