Public disclosure of Minnesota health care contracts may reduce competition

Responding to a request for comment, the staff of the Federal Trade Commission (FTC) has warned that the effect of a recently enacted Minnesota law providing for the public disclosure of state health care contracts posed a substantial risk of reducing competition in health care markets, the FTC announced today.

Minnesota recently enacted amendments to the Minnesota Government Data Practices Act (MGDPA) that would treat the state’s health plan contract terms as presumptively government records that the public could ask to see by making a freedom of information request. The Minnesota legislature delayed the application of the amendments until June 30, 2015, to allow time to consider their impact on the state health care markets. Subsequently, Minnesota Rep. Joe Hoppe (R-47B) and Rep. Melissa Hortman (D-36B) invited the staff of the FTC to comment on the possible competitive effects of the amendments.

The FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics commented that disclosing the negotiated terms of health plan contracts may offer little benefit to health care consumers but could pose a substantial risk of reducing competition in health care markets. For example, the MGDPA amendments may lead to the disclosure of competitively sensitive price and cost information that could enable health care providers to see what terms health plans are offering their competitors and to use that information against the plans during negotiations.

Such disclosure of price and cost information could also enable competing health care providers to agree in advance on terms that they each will offer to health plans, instead of trying to outbid each other by offering better terms to win the contract. These concerns are heightened in Minnesota’s health care markets that already see reduced competition as a result of having fewer competing providers.

The comment therefore urges the Minnesota legislature to strike a careful balance between beneficial disclosure of certain information that health care consumers would likely find to be most useful when they are choosing among competing health care providers and services (e.g., out-of-pocket expenses, co-pays, quality and performance indicators) and harmful disclosure of other information (e.g., negotiated fee schedules and other contract terms between health plans and providers) that would hurt consumers by reducing competition among providers, leading to higher prices, lower quality, or less choice.