[T]he Vermont Attorney General’s Office will make oral arguments in front of the U.S. Supreme Court on Dec. 2 in a case about health care price transparency that will set national precedent.
The Supreme Court will ultimately decide whether the state of Vermont can force an insurance company to hand over data regarding health insurance claims. A ruling on the matter is expected next year.
At the heart of the lawsuit is whether Liberty Mutual Insurance Co., which self-insures 80,000 workers’ health insurance across the country, should be required to submit health care claims data to the Green Mountain Care Board, a state regulatory agency.
The board wants to use the information to regulate health care and change payment structures. The Green Mountain Care Board already has information from some insurers, and they’re using similar information from government programs to implement cost-savings through accountable care organizations.
Mike Donofrio, general counsel for the Green Mountain Care Board, said the board uses the data to better understand cost and utilization across the state and “to make more informed policy decisions.”
The board has also considered using an all-payer claims database, called Vermont Health Care Uniform Reporting and Evaluation System, or VHCURES, to improve health care price transparency. In the current market, insurers pay different prices for the same health services and end users rarely know how much health care costs.
Liberty Mutual has been in a legal battle with Vermont since 2012 in an effort to keep claims information proprietary. The company argues that the federal Employee Retirement Income Security Act, which governs self-insured employee benefit plans, pre-empts state rules requiring the company to submit claims data to VHCURES (pronounced VEE-cures).
Vermont has backing from several statewide and national interests, including the U.S. Solicitor General, 18 states, the District of Columbia, Harvard Law School and the American Medical Association.
Gobeille v. Liberty Mutual Co.
Liberty Mutual is based in Massachusetts and self-insures just 137 people in Vermont, according to documents filed with the U.S. Supreme Court. The company uses Blue Cross Blue Shield of Massachusetts — under the umbrella of the Blue Cross Blue Shield Association — to administer the plan.
In 2012, after the Vermont Department of Financial Regulation subpoenaed Blue Cross Blue Shield of Massachusetts to submit the data, Liberty Mutual sued Vermont in U.S. District Court in Burlington. The court sided with Vermont, saying that the state mandate was meant to improve health care administration, and was “so peripheral” that it could not interfere with the federal Employee Retirement Income Security Act.
Liberty Mutual then appealed the decision to the U.S. Court of Appeals for the Second Circuit in New York City. In February 2014, the appeals court issued a 2-1 decision in favor of Liberty Mutual. The court found that the federal law pre-empted Vermont’s reporting law.
The justices argued that the federal law already addresses reporting on employee benefit plans, and that the federal law was meant to avoid burdensome, redundant state regulations.
The state of Vermont appealed to the U.S. Supreme Court, and the court agreed in June to hear the case. Bridget Asay, Vermont’s solicitor general, is the lead attorney for Vermont.
Bill Sorrell, the Vermont attorney general, said that while Liberty Mutual is a small participant in Vermont’s marketplace, the wrong decision could leave the state “hamstrung” in trying to get access to further claims data.
“If states are going to play more active roles in the regulation of the health care system then information is hugely important,” Sorrell said in an interview.
A spokesperson for Liberty Mutual did not return an emailed inquiry for comment. In June, Liberty Mutual said it “looks forward to the Supreme Court’s review of this issue.”
Legal arguments for Vermont
Vermont argues that the Employee Retirement Income Security Act allows “generally applicable state health care regulations,” and the 2005 state statute does not violate federal law.
The U.S. solicitor general, the third major party in the case, supports Vermont’s arguments. Donald Verrilli’s office argued that ERISA already imposes reporting requirements on plans, including financial and actuarial information.
“The Vermont reporting requirements, however, have an entirely different focus,” the U.S. solicitor general wrote. “The information submitted to the board enables it to populate a database that is designed as a tool to assess and improve outcomes for Vermont residents.”
“The reporting requirements have nothing to do with ERISA’s principal concerns with the soundness of plans and the actions of plan fiduciaries in administering plans and paying promised benefits,” the U.S. solicitor general wrote. “They are therefore ‘quite remote from the areas in which ERISA is expressly concerned.’”
More than a dozen states and the District of Columbia, led by New York, support Vermont in the same friend-of-the-court brief. The states argue that states are entitled to claims data because states will use the information to regulate health care, “a traditional responsibility of state government.”
The states say access to the data could provide greater price transparency to consumer and ultimately lower health care prices.
Currently, the health care market allows government programs and commercial insurers to pay different rates to the same doctor for the same procedure and impose different billing codes for treatments. Consumers remain insulated from price information.
The Harvard Law School Center for Health Law Policy and Innovation argues that the federal Employee Retirement Income Security Act requires employers to disclose substantially different information than the Vermont law on VHCURES would.
In an amicus brief, or friend-of-the-court filing, Harvard argued that federal law requires employers to disclose information about financials — like current assets — while Vermont is requesting claims data in order to help the state shape health care policy.
“Furthermore, because all insurance plans will have this information already aggregated into their own databases, the Vermont statute will not substantially impact how benefits are administered to beneficiaries or mandate certain benefit structures,” the law school wrote.
Legal arguments for Liberty Mutual
Liberty Mutual argues that the Employee Retirement Income Security Act pre-empts Vermont’s law because it covers a “core subject matter” and that it “interferes with nationally uniform plan administration” and regulation.
Several other groups have filed legal opinions in support of Liberty Mutual — including the American Benefits Council, the ERISA Industry Committee, the National Coordinating Committee of Multiemployer Plans, the New England Legal Foundation, and the U.S. Chamber of Commerce.
The Blue Cross and Blue Shield Association, the national umbrella organization for Blue Cross Blue Shield of Massachusetts, favors Liberty Mutual’s stance. The organization wrote that Vermont’s law imposes heavy administrative burdens on self-insured health plans.
The insurer said “a substantial majority” of its business is administering self-insurance plans. If federal law no longer pre-empts state statutes, Blue Cross Blue Shield Association member companies would have to comply with new state rules governing ERISA.
“Notably, Vermont’s law does not require reporting only from third-party administrators or insurers stationed in Vermont, but from an entity — seemingly anywhere — that processes or insures benefits for a Vermont resident,” the organization wrote.
Darcie Johnston, who runs Vermonters for Health Care Freedom, supports the Liberty Mutual arguments. Johnston believes state access to health data could lead to privacy protection breaches.
“We are very, very concerned about the security of this data,” Johnston said. “It’s too small a state to have that be completely not-identifiable.”
