The Affordable Care Act is designed to accomplish three goals: expand access to affordable and comprehensive health insurance; improve the quality and efficiency of care; and constrain rising health costs. While the closely watched insurance marketplaces are key to these efforts, the health law gives policymakers other important but often overlooked tools. Among the most promising is the law’s new transparency framework. When implemented, its sunshine provisions will require health insurers to publicly report a wealth of existing industry data about coverage and claims.
These disclosures will enable policymakers to see, as never before, how private health insurance is working for real people (and how it is not); permit apples-to-apples comparisons across plans; and supply the hard data critical to health care payment and delivery system reforms.
Filling in the gaps. Existing public data sources describing health care usage and costs are valuable but marked by significant gaps. Policymakers have useful national data about hospital care and Medicare claims, for example. And more than a dozen states have taken steps, often with federal assistance, to develop all-payer claims databases (APCDs). By gathering claims data from an array of payers, APCDs can be an especially powerful tool for evaluating the performance of a state’s whole health system.
In general, however, detailed claims and coverage data for the private insurance market remain hidden from view. As a result, policymakers who want to better understand and analyze commercial insurance—the largest component of the nation’s health system, and one subsidized with significant taxpayer dollars—lack the robust information they need to do so.
The Affordable Care Act requires all issuers of nongrandfathered private health coverage to make timely, plain-language disclosures of detailed claims and coverage data to the U.S. Department of Health and Human Services (HHS), state insurance regulators, and the public. This obligation will sweep broadly once implemented in 2015: it applies equally to insurance offered inside the new marketplaces and out, to individual market policies, group coverage, and self-insured plans. For the first time, virtually the entire private insurance market will be subject to a uniform minimum standard of transparency.
What will insurers have to disclose? The health law lists eight categories of information that plans must make public, including:
- Claims payment policies and practices;
- Periodic financial disclosures;
- Data on enrollment;
- Data on disenrollment;
- Data on the number of claims that are denied;
- Data on rating practices;
- Information on cost-sharing and payments with respect to any out-of-network coverage; and
- Information on enrollee and participant rights under health reform.
The law also gives HHS the authority to identify and require the disclosure of additional data categories, which will be essential for nimble oversight of a rapidly changing industry.
These new transparency requirements can do much to fill existing information gaps and advance policymakers’ understanding of private insurance. For example, disclosure of information about claims payment patterns, including denials and appeals, can help regulators identify discriminatory practices and benefit structures.
The comprehensive enrollment and disenrollment data called for by the law, including information chronicling the reason coverage was terminated, can reveal how consumers respond to their insurance options and make it easier to spot unlawful market behavior. And detailed information about insurance product design, including data on cost-sharing and payments for out-of-network coverage, can expose trends in how plans construct provider networks, informing ongoing debate about network adequacy.
Equally important, the detailed claims information will illuminate patterns in health care usage and the prices insurers are paying for those services—data that until now have remained obscured. These data can be used to help consumers make better-informed health care decisions based on value, and to help policymakers as they develop evidence-based payment and delivery reforms.
Looking forward. While the transparency requirements will not take effect until 2015, policymakers can take important steps now to ease implementation. At the federal level, regulators can provide additional guidance regarding the reporting process, including identifying the specific information to be disclosed, the timing of those submissions, and their format.
In the states, policymakers may take legislative or regulatory action to facilitate information collection and compliance. For example, Minnesota incorporated the transparency requirements into its own law and additional states passed legislation formalizing their authority to enforce the federal provisions. Transparency-minded states may also decide to use the federal framework as a starting point, perhaps to enhance their own APCDs or to guide early collection of this information. States that lay the groundwork for the new disclosure regime now will be well positioned to identify how insurers are responding to the Affordable Care Act—both inside and outside the marketplaces—and how consumers are faring as a result.