Rising medical costs and changes in federal policies are increasingly driving employers, insurers and pharmacy benefit managers to fight over access to workers’ claims data.
Carriers are pitching self-funded employers the largest rate increase since the start of the COVID-19 pandemic to account for rising provider expenses and increased member utilization, said Michael Thompson, CEO of the National Alliance of Healthcare Purchaser Coalitions, a nonprofit group of private- and public-sector employers and unions focused on healthcare purchasing.
Employers are asking insurance companies, pharmacy benefit managers and brokers to fork over their workers’ de-identified claims data to ensure the premium increases are justified. Their calls for information on their workers’ medical bills are not always met with open arms.
The lack of transparency has increasingly pushed employers to take the unusual step of suing their third-party administrators. It’s also driven employers to look for new partners to manage their health and pharmacy benefits, Thompson said.
“It is a perfect storm. This idea that we can charge anything and build hidden fees here, there and everywhere is gone,” Thompson said. “People are going to have to reexamine practices they've taken for granted, as if nobody's watching. Well, [employers] are watching now, and we're in a rapidly changing environment.”
Who owns the data?
Under the Employee Retirement Income Security Act of 1974, self-funded employers have a fiduciary responsibility to make sure they’re providing the best medical benefits for the best price to their employees. These companies pay all of their workers’ medical bills, but contract with insurers and pharmacy benefit managers to administer the plan, negotiate with providers and process claims. Sixty-five percent of workers who receive job-based coverage are enrolled in plans that are self-funded, according to a report last month from KFF.
Given that they outsource benefits administration, employers’ insight into what their workers’ healthcare costs actually amount to has historically been limited. But the Consolidated Appropriations Act of 2021 amended ERISA to require employer-sponsored health plans to have access to the data. Self-funded employers must submit their first annual report to federal agencies in December promising that their contracts with health and pharmacy service providers do not include gag clauses, which restrict access to providers’ price or quality data, and workers’ de-identified claims data. Employers that do not submit this attestation to the Departments of Labor, Treasury and Health and Human Services could face a fine of up to $100 per day for every plan member.
As employers renegotiate their contracts, third-party administrators are agreeing to employers’ calls to remove gag clauses, said Randa Deaton, vice president of purchaser engagement at the Purchaser Business Group on Health, a coalition of 40 large public and private employers that includes Walmart, Boeing and Microsoft.
But administrators instead sometimes shift the legal rights to workers’ claims to the non-disclosure agreements they hold with companies, Deaton said. The action effectively works to block employers from accessing the de-identified claims.
Pharmacy benefit managers are often unwilling to provide employers information about the compensation they receive from drugmakers or other entities for prioritizing their prescriptions on employers’ formularies, Deaton said.
“It has been a very difficult year for negotiations,” she said. “Negotiating with the plans or with their vendors is often like ‘whack a mole.’ You take care of one issue. Next thing you know, something else pops up.”
Insurance lobbying group AHIP did not respond to an interview request.
PBMs are complying with federal law by providing employers with information on their total drug spend, a Pharmaceutical Care Management Association spokesperson wrote in an email.
“Pharmacy benefit companies are complying with the rules of the program by reporting aggregate level prescription drug claims data in order to best protect patient privacy and improve the ability of the federal departments receiving the data to report on the information they receive,” the PBM trade group spokesperson wrote.
Taking the fight to court
The fight over whose data belongs to whom—and how much disclosure is required—has led some companies to court.
The Kraft Heinz Company sued Aetna last month in Texas federal court, alleging the CVS Health subsidiary violated ERISA by improperly leveraging its role as the novelty food and beverage manufacturer’s third-party administrator to generate $1.3 billion in excess profits. The company sued after it asked for its employees’ claims data and Aetna allegedly provided incomplete data and edited bills from a specific time frame. Aetna declined to comment.
In February, supply chain company Owens & Minor sued Anthem Blue Cross and Blue Shield of Virginia in federal court for the Elevance Health subsidiary’s alleged refusal to turn over its employees’ claims data. At the end of last year, unions representing bricklayers and other laborers in Connecticut sued Elevance Health in federal court, alleging the insurer blocked the unions from obtaining their own claims data to hide that it willingly overpaid providers. Elevance Health did not respond to an interview request.
The Consolidated Appropriations Act also requires companies that help self-insured employers structure their benefits offerings to disclose any payments they may receive for recommending certain vendors.
Willis Towers Watson, one of the largest such consultancies, complies with these federal requirements, said Courtney Stubblefield, managing director and insights and commercialization leader. The company is working with employers to get their claims data from health and pharmacy benefits providers, but negotiations with insurers and PBMs are tense, she said.
“We believe employers own their data, especially those that are self-funded. They're the ones spending the money,” Stubblefield said. “We continue to lobby on their behalf to get that data. It's a process, and there's work to be done in that space. We want full, complete transparency for our clients.”
