Markets Wired

Federal Trade Commission staff has submitted comments to Minnesota state legislators Joe Hoppe and Melissa Hortman in response to their request for comment on the possible competitive effects of a recently enacted law that could make contract terms for the State of Minnesota’s health plans subject to public disclosure.

The comment, submitted by staff of the FTC’s Office of Policy Planning, Bureau of Competition, and Bureau of Economics, concerns 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 can 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.

According to the staff comment, 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.

The Commission vote approving the comment was 5-0. (FTC File No. V150008; the staff contact is Elizabeth A. Jex, Office of Policy Planning, 202-326-3273.)

The FTC’s Office of Policy Planning works with the Commission and its staff to develop long-range competition and consumer policy initiatives, consistent with the FTC’s unique mission to conduct research and engage in advocacy on issues that affect competition, consumers, and the U.S. economy. The Office of Policy Planning submits advocacy filings; conducts research and studies; organizes public workshops; issues reports; and advises staff on cases raising new or complex policy and legal issues. To reach the Office of Policy Planning, send an e-mail to opp@ftc.gov. Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.