UDS: The Acronym You Didn't Know You Needed to Know!

The Health Resources and Services Administration (HRSA) collects data like patient characteristics, services provided, health outcomes, staffing, costs and revenues from certain health centers to evaluate operations and performance via the Uniform Data System (UDS).

This is NOT the UDS to which I am referring.?

Today, employers are hitting a brick wall when trying to get their own claims data from big carriers like Blue Cross Blue Shield, UnitedHealthcare, Cigna, and Aetna—often called BUCA.[1] These carriers often argue that the data is proprietary, confidential, or a trade secret, making it tough for employers to use the info effectively. In states like Indiana, even though a new law allows employer access to data unless it's a trade secret.[i] Good luck battling Anthem in Indianapolis over whether your claims data is a trade secret!

BUCA carriers, backed by big consulting firms, enforce strict Non-Disclosue Agreements (NDAs) and toss around the scary “HIPAA” acronym to keep employers from asking for or accessing their data. They claim it’s a HIPAA violation or a major risk cyber security risk not worth taking. Even if you get past that hurdle, BUCA’s general counsel will likely demand you demonstrate a business justification to their satisfaction in order to meet the "minimum necessary" standard under HIPAA, all aimed at scaring you away from your own data.

But here's the kicker: these same carriers hand over your de-identified claims data to big consulting firms twice a year in a standardized format, without your permission or compensation! This data exchange, known as the Uniform Data and Discount Specification (UDS), is used for RFPs and evaluations.

What is the Uniform Data System (UDS)?

The Uniform Data Discount Specification, or UDS, is a standardized compilation of book of business (BoB) discounts, developed by large health payors (BUCA) and benefit consultant organizations.[ii] It has become the “industry standard” according to firms like Milliman and ECG Management, for measuring and reporting on provider networks across various geographies.[iii] The stated purpose of UDS is to help self-funded plan sponsors identify which payors offer the most favorable healthcare pricing for inpatient, outpatient, and professional service types across different markets.? But it appears after years of delivering the status quo at higher and higher prices, it delivers only one thing consistently – an award to BCBS, United, Cigna and Aetna.?

A Bit More Background: ?The UDS began in the late 2000s as a response to the perceived need for self-funded plan sponsors to compare healthcare pricing across different markets. Before UDS, there was no standardized way for employers, or better yet, their trusted brokers and advisors, to evaluate the discounts provided by various payors. The UDS workgroup, which consists of representatives from participating payors, was formed to address this gap. They developed the specifications and guidelines for data submission, ensuring that the data collected would be comparable across different payors.

Initially, the focus was on creating a uniform way to report unit cost discounts from billed charges to allowed amounts. Over time, the scope of UDS expanded to include more detailed data on different types of services, such as inpatient, outpatient, and professional services. The data content is compiled and shared twice a year, covering a rolling 12-month period and including approximately six months of claims lag.[iv]

UDS data is then used by consulting firms to create reports that purport to compare the economic benefits of different health plans for RFP and vendor selection processes. These reports are frequently used by brokers to “guide” self-funded employers through the health plan selection process. Health plans that do not participate in the UDS process (smaller non-BUCA plans) are generally left out of these discussions, and therefore, left out of RFP and vendor selection processes by large brokers and consultants.[v]? Ever wonder why smaller more competitive health plans or different types of payer vendors didn’t make it on the “spreadsheet” of your broker/consultant?? I’m going to bet they aren’t part of the exclusive club that is the UDS ?“working group.”? ?

The limitations of UDS are significant and it would likely be more widely criticized if it were more widely known.? It is oversimplified, has inconsistent methods of calculating network discounts, and is designed to benefit the big players that belong to the BUCA club. And even within that club, there is one vendor that generally benefits more than the others when it comes to UDS – and that is the Blues. Blue plans often have the largest provider networks, which can lead to higher risk for plan sponsors due to frequent and deep claims exceeding outlier clauses. The sheer volume of claims and Blue's market dominance contribute to this issue, increasing per-member-per-month (PMPM) costs. Consequently, there's a need for better risk adjustment accuracy considering various case, provider, and service mixes.

Firstly, the data submissions can be inconsistent. The "uniform" in UDS is sometimes seen as "unstable" due to varying submission accuracy and the changing dynamics of the healthcare industry. Different payors may interpret the guidelines differently, leading to discrepancies in the data submitted. This inconsistency can undermine the reliability of the comparisons made using UDS data and because there is no real enforcement of regulatory mechanism to ensure the integrity of the data, it is what it is.

Secondly, the metrics used by UDS are often oversimplified. Network discount evaluations are typically presented as straightforward percentage discounts.? This is terribly misleading. These evaluations do not account for complexities like variations in service utilization patterns, the size and mix of the provider network, and actual charges billed. As a result, the evaluations can be vague and will produce inconsistent results, even within the same geographic regions.

Thirdly, UDS has a limited scope. The data collected does not fully accommodate important factors like population demographics, out-of-network utilization, and other costs charged to the plan sponsor. For example, out-of-network services, which can significantly impact total healthcare costs, are not adequately captured in UDS data. This limitation reduces the overall value of UDS in providing a comprehensive assessment of a payor's provider network.? But, given what we know about the massive profits derived by the carriers from their out-of-network recovery services provided to self-funded employers, we know why they wouldn’t want this to be a part of the evaluation math.?

Another issue is the method of claims repricing. While repricing efforts can provide additional insights, the lack of standardized methods among payors makes it difficult to compare repricing results reliably. Each payor undoubtedly uses different assumptions and methodologies, leading to variations in the conclusions drawn from repricing exercises. This inconsistency diminishes the usefulness of repricing as a tool for evaluating payor networks, when the assumptions and methodologies are not strictly controlled.? But again, there is a reason for this fluidity – as it will only ever benefit the large players.[vi]

How UDS Benefits BUCAs to the Detriment of Employers

BUCAs leverage UDS data to enhance their competitive positioning in RFPs and evaluations, overshadowing regional and smaller health plans. This strategic use of UDS data allows BUCAs to present themselves as offering more favorable pricing and discounts, which might not accurately reflect the true value and effectiveness of their provider networks.

For employers, this is a major disadvantage.? And at the same time, they are taking it on the chin twice because they are also being denied access to the very same data that carriers use for their own benefit. This lack of transparency and data access stops employers from making informed decisions about their healthcare plans and managing costs effectively.

Why Didn’t I know About UDS?

Details about the UDS working group, their governance structure, and any specifics about their operations seem to be not for public consumption. It's a good thing I downloaded the following UDS guidelines from 2020 when I did because they have been removed from the web in the last 8 months.? An excerpt from that document is telling, as it basically directs the working group to operate in a zone of silence:?

“The …UDS workgroup was created to develop a standardized data specification in order to simplify the data development process for carriers. The workgroup is only focused on what data elements should be included in the submission. No discussion of use is permitted at any UDS meeting. Any discussion about data use should take place directly between data submitters and data receivers.”

This lack of transparency makes it difficult for employers to understand how the data is used and to challenge the practices that may not serve their best interests.

Questions Employers Should Ask Their TPAs

First, ask for your data!? If you’re lucky enough to succeed in getting everything you asked for, well, you should get an award.? ?

BUT, ?if they don't or push back, I would suggest the following:

• First, reach out to me and I will provide you with the most recent UDS format that is publicly available.?
• Next, ask your carrier how frequently they deliver their data to consulting firms using the UDS and to which consulting firms it has been delivered over the last _ years (how many years have you been with your vendor).?
• If they dispute submission, then you should immediately ask for a three way call to contact your broker/consultant so that they can confirm that your carrier indeed, does not submit your claims information, even if part of the carriers entire BoB.?
• Once you have confirmed that your carrier submits claims data as part of this process, you should simply state: “Because you already have this data in a readily available format and provide it to third parties on a regular basis, I would like our claims data in a similar format on a more regular frequency.

Of course, they might look at you like you have two heads and tell you they have never heard of UDS and they do nothing with your claims data.? You should direct them to this article and the citations herein, which link directly to reputable consultants, actuaries, and other articles that reference the UDS submission process and validate everything I have just said.

Conclusion

The Uniform Data System (UDS) is crucial for evaluating payor networks, but its limitations and the opaque practices of major carriers pose significant challenges for employer plan sponsors. By demanding greater transparency and leveraging available data, employers can better navigate the complexities of healthcare benefits and make informed decisions that truly reflect the value and effectiveness of their provider networks.

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[1] https://news.bloomberglaw.com/daily-labor-report/employers-still-struggle-to-access-insurers-health-cost-data

[i] See HEA 1259, SECTION 14. IC 27-2-25.5-0.7 stating that third party administrator “must provide that the plan sponsor owns the claims data relating to the contract. However, a plan sponsor's ownership of the claims data under this section may not be construed to require the pharmacybenefitmanager or thirdparty administrator todisclose a trade secret (as defined in IC 24-2-3-2).”

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[ii] https://www.risk-strategies.com/blog/stuart-piltch-unveils-limitations-concerns-of-uniform-data-systems

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[iii] https://www.milliman.com/en/products/payer-network-check

https://www.ecgmc.com/insights/blog/3248/how-uniform-discount-reporting-can-helpor-hurta-health-plans-growth-strategy

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[iv] Id.

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[v] https://www.risk-strategies.com/blog/stuart-piltch-unveils-limitations-concerns-of-uniform-data-systems

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[vi] A prime example of this played out in the Montana State Health Plan when State awarded the contract for third party administrative services to Blue Cross Blue Shield of Montana over Allegiance in 2022 and a reference based pricing model.? This occurred as a result of, inter alia, the assumptions and methodologies that BCBS was permitted to use in its repricing analysis that skewed the results in BCBS favor – despite Allegiance likely delivering the best deal for the State.?