The state Health Department inked a $168 million contract with Optum — the health services arm of insurance giant UnitedHealth – to build its health transparency tool in 2016, five years after a law authorizing the state to collect, store and analyze claims data from hospitals and insurance companies was passed. State documents outlining the project said that New York has “fragmented, inconsistent and incomplete” information about its healthcare ecosystem and that such a database was an “essential component of any healthcare payment reform.
So far the state has paid Optum $159 million for its work on the database, according to records from the state comptroller, but the archive is unavailable to the public. Optum, which earned nearly $227 billion in revenue last year, has yet to finish collecting the relevant data and has not made any claims information available to patients and researchers who want to better understand medical costs, according to the state. The database is currently only available internally to Health Department staffers.
The Health Department has chalked the delay up to logistical hurdles and challenges in collecting data from hospitals and insurers during the height of the pandemic. But in the meantime, New Yorkers continue to rack up high medical costs without adequate information.
The state spends more than any other on healthcare, an average of $14,000 per person in 2023. That’s 37% more than the national average, according to data from the U.S. Centers for Medicare and Medicaid Services. High medical costs have led to widespread medical debt statewide; more than 700,000 New Yorkers had medical debt in collections as of 2022, with half of those individuals owing $500 or more, according to a report from the Urban Institute, a Washington, D.C.-based think tank that researches social and economic policies.
“Patients have suffered; employers have suffered. We have all paid for this delay,” said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society, a Midtown nonprofit that helps patients navigate medical debt.
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Helping patients
The cost transparency database was intended to help New Yorkers like Shameeza Singh, a mother of three who lives in Queens Village. Her son, King, was diagnosed with leukemia at age 2, and she and her husband immediately got him into treatment. The family didn’t discuss costs with the hospital when enrolling King in chemotherapy at Northwell’s Cohen Children’s Hospital in 2016; they just wanted to get him care.
Even with Singh’s insurance, which covered 80% of her son’s treatment costs, her family owed thousands of dollars per week. After her husband left his job to manage King’s treatment, the family was left to survive on a single income.
After four years of treatment, King is cancer-free. But the financial impacts of his diagnosis and subsequent procedures have endured. Singh said she wishes she’d had more information to compare the costs at different health systems, saying that she would have traveled to hospitals in other parts of the city if it meant she wouldn’t be swimming in tens of thousands of dollars in medical debt. It’s unknown how much another hospital would have charged for King’s treatment.
“It has just been a financial nightmare,” she said.
Barbara Osborn, a spokeswoman from Northwell Health, said that the health system “recognizes the challenges that families can face when managing healthcare costs” and has a financial assistance program that serves households up to five times the federal poverty level. Osborn noted that the health system provides services to all patients regardless of their ability to pay.
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When New York passed the law authorizing its database in 2011, it was set to become a national leader. Other states had similar tools, with Maryland implementing the first all-payer claims database in 1995. But New York’s directory was designed to be even more comprehensive than its predecessors; it would compile information on healthcare prices from medical claims, as most other comparable tools do, but it would also make use of birth and death data, hospital discharges and insurance enrollment to paint the full picture of the state’s health.
Since New York began its contract with Optum, at least 23 other states have gotten similar databases up and running, according to the U.S. Department of Health and Human Services. The federal government also implemented its own rule to regulate hospital price transparency in 2021, requiring hospitals to publish a full list of their prices online to increase competition and mitigate rising costs.
“We were ahead of the curve in 2011,” Benjamin said. “Now we are so far behind.”
Optum did not respond to a detailed list of questions from Crain’s about what work it has completed on the all-payer database and its delay in executing the project.
Cadence Acquaviva, a spokeswoman from the state Health Department, told Crain’s that the general system development has been complete since 2018 and the state began collecting data from insurers in 2020. The pandemic presented challenges that prevented hospitals and insurance companies from quickly submitting medical claims to the state. Once the state finally started collecting the data from insurers, officials uncovered differences in the way companies decide to pay or deny a medical claim, making it difficult to assess and validate the data, Acquaviva said. The database currently processes 800 million patient healthcare visits each year and captures information on 15 million people with insurance coverage in New York.
“We are in the final stages of validating the data,” Acquaviva said, adding that the Health Department is still collecting information from commercial insurance companies and plans to open some data to the public next year.
Helping policymakers
The database was also intended to provide lawmakers with the necessary information to mitigate the rising cost of healthcare by better understanding the prices of elective services, enrollment in state health programs and hospital bills for additional charges such as facilities and overhead fees.
“It would give the public and policymakers a way to know where our healthcare dollars are going,” said Richard Gottfried, former Manhattan assemblyman and health chairman who helped devise the state law in 2011, noting that healthcare is now close to 20% of the state’s economy.
There are a “limitless” number of things that could be better understood in New York with more health data transparency, according to Paul Francis, chairman of the think tank Step Two Policy Project and a former health adviser under ex-Gov. Andrew Cuomo. The database could help agencies like the Department of Health or the Department of Financial Services build a consumer-facing tool to help patients and policymakers understand the price differences between shoppable services like mammograms or colonoscopies across different health systems. It could also help policymakers understand how many patients enroll in a popular state home care program that’s responsible for more than $9 billion in Medicaid spending each year – one of the biggest policy focuses in New York.
The Health Department acknowledged that the database is essential for patients and policymakers.
The database “is definitely one source that will support price transparency for healthcare, not just hospital price transparency,” said Acquaviva. The purpose of the database is to provide a “comprehensive picture of population health in New York State” and serve as a key data and analytical resource to support policy and research, she added.
And Singh agrees that the tool – and better hospital price transparency enforcement from all levels of government – would have helped her family tremendously.
“It’s the least that they can do,” Singh said.
This story first appeared in Crain's New York Business.
