Unequal Transparency: How Hospitals Report More Data than Any Other Entity in the Health Care Sector

Imagine if the government required health insurance and drug companies to account for every dollar they spent, audit those data, and publicly report those numbers. The pushback would be tremendous, yet that is the reality for hospitals and health systems operating in the U.S.

The complexity and volume of data reporting required from hospitals and health systems is far greater than any other entity in the health care sector. These data serve a range of purposes and are reported to a variety of federal and state governmental agencies, regularly audited and generally made public for scrutiny by policymakers, researchers, and patients, alike. However, hospitals also share data with a range of other organizations for a variety of purposes, including credit rating agencies and bondholders, and accrediting organizations. Despite this high degree of transparency by the hospital field, observers and critics often argue that hospitals aren't reporting enough data.

Below, we set the record straight on this important issue and why additional hospital reporting is not going to magically solve the pressing issues facing the health care field: 
 

• Hospital data reporting is comprehensive and widely accessible. Currently, hospitals report a variety of information to different audiences including through Medicare cost reports, IRS form 990 (Schedule H), audited financial statements, community health needs assessments, price transparency files and 340B annual registration requirements, to name just a few. Notably, these reporting mechanisms are the result of federal requirements only and do not include myriad hospital reports that may be required by individual states. These are all either publicly available through the government or easily accessible by the public through third-party websites. As a result of having to publicly report so much data in numerous forms through multiple different platforms, a common complaint is that there is no easy, clean singular source of data for hospitals. However, this approach fails to acknowledge that different audiences employ different data definitions that may serve one purpose but not the other. For example, CMS requires certain hospital data to set Medicare payment rates, which are different than the data a bond rating agency requires to set bond covenants and evaluate creditworthiness. Additionally, hospitals are not monolithic organizations — they vary widely in their size, patient characteristics, financial infrastructures, services provided and staffing needs. For this reason, a “one size fits all” data reporting structure would be difficult to operationalize.

• Existing hospital reporting is extremely costly, time consuming, and ever changing. The existing data reporting that hospitals comply with comes at a significant financial and labor cost that is borne entirely by the hospital or health system. For example, completing the annual Medicare cost report alone is an incredibly time-consuming and complex endeavor, requiring dedicated staff to manage this process, expensive software and, in some cases, consultants and auditors to ensure accurate completion. Another example is the detailed reporting hospitals are required to perform demonstrating the quality of the services they provide their patients.
  
   
• Hospital data requirements are constantly evolving as new and updated regulations are published or temporary crises arise. For example, during the COVID-19 public health emergency, hospitals temporarily were required to report detailed data such as infection rates, vaccination rates, level of staffing and daily counts of personal protective equipment. At the same time, regulatory changes through annual updates to the Medicare payment rules often require, for example, hospitals to report data on new or revised quality metrics. Under both scenarios, hospitals are forced to incur costs which can include additional staffing to manage new reporting requirements and modifying existing software systems to accommodate such changes. 
  
   
• Commercial insurers and drug companies are not held to the same data reporting standards as hospitals. For example, the publicly available Medical Loss Ratio (MLR) reported by Medicare Advantage insurers, which requires insurers to spend 80-85% of their premium dollars on medical care, is sparse compared to hospital data. The data not only lags as much as four years, but the data is often limited to just the contract MLR percentage, with no details about how the insurer is counting their medical care costs and revenues. Furthermore, these lax MLR reporting requirements not only provide no meaningful accountability to meet the 80-85% MLR requirement, but also create opportunities for insurers to take advantage of business verticals where they can count spending on their subsidiaries as “medical care” spending. Additionally, while the rate review process provides some transparency into how insurance rates are set, the details that are publicly available varies widely by state and much of the public information is at a very high level that makes any meaningful scrutiny difficult. 

Similarly, there is no public data transparency around how drug companies price their drugs, by how much those drug prices increase, and how much margin they achieve on each drug sold — it is complete “black box.” For example, a recent study published in the Journal of the American Medical Association estimated that it costs anywhere between $0.89 and $4.73 to produce a one-month supply of the blockbuster drug, Ozempic. The same drug is sold for nearly $1,000, earning Novo Nordisk, the drug’s manufacturer, a hefty margin on each dose of Ozempic sold. Similar margins are likely true for most drugs sold in the U.S., but the data to investigate this and lower drug costs for patients and providers is largely unavailable.

The current level of public data reporting by hospitals already provides policymakers, researchers, and the public with a comprehensive set of data points that far exceeds any public data reporting by other entities within the health care sector. Therefore, requiring hospitals to report even more data will do little to bring additional insights not already available. Instead, it would result in additional costs for an already financially strained hospital field and would divert staff time away from patient care to data reporting with no real benefit to lower health care costs for Americans.