Analysis Examines the Implications of Price Transparency for Providers and Patients as New Rules Go into Effect

A new KFF analysis examines how new federal rules on price transparency for health services may affect patient decision-making and market pricing.

As of January 1, 2021, the United States Department of Health and Human Services requires that hospitals publish payer-negotiated rates for common services on their websites. A second set of rules, which requires insurers to provide rate and cost-sharing estimates for common services, is scheduled to go into effect in 2023.

While the new rules are intended to help patients save money by choosing lower-priced care, the analysis finds that many patients still face significant barriers to shopping for common health services. Many health services, particularly those that treat emergent conditions like heart attacks, cannot be planned for in advance, and awareness of price comparison tools among consumers is limited. The listed rates may not reflect patients’ final out-of-pocket costs if additional services, unaccounted for when the patient used the transparency tool, were received during the course of care.

The brief also presents new analysis of the significant geographic variation in prices for three common services covered under the price transparency rules: hip and knee replacements, MRIs, and cholesterol tests. The average price of a lower back MRI in Oakland, CA is $853 – over 144% higher than the average price in Orlando, FL ($349). Even within the same region, prices for a given service can vary dramatically: for example, a knee or hip joint replacement in the Houston, TX area could cost as little as $28,815 or as much as $45,775.

The analysis is available on the Peterson-KFF Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.