Unfinished Business: An All Payer Claims Database

September 16, 2014

The 2014 legislative session ended on August 31, and one piece of legislation that we had been watching closely was AB 1558 (DeLeon). The bill would establish an All Payer Claims Database (APCD) in California by requesting that the University of California establish a dataset that would collect information about payments for health services from all payers in the state. The bill had been moving through the Legislature, but stalled in the Senate Appropriations committee. In August, it was placed in the suspense file and held under submission. Although the clock has expired for this session, we hope to see the legislation reintroduced, passed, and signed into law in 2015.

The impact of the law could be substantial and have far-reaching positive effects for California’s health care consumers and employers that offer coverage. Currently, the prices that insurers pay for health care providers’ services and the number of services providers offer are largely unknown. This spectacular lack of transparency in the health care marketplace is a problem because prices and service utilization both affect the level of cost-sharing and monthly premiums for consumers and employers. An APCD would allow consumers, employers, and insurers to know the prices of different hospitals and health practitioners for the same services. The database would also allow individuals to know the number of services for which providers have billed for a particular type of illness, episode, or group of patients.

AB 1558 would additionally incorporate publicly available data about patient outcomes and experiences. The combination of cost, utilization, outcomes, and experiences data would provider all purchasers a wealth of information about how these measures vary geographically, across facilities, specialties, and services. This transparency allows all purchasers and payers to focus on value, or getting the highest quality of service for their dollar. It will motivate providers to be more competitive on these metrics, allow insurers to assemble the most efficient and high-quality networks, and allow consumers to shop among the insurers based on their relative price and quality. Over time, these activities ought to lead to system-wide improvements in quality and cost containment.

For all of these reasons, consumers, and all health stakeholders, should not give up on creating an APCD in California. A more transparent, functioning, and competitive health care marketplace would benefit us all. We encourage the Legislature and Governor to tackle this problem in earnest by passing and signing into law APCD legislation during the next session.

For the analysis of the bill: