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Transparency and Disclosure: Reform Bill Provisions

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Transparency and disclosure are vital, although largely ignored, issues in health care reform. Health care is the most expensive thing that we as a nation consume, and one of the most dangerous. We spend over 17% of our national income on health care. Far more Americans die each year from medical errors than from auto accidents. Yet far less information is available about either the price or quality of medical care than is available about auto prices or auto safety. Greater transparency in health care should be one of the major contributions of health care reform. This post first addresses some of the reasons why transparency and disclosure are important and then describes the transparency provisions in the pending legislation.

Public disclosure of information by and regarding health care providers, health insurers, and government health care programs can serve a number of purposes. First, disclosure is necessary if consumer choice is to be meaningful and competition effective. Disclosure of information regarding the cost, efficiency, and coverage of health plans is essential if consumers are to choose the most appropriate and cost-effective plan for their needs. Insurer transparency is also necessary if we are to rely on competition among health plans through the exchanges to hold down premium growth. Disclosure of cost and quality information by providers is also required to empower consumers to identify high quality providers who are most appropriate for their health care needs. Disclosure of provider charge information to consumers might even at the margins help control costs. Insurers might also be more effective at driving down provider prices if they had more information about the discounts providers offer to other insurers, although it is also possible that disclosure of provider prices could discourage providers from giving discounts and drive prices higher.

Competition is not the only reason why transparency is important, however. Disclosure is also important for accountability. For example, disclosure of conflicts of interest (involving, for example, provider self-referrals or of payments by drug and device companies to providers), may make consumers more critical of provider recommendations for services or more likely to shop elsewhere. Perhaps more importantly, the prospect of having to disclose conflicts may make conflicts less common. Drug companies may be more reluctant to make payments to doctors and doctors to receive payments if they know that the payment will be widely known. Similarly, disclosure of errors and quality deficiencies might encourage providers to improve safety and quality; while public disclosure of more information concerning insurance cost and coverage or of provider price information might encourage insurers and providers to moderate costs.

Provider and insurer transparency are essential if government programs regulating insurers or providers are to function. The Food and Drug Administration, for example, is dependent on post-marketing reports of adverse events involving drugs and devices to assure that drugs are in fact safe. Insurance regulators need information from insurers to determine whether premium increases are justified or whether insurers are complying with underwriting requirements. Fraud and abuse investigators need information about transactions providers engage in to assure program integrity.

Government transparency itself is also important. Public disclosure of information concerning the effectiveness of government regulatory or benefit programs might incentivize program managers to higher achievements or citizens to be more critical—or supportive—of those programs. Disclosure of conflicts of interest involving members of government commissions or of private entities that play a role in health reform might make such conflicts less frequent and salient. Finally, disclosure of insurer, provider, or government information might help citizens to be more effective policy advocates. (For more on the rationales for disclosure, see Bill Sage’s excellent article in the 1999 Columbia Law Review).

Although greater transparency and accountability in government is always to be desired, transparency in government programs can also provide a model for the private sector. The work that the Dartmouth group has done for years on variations in medical cost has only been possible because Medicare cost and utilization data are available to researchers. Medicare local and national coverage screens are readily available on the web. By contrast, private insurers and providers consistently keep this information secret, claiming that it is proprietary information. We know far less about cost and utilization in the private sector than we do in the public sector. This hampers the ability of researchers and of the public to understand how the private sector functions or could be improved.

What information should be available in health care reform? With respect to insurers we need a lot more information than is now available. Currently, as required by ERISA and state law, insurers generally make available to their members, and often to potential members, information on covered benefits, exclusions, cost-sharing, and provider networks. But consumers need to know more to make sure they are getting good value from insurers. Useful information could include, in addition to coverage and cost-sharing information:

  • Medical loss ratios. What percentage of premiums actually goes to pay for medical services, and how much is spent on administrative costs?
  • Actuarial value. This is in effect shorthand for the value of coverage and the impact of cost-sharing, but is a useful tool for comparing plans. Measurement of actuarial value should take into account the impact of out-of-network cost-sharing differentials.
  • Coverage guidelines, protocols, and formularies for particular products and services. It is not very useful, for example, to know that a plan covers for example, cancer chemotherapy if it in fact does not cover any that are prescribed off label. Medicare publishes its local and national coverage determinations online, and private insurers should do the same.
  • “Coverage facts labels,” that provide scenarios as to how coverage and cost sharing would apply with respect to common serious medical conditions.
  • Information on insurer performance that might indicate problems. This would include member satisfaction data and information on the volume of grievances and appeals; provider disenrollments, voluntary and involuntary; and member disenrollments.

(I draw on the thoughts of Karen Pollitz and Diane Archer here).

What might we want to know about providers? Certainly data on error rates and quality, including preferably outcomes data. Determining what and how much to disclose here may be problematic. Too much data will overwhelm and confuse consumers and overburden providers; too little will encourage providers to focus on reported items to the exclusion of other quality issues and provide a very incomplete picture of performance. The most easily accessible data, such as claims data, may have little relevance to quality; while data most relevant to quality may be hard to measure. Outcome data is usually the most important, but may be difficult to attribute to any particular treatment. It also may not be easy to provide accurate risk adjustment of outcomes data to reward quality rather than risk selection (and to not encourage discrimination against high risk patients and, often coincidentally minorities and the poor). Designing optimal quality reporting systems will be a long-term developmental process. But this process is already underway, and not having yet developed the perfect approach is no excuse for not making available information to the extent already possible.

Providing useful provider cost information is also not a straightforward process. One issue is the sheer volume and variety of products and services provided. One could ask for prices on the 20 or 50 most common DRG or CPT codes or most commonly used drugs, but providers can always jack up prices on ancillary services or tests that do not fall within that description. Further, not all payers pay on a code basis (most insurers do not do so for hospital services). There is also the problem of what information to disclose. Provider charges are useless if they are, as is commonly the case, wildly inflated above the actual prices that large payers pay. But the problems here too are not insurmountable. Payments for common procedures and tests could be provided, with more available on request. Here, as for other consumer products, once information is available experts can digest the information and figure out how to process it so that it will be useful for ordinary consumers. The average price negotiated with the two or three largest payers could be disclosed, as well as Medicare payment rates.

Finally, as new government entities are created in health care reform, it is important that they be transparent and accountable. The existing open meetings and freedom of information acts will presumably apply to new government entities. It is important, however, that they interpret the proprietary information exceptions to the FOIA very narrowly to avoid shielding cost and quality information that should be public. Also, as new entities are created under the legislation that are required to include experts and representatives of interested groups, it is important that conflicts of interest be fully disclosed, if not prohibited, to assure that the new entities serve the public and not just private interests.

What follows compares the two bills as they address transparency with respect first to insurers, then providers, then to the government. The Senate has on the whole much more comprehensive provisions for insurer disclosure than the House. The House bill is arguably stronger on provider disclosure, although neither bill is adequate. House provisions are listed first, followed by Senate provisions:



§ 215(b). Health plans must list providers who participate in their networks on their own website and on the exchange website. The Commissioner of Health Choices must establish an online system for consumers to identify which insurer networks providers participate in.

§ 217. Requires health plans to give 90 days notice of coverage decreases or cost-sharing increases.

§ 231. Requires the Commissioner to develop uniform marketing standards

§ 233. This is the primary insurer transparency and disclosure section of the bill. Exchange-participating health benefit plans must disclose in an accurate and timely manner and in plain language to the Commissioner and the public plan documents; plan terms and conditions; claims payment polices and practices; financial data; enrollment, disenrollment, claims denials, and rating practices data; and information on cost-sharing and out-of-network coverage. Employment-based health plans are to disclose to their participants terms and conditions and financial disclosure. Plans are also required to disclose information on enrollee and participant rights, and to allow individuals to determine the amount of cost-sharing that they will be responsible for with respect to the furnishing of an item or service by a participating provider in a timely manner on request, through the internet or otherwise. Insurers are also required to ensure transparency of their payment arrangements to providers. This section also requires pharmaceutical benefit managers to disclose information to health plans and to the Commissioner on the cost and volume of drugs, including generic usage, switching, etc., but the information is not available to the public except in aggregate form. Section 234 provides that § 233 only applies outside the exchange to the extent specified by the Commissioner.

§ 242. Requires Commissioner to collect data to promote quality and value, protect consumers, and address disparities. Requires Commissioner to develop standard definitions of insurance and medical terms.

§ 309. Purchasers of insurance sold under interstate compacts must be told that the policy may not be subject to all insurance laws and regulations of the state in which they reside.

§ 1173. Requires disclosure of medical loss ratios by Medicare Advantage plans and minimum MLRs of .85.


§1001 (creating §2715 of the Public Health Services Act). Requires the Secretary of HHS, in consultation with NAIC and others, to develop standards for compiling and providing a summary of benefits and coverage explanation for group health plans (including self-insured plans) and health insurance issuers. The standards must provide for a summary of benefits that:

  • Is in a standard format, not more than 4 pages, long, not smaller than 12 point type;
  • Is culturally and linguistically appropriate and in easily understandable language;
  • Uses uniform definitions of standard insurance and medical terms (to be developed by HHS);
  • Includes a description of coverage, including cost sharing;
  • Lists exceptions, reductions, and limitations on coverage for all essential services and other benefits;
  • Includes cost sharing provisions and renewability and continuation of coverage terms
  • Includes a “coverage facts label” that illustrates common benefit scenarios, such as pregnancy or serious chronic illness
  • States whether the plan provides minimum essential coverage (meeting the individual mandate’s requirements) or ensures that the plan provides not less than 60% of allowed benefits (and thus is adequate to keep employees from opting for the exchange instead of employer coverage)
  • Includes a statement that the coverage outline is just a summary and that the coverage document itself is the real contract, as well as a contact number to ask additional questions and a web address as to where the contract itself can be found.

The summary of benefits and coverage explanation are to be provided to applicants, enrollees, and policy holders. Enrollees are entitled to 60 days notice of modification of plan terms. Plans that fail to provide required information are subject to a fine of $1000 for each enrollee to whom the information was not provided. The requirements preempt any state standards that require less disclosure.

§1003, adding to the Public Health Services Act §2794. Requires health insurance issuers to post on their websites justifications for unreasonable premium increases. Also requires HHS to post information about increases and the justifications for increases.

§ 1103. Requires HHS to establish a website on which comparative information would be posted about insurers including medical loss ratios, eligibility, availability, premium rates, and cost sharing, consistent with the standards created under § 2715, described above.

§ 1104. Administrative simplification procedures are to support a transparent claims processing and appeals process.

§ 2717. Requires group health plans and insurance issuers to report to HHS and to enrollees on programs to improve health outcomes, reduce hospital readmissions, implement patient safety and error reduction programs, and promote prevention and wellness. HHS is to post reports on a website.

§ 2718. Insurance issuers are to report the proportion of their total premium revenue spent on clinical services, activities to improve health care quality, and other non-claim costs, excluding taxes and fees. HHS is to post the reports on the internet.

§ 1311. Exchanges are to rate plans based on quality and price and make information available to the public. Exchanges and qualified health plans are also supposed to provide standardized information found in the uniform outline of coverage described above to allow consumers to compare plans.



§§ 1156, 1411, 1451, and 1632 are program integrity provisions requiring disclosure of ownership interests and of conflict of interest situations. For example, nursing homes and specialty hospitals must disclose ownership information and drug and device companies must disclose payments to physicians.

§ 1783. Requires states as part of their obligations under the Medicaid program to establish a program to disclose hospital charges. Under this program, hospitals will disclose their charges for their most common inpatient and outpatient services, as well as how much Medicare and Medicaid pay them for those services. Hospitals that provide for reduced charges based on financial need must disclose the factors and formula that they use for reducing charges. Hospitals must provide this information to individuals seeking services and through an internet website. Hospitals are also supposed to disclose quality of care information that they are required to make publicly available under the MMA. This provision is effective immediately, but the states have two years to come into compliance.


§ 2718 of the PHSA, added by § 1001. Requires hospitals to establish and make public a list of standard charges for items and services provided by the hospital, including DRGS.

§§ 6001, 6002, 6003, 6004, 6101. Like the House bill, the Senate bill contains a number of program integrity provisions requiring disclosure of ownership interests in nursing homes and in self-referral situations and of information regarding payments by drug and device companies and drug sample distribution.


Both the House and Senate bills contain a number of provisions requiring new commissions, agencies, or programs established under the program to avoid or disclose conflicts of interest and to operate and promulgate rules and guidelines in an open and transparent way. These provisions include House bill sections 1401 (comparative effectiveness research), 1443 (multistakehoder input into quality measures) and Senate bill sections 2951 (maternal, infant, and early childhood visitation programs), 3911 (national strategy for quality improvement), 3014 (multistakeholder input in quality measurement), and 6301 (comparative effectiveness research).


Both the House (§ 2572) and Senate (§ 4205) require chain restaurants and vending machines to post the calorie content of items they sell and require that chain restaurants also have additional nutritional information available.

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The views reflected in this expert column are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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