A tension between transparency and trade secrets has surfaced in North Carolina, where the state's largest insurer believes a new disclosure law will have unintended consequences.
Blue Cross and Blue Shield of North Carolina is asking the North Carolina Medical Care Commission to delay new hospital payment disclosures under the state's Health Care Cost Reduction and Transparency Act, amid concerns of the data exposing negotiated reimbursements and upending its contracting strategy.
Aimed at enabling comparison shopping, the law requires hospitals to publicize on a quarterly basis their payments across the five largest insurers for the 100 most common diagnosis related groups, or admission cases, and requires providers to disclose payments for the 20 most common outpatient imaging procedures and surgeries.
"For too long, North Carolina patients have been in the dark on what they can expect to pay for common medical procedures when they are admitted to a hospital," North Carolina Governor Pat McCrory said when the law was enacted. "This gives patients and their doctors pricing information so they can make an informed financial decision with regard to their healthcare."
The trouble is, Blue Cross and Blue Shield of North Carolina, being the state's largest insurer, may be singled out unfairly and indirectly, according to network management vice president Mark Werner.
BCBSNC covers around 70 percent of the state's commercially-insured population and hospitals are planning on disclosing volumes of DRGs along with de-identified payments. So although all the insurers will be de-identified in the payment database, consumers and other hospitals and rival insurers may well be able to figure out what BCBSNC is paying. Only BCBSNC has the large volume across the reported DRGs, with the fields representing other insurers likely to remain blank across more than a few DRG areas, Werner said.
Under the regulations developed for the law, hospital reporting "will have the unintended consequence of disclosing solely BCBSNC payment data" and "not the payment data of the five largest health insurers as contemplated by the Act," Werner wrote in a letter to the state Medical Care Commission, which is overseeing the disclosure system.
"As such, BCBSNC respectfully requests that the North Carolina Medical Care Commission and the North Carolina Department of Health & Human Services delay hospitals' first reporting under the Act to provide adequate time for the Commission, the Department, hospitals, and BCBSNC to work together to ensure that the Act's true purpose of providing reliable and transparent information to the citizens of North Carolina is met."
The insurer is not trying "to interfere with the reporting requirements or the Act's mandate for greater transparency," Werner wrote. But, he argued, there are grounds for delaying or amending the reporting -- North Carolina's proprietary information protections for businesses.
Under the North Carolina Trade Secret Act, "any information or formula that derives independent commercial value from not being known and is the subject of reasonable efforts to maintain its secrecy may qualify as trade secrets," Werner maintains. "Non-public financial information that has been properly protected has routinely been determined to qualify as a trade secret."
In other areas of disclosure, even to regulatory agencies, BCBSNC has steadfastly protected its competitively sensitive payment information and properly redacted documents and restricted access to such information and materials," Werner continued.
Nonetheless, BCBSNC maintains that it is committed to making healthcare more transparent, albeit through more consumer-friendly methods, across more data and without revealing trade secrets. A company spokesperson also noted that its online transparency tools let members compare cost and quality information across 400 procedures and episodes of care.
"We are advocating for more transparency, We believe that under the current regs many of the reporting fields will simply be blank," said spokesman BCBSNC Lew Borman. "Our concern is that consumers may not have access to enough data. Consumers want to know what a procedure costs and they want to be able to compare and project actual costs for a full episode of care, not a series of DRGs."
Whether or not this plea for more time resonates with the Medical Commission remains to be seen. Changing the law would require an act of the legislature, as Werner noted, although on the other hand, the law as implemented seems to run afoul of the state's trade secret act. The deadline for hospitals to submit the data has already passed, so only time will tell.