A state health claims database meant to illuminate costs still has not launched more than a decade after officials first announced it. The delay is contributing to skyrocketing medical spending, according to a new report from a nonprofit seeking to reduce health costs.
State lawmakers passed a law in 2011 to establish a public-facing “all payer database,” a tool to compile claims from health insurers and hospitals in a single place. The archive is supposed to bring opaque medical prices into the public eye to arm researchers and policymakers with information about why medical costs are so high and help them develop solutions.
Yet 14 years and more than $160 million later, the state has not launched a functioning database as health costs continue to rise and patients rack up medical debts. Overall health care spending in New York rose 56% over the last decade, outpacing the 30% increase in median household income during that time, according to a report published Monday by the Midtown nonprofit Community Service Society, which helps New Yorkers navigate medical debts.
Launching the all payer database is essential to the state’s effort to reform and reduce medical costs, according to the society. It also recommended that the state implement an independent body to review health care transactions and analyze costs, following in the footsteps of states including Oregon and California, as well as pass legislation to curb how much hospitals can charge in outpatient settings. New York’s failure to launch a functional claims database hinders efforts to mitigate costs and puts it steps behind other states that have launched transparency measures, the report says.
Colorado, for example, launched an all payer claims database in 2012 and regularly publishes price information for policymakers as well as a consumer-friendly tool for patients, according to the report.
“Other states have woken up and smelled the coffee,” said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society and one of the authors of the report. “It’s time for someone to do something.”
Lawmakers passed a bill to create the all payer database because of concerns that they lacked information to mitigate high health care spending. The state initially planned to launch a patient-facing tool to help consumers navigate price discrepancies between different hospitals, but it abandoned those plans under Gov. Kathy Hochul, the Capitol Pressroom reported last year.
The Health Department in 2016 inked a $170 million contract with Optum, a subsidiary of the Minnetonka, Minnesota-based insurance giant UnitedHealth, to help establish the database. The agency paid Optum $164 million as of early this year, state records show, but there is still no health claims data available to the public.
Health officials previously told Crain’s that delays in getting the database up and running were caused by logistical hurdles and challenges in getting information from hospitals and insurance companies during the height of the pandemic. But attention on New York’s high medical prices have renewed concerns about the agency’s delay on the database.
The stalled database is not the sole reason why health costs continue to rise, the report said.
Health care spending in New York has tripled over the last three decades, following a series of policies in the 1990s to deregulate hospitals and insurers under former Republican Gov. George Pataki, according to the report. The state also “gutted” its health planning apparatus, Benjamin said, consolidating regulatory bodies tasked with reviewing the establishment of new health care facilities and changes in ownership into the Public Health and Health Planning Council.
The Health Department is “finalizing development, testing and validation of all payer data” to help a range of stakeholders use the information effectively, said Danielle De Souza, an agency spokeswoman. The agency expects to release its first data files by the second quarter of 2025, she added. State Health Commissioner James McDonald refused to say when exactly the agency planned to finalize the database in a budget hearing earlier this month, but said that he hopes it will come together by the end of the year.
“I’m hoping for 2025,” McDonald said during his testimony. “I inherited a lot when I got to the department. I’m aware of the problem and I’m trying my best to fix it.”
