After Gobeille: Can Federal Regulators Save All-Payer Claims Databases?

Editor’s note: Read more Health Affairs Blog posts on the Supreme Court’s recent ruling in Gobeille v. Liberty Mutual Insurance Co.

On March 1, 2016 the Supreme Court of the United States issued its first eight-member decision in Gobeille v. Liberty Mutual Insurance Co, 577 U.S. (2016) holding that Vermont could not require self-insured employers, and their third party administrators, to submit their health care claims data for use in the state’s all-payer claims database (APCD). The decision raises issues regarding the future of all-payer claims databases and how states interested in collecting claims data, such as Vermont, should proceed.

The case, on appeal from the Second Circuit, addressed whether the Employee Retirement Income Security Act of 1974 (ERISA) preempted Vermont’s state law requiring all health insurers to provide data for their APCD. Earlier cases, including New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) established that a state law is preempted by ERISA “if it has a reference to ERISA plans or if a state law has an impermissible connection with ERISA plans.” Gobeille No. 14-181 slip op. at 6 (U.S. Mar. 1 2016). Liberty Mutual’s argument was that the Vermont statute interfered with the “uniformity of plan administration” and hence, “had an impermissible connection with ERISA plans.” Essentially, since lawyers can argue that everything relates to everything else, an ERISA analysis begins with the question of how closely the state statute relates to ERISA.

In the 6-2 decision handed down last week, the majority opinion, authored by Justice Kennedy, with Chief Justice Roberts and Justices Thomas, Breyer, Alito, and Kagan joining, held that “ERISA’s extensive reporting, disclosure, and recordkeeping requirements are central to and an essential part of the uniform system of plan administration contemplated by ERISA and that the State statute interferes with this nationally uniform plan of administration.”

An Opening For The Department Of Labor To Act?

In oral arguments, in December 2015, as reported by SCOTUSblog, Justice Breyer’s position was that “the Vermont rule would be preempted unless the Department of Labor adopted regulations validating it. As Breyer said, ‘I think the agencies have a lot of power there, and I think they have more capacity to decide this kind of thing than a group of judges.’” SCOTUSblog went on to note that “[Justice] Scalia scoffed at the idea that an agency can alter the preemptive effect of a congressional enactment.”

In his written concurrence, Justice Breyer wrote:

Pre-emption does not necessarily prevent Vermont or other States from obtaining the self-insured, ERISA-based health-plan information that they need. States wishing to obtain information can ask the federal government for appropriate approval. As the majority points out, the ‘Secretary of Labor has authority to establish additional reporting and disclosure requirements for ERISA plans.’ Gobeille, No. 14-181, slip op. at 2. (U.S. Mar. 1, 2016)(Breyer, J., concurring).

While no Justices joined Breyer in his concurrence, the majority opinion by Justice Kennedy, in dicta, noted that:

The Secretary of Labor, not the States, is authorized to administer the reporting requirements of plans governed by ERISA. He may exempt plans from ERISA reporting requirements altogether…and, he may be authorized to require ERISA plans to report data similar to that which Vermont seeks, though that question is not presented here. Either way, the uniform rule design of ERISA makes it clear that these decisions are for federal authorities, not the separate states. Gobeille, slip op. at 10.

Note that the court did not say that the Secretary of Labor can require ERISA plans to report such data, rather that it may be possible but it is not within the scope of this case.

Following the Court’s decision, advocates for all-payer claims databases are finding hope in the Breyer opinion. The appellant, Alfred Gobeille, chair of the Green Mountain Care Board, said, “I think that the justices gave us clarity, they said, ‘No, you can’t do this this way, but the (U.S.) Secretary of Labor can do this and should do this and should work with the states to figure out how to do it.’” Gobeille went on to say that “states that want to maintain similar databases can now come together and ask the U.S. labor secretary to enforce health care claims data reporting for ERISA companies.”

SCOTUSblog noted on March 2 that the opinion:

leaves the Department of Labor in something of a box. The department’s brief in the Supreme Court suggests that it is important to the practical success of the ACA for the States to collect and analyze the data that is shut down by this case. But if the Department adopts the regulation that Justice Breyer suggests to permit the State databases to continue, insurers have a roadmap for challenging the regulation: the Court has held that ERISA preempts those databases, and some Justices probably share Justice Scalia’s view that yesterday’s holding necessarily bars any such regulation.

Since the Supreme Court left the door slightly ajar for the Department of Labor to act, the question remaining is whether this is a real solution.

Will A Regulatory Approach Save The Day?

For a moment, let’s assume, even though it remains an open question, that the Department of Labor can legally develop regulations to compel ERISA plans to contribute data “through” the federal government such that the states can add these data to their other data holdings. There are a number of potential problems associated with this proposed solution. These include, among others:

The federal government may not be able to properly collect or may choose not to release the data

• The Department of Labor has limited experience collecting or supervising the collection of the kind of information states want. Annual reporting by ERISA plans historically is through the Form 5500 (a 3-page document) and Schedule A (a 4-page document), which only collects summary insurance information.


• Reliance on the goodwill of the federal government to get the data to the states in the desired manner may be misplaced. Qualified Entities were relying on the recently enacted Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to gain access to Medicaid data only to apparently have this path cut off by the proposed new Centers for Medicare and Medicaid Services (CMS) rules. Similarly, many have criticized CMS for years over their data release policies.

Federal policy may mean inflexibility for states

• The states may not be thrilled with the standards adopted. Regulations are likely to prescribe both what and how often entities need to report. Currently, some state all-payer claims dataset initiatives are collecting data on a monthly basis, some on a quarterly basis, and some on an annual basis. A national ERISA data dictionary also may not align with variables collected by states for non-ERISA plans. A separate ERISA standard could necessitate costly changes and aligning the two data flows governed under different regulatory regimes may undermine the utility of the data.


• A regulatory approach to data collections is likely to be somewhat inflexible, since proposed changes in data collections would likely have to go through a rule-making process.

It is not known at this time how many ERISA plans may actually opt out of participating in these data-sharing activities in the absence of federal action by the Department of Labor. But real standards, that significantly reduce compliance costs, may permit voluntary flexible schemes to succeed even though they do not include all payers. Waiting to see how this plays out may make more sense before rushing to a potential federal solution.