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Editorial: Medicare Transparency

Information can be efficiency’s best friend. The more that participants in the marketplace know about the true costs and benefits of various goods and services, and about the behavior of other individuals and firms, the easier it is for them to get the most for their money. The U.S. health-care system notoriously lacks transparency, which may be a reason why it produces poorer results at higher cost than do systems elsewhere.

So one of the more encouraging recent developments in health care has been the Obama administration’s disclosure of data about how Medicare spends roughly $500 billion each year. Last month, the Department of Health and Human Services released the average charges for the 100 most common inpatient procedures, revealing wide and seemingly inexplicable price variations between neighboring hospitals. Last week, HHS produced average charges for 30 outpatient procedures from hospitals across the country.

Now a federal court in Florida has opened a legal pathway to even more Medicare transparency. Judge Marcia Morales Howard vacated a 33-year-old injunction that barred HHS from ever telling the public how much it reimburses individual health-care providers. The gag order was imposed in 1979 at the request of the American Medical Association, which claimed that its members’ financial privacy was threatened by a Carter administration attempt to reveal that information. Dow Jones, publisher of the Wall Street Journal, and other advocates of disclosure argued that doctors’ privacy is now outweighed by the public’s interest in knowing what happens to a flow of taxpayer funds that is many times bigger than it was in 1979.

Judge Howard ruled that the 1979 order has been superseded by subsequent federal court interpretations of privacy law — echoing an argument that the Obama administration, again to its credit, had made before the court.

That doesn’t mean HHS must immediately release all the data. Mandatory public disclosure remains the unrealized but laudable goal of a bipartisan Senate bill sponsored by Ron Wyden, D-Ore., and Charles E. Grassley, R-Iowa. It would require HHS to set up a free, searchable Medicare-payment database and clarify that there is no Freedom of Information Act exemption for Medicare payments to providers.

For now, Howard’s ruling simply allows the agency to entertain Freedom of Information Act requests for the data with a much freer hand. That is assuming, of course, that the ruling stands up to an AMA appeal — and the doctor organization says it is still weighing its legal options.

We would hope that doctors reconsider their position on this issue. Yes, Medicare is premised on their voluntary participation, in return for what they rightly expect will be respect for their legitimate privacy interests and those of their patients. But given the huge amounts of public money that Medicare funnels to providers — a significant portion of which leaks out in the form of fraud and waste — physician reimbursements cannot reasonably be considered purely private business information. Doctors should stop resisting the transparency movement and join it. After all, their profession is founded on a belief in free inquiry and the unhindered flow of useful information.

The Washington Post