Oregon’s All Payer All Claims Data Base Received an F

The author calls into question Milliman’s role as a healthcare clearinghouse and is the glue between Oregon’s two databases held by Q-Corp and the Oregon Health Authority. The Oregon Insurance Division contracts with both entities to review rates for individual and small group coverage. 

F. That’s the grade that Oregon, along with 46 other states, received from the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute (HCI3) in their recent report card on State transparency laws.

This should be no surprise since Oregon’s legislation for its All Payer All Claims database invokes the Oregon Uniform Trade Secrets Act. Francois de Brantes, the Executive Director of HCI3, tells me the “agents of the status quo“ prevailed despite his efforts to persuade legislators to remove trade secret protections before 2009 legislation for Oregon’s database was passed.

In 2013, the Rhode Island Office of the Health Commissioner debunked trade secret arguments in a bulletin, concluding, “disclosure of those price variations is necessary to enable providers to make cost-effective clinical referrals, care coordination, and other treatment decisions.” Indeed, with growing numbers of consumers in health plans that have large deductibles and high co-insurance, HCI3 sees a growing need for pricing and quality information.

Bundling high deductibles with incentive pay = higher MLRs

Milliman, a global private actuarial company, also advocates for transparency. Their suggestion for a “transparency cost network” is a “practical consumer-driven health care solution. “ Consumer-driven is synonymous for high deductible plans. Milliman recommends a “high out–of–pocket maximum (e.g. $5000-$10,000)… to ensure that the member’s connection to the cost is meaningful” through the vehicles that “align the incentives for providers to work with patients to make the most cost-effective choices.“

These days, it’s not fees-for-services that physicians negotiate but compensation that is supposed to be “fair market value.” The increasingly rare solo practitioner, struggling to remain profitable with new payment structures and care models, has no leverage with take-it-or-leave-it contracts.

Instead of a guaranteed salary, doctors are being paid incentive-driven compensation (or risk compensation) “linked to productivity and clinical behavior.” “Bundled care,” though global payments that follow patients through their “episode of care,”is supposedly the 21st Century antidote to high costs.

A $30 billion incentive program to go paperless began in 2009. Digital records still don’t flow smoothly among doctors, hospitals and patients; and measurable savings or widespread improvements have not been seen yet.

Researchers at the RAND Corporation and the Harvard School of Public Health evaluated Prometheus, a bundled payment model developed by HCI3. By the end of the 4-year study, the project failed to fully implement the payment model. Challenges to define “bundles” and payment methods, implement quality measures, determine accountability, engage providers and redesign delivery just couldn’t be surmounted.

Dr. Robert Painter, the senior program officer for the Promethus grants said, “Any payment reform that tries to rationalize the current state of misaligned incentives and data dysfunction is going to run into a horrendous buzz saw of problems.”

Insurance companies claim data warehousing and mining will provide better value for consumers and increase transparency. These costs ramp up the medical loss ratio (an indirect measure of premium dollars spent on administration, marketing, and profits) —regardless whether misaligned incentives and data dysfunction persist.  

That’s because the Affordable Care Act changed the formula from simply dividing claims by premiums, adding “quality improvement expenses” in the numerator and subtracting “expenditures on taxes, licensing and regulatory fees” in the denominator.  It will be impossible to follow the money to this bottomless pit.

Oregon’s transparency claims

How do Oregon’s All-Payer, All-Claims databases expect to provide better value for consumers when transparency of pricing is doomed?

The insurance industry works hand-in-hand with intermediaries known as a “health care clearinghouse.” Does a business or agency :

  • Process or facilitate the processing of health information from a nonstandard format or content into standard format or content or from standard format or content into nonstandard format or content?
  • Perform this function for another legal entity?

Answer, “Yes!” and your business or agency can be a “covered entity” with privilege to access personal health information.

Milliman Inc. qualifies as a healthcare clearinghouse and is the glue between Oregon’s two databases held by Q-Corp and the Oregon Health Authority. The Oregon Insurance Division contracts with both entities to review rates for individual and small group coverage. 

Q-Corp plans to merge claim data with clinical data. Mountains of metadata: pharmacy, laboratory, vital statistics, and immunization data linked to our names.This personal health information can tell a lot about a person without violating Oregon’s law to protect physician-patient privilege.

Prescription for Atripla: HIV positive. Antabuse: chronic alcoholic.  High doses of Livalo: high cholesterol and high risk for heart attack.

Milliman, as I wrote earlier, is one of the top purchasers of health information in the nation. The Federal Trade Commission found Milliman violated the Fair Credit Reporting Act in 2008 when they created and marketed “pharmacy risk scores” from pharmaceutical data they purchased using IntelliScript®, software they developed. Higher pharmacy risk scores implied higher medical costs and were used to make coverage decisions.

Milliman is paid to get Oregonians’ personal health information.

  • An OHA contract pays Milliman $4,856,675 from 1/27/2011 through 1/31/2016
  • Q-Corp pays Milliman for data aggregation: $436,040 in 2012

Q-Corp’s 2012 payment to Milliman amounted to nearly a third of its revenues that year. Coincidentally, nearly a third of Q-Corp's revenue comes from insurance companies.

Healthcare intelligence

Milliman boasts the broadest and deepest data sets from “a longitudinal research database of full medical and prescription drug claims experience for more than 80 million plan members annually. Our clients can go beyond peer comparisons to understand what they really need to succeed in new competitive and regulatory environments.”

Who are the clients that benefit from Milliman’s growing line of Healthcare Intelligence products—HealthcareEDU, MyRxConsultant, MedInsight®, Health Cost Guidelines®, and IntelliScript® (the software that generates pharmacy risk scores)? Milliman claims “no firm has a more complete understanding of insurance… from the nuances of various regulatory regimes to the patterns in policyholder behavior.”

Milliman Advanced Risk Technologies® are claims-based risk scoring tools that identify members with chronic or complex illnesses. Risk scores are implicated in higher rates paid for privatized Medicare Advantage plans. CMS estimates that from 2008 through2013, $70 billion of “improper” payments to Medicare Advantage plans resulted from up-coding, or overstating how sick patients were.

Milliman must comply with federal rules to make sure highly confidential information in Oregon’s databases is secure. Computers analyze metdata without violating HIPAA business associate contracts. Since trade secret laws protect proprietary software code, how would Oregonians ever know whether Milliman uses their software to further mine Oregonians’ personal health data to serve the insurance industry?

Maybe that’s why the Center for Consumer & Insurance Oversight stipulates that states awarded Rate Review Grants must locate data centers “at academic or other non-profit institutions.” These grants are intended to transform the way states review health insurance premium increases and enhance pricing transparency.  Yet the application clearly acknowledges a contract between Milliman and the Oregon Health Authority (OHA) to “collect and warehouse data on paid claims.”

Hearst and MCG

Moda Health uses Milliman Care Guidelines for “evidence-based guidance.” With the lowest cost plans offered through Cover Oregon, Moda reaped nearly all enrollment gains

Hearst Corporation acquired Milliman Care Guidelines and rebranded it MCG in 2012. MCG adds to its health care information businesses, Hearst Health, through a “consolidated presence across the clinical, pharmacy, home and hospice care, and health insurance markets” that reaches 75% of patients discharged from U.S. hospitals.

During the turn of the 20th Century, Hearst was infamous for yellow journalism, sensationalizing stories to sell papers and sway public opinion. In 1890, Samuel Warren and Louis Brandeis, published "The Right to Privacy" as a critical response to sensational forms of journalism, which they saw as an unprecedented threat to individual privacy.

The concluding part of this op-ed article will appear in next week’s alert.

Dr. Kris Alman retired from healthcare to become a citizen activist for a healthier democracy. She advocates for fair taxation to invest in our common goods--prioritizing education, renewable energy, campaign finance and healthcare policies and laws.