California Payment Reform and Transparency Projects Pick up Momentum

June 25, 2014

Last week, the California Department of Insurance (CDI) announced that it would form a partnership with UCSF researchers to build a database of price and quality information to help health care consumers make informed choices about health care providers in the different regions of the state. The project, funded by the federal Department of Health and Human Services, will gather data from public and private insurance plans to compare the performance of providers on specific procedures and care for common conditions. This new information source will be an important step toward paying for the value of health care services, and away from just paying for the number of services, regardless of their impact on patients’ health.

Currently, insurers, employers, and consumers (depending on their role in the health care marketplace) are negotiating prices, choosing providers, and paying for services with fairly limited information about which providers have better quality, health outcomes, and efficiency than others. In other words, we consumers currently do not have a way to comparison shop based on price or quality. Health care costs contribute to a significant fraction of our personal budgets, and yet, we are expected to make (mis)informed decisions about expensive procedures of unknown quality.


You wouldn’t buy a smartphone or a flatscreen TV without comparing a few options and checking out consumer reviews of their quality and features, and, of course, you would want to compare prices. We should try to be similarly smart shoppers when it comes to choosing our healthcare providers.

An important part of the CDI-UCSF quality and price-reporting project is the inclusion of information about providers in both public and private insurance plans. The greater the number of payers and providers included in any data reporting or value-based payment system, the stronger the impact it will have on provider behavior across the state, or the country for that matter. Ideally, all payers (private insurance, Medicare, and Medi-Cal) should use the same provider incentives to steer the whole health care system toward providing high-quality care at a competitive price.

Similar ongoing efforts to improve health care data reporting and transparency have also led to the creation of the California Healthcare Performance Information System (CHPI). CHPI recently launched, first collecting data in 2013, and its purpose is similar to that of the CDI-UCSF partnership. It has collected data about quality and efficiency from Medicare and from Anthem Blue Cross, Blue Shield, and UnitedHealthcare. Still, reporting data to CHPI is voluntary, and the database does not include many large insurers and coverage programs, which limits its ability to push the system toward transparency and value-based competition.

Fortunately, the California Legislature is now considering a bill that would require insurers to report price and quality information to a new all-payer claims database (APCD). Payers would have to submit claims data about utilization, payment, and consumer cost-sharing. The measure passed the Assembly and awaits a vote in the Senate. This more comprehensive data source would do a great deal more to enable consumers, employers, and insurers to get a better idea of what they’re paying for, and whether or not they could get better value for their dollar with other providers. We can only truly begin to bend the cost curve when we can quantitatively pinpoint the inefficiencies in our health care system.

Again, one of the most important things about the APCD would be its ability to collect and compare data across many large payers in the health care marketplace. Comparing the performance and cost of providers in all of these types of coverage has the greatest chance of influencing how we make decisions about and pay for care. The transparency of an APCD would encourage all who pay for health care to move toward paying for value, which has a lot of potential to control health spending and improve health outcomes.