How Price Transparency Can Reduce Your Healthcare Costs

Updated on December 30, 2019
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Nicky is multispecialty Nurse Practitioner who is certified in Facial Esthetics (Botox and dermal fillers).

Increasing expenditures in the healthcare industry in turn lead to increasing costs for patients.
Increasing expenditures in the healthcare industry in turn lead to increasing costs for patients. | Source

Rising healthcare cost is a national issue that requires legislative attention. In 2015, healthcare spending equaled 3.2 trillion dollars, a whopping 17.8 percent of the nation’s gross domestic product (Wound Care Advisor, 2015). Unless controlled by regulations and consumer driven initiatives, healthcare spending is expected to increase over the next few years. Essential to facilitating value-based purchasing and curbing spending are strategies such as pricing models (Hilsenrath, Eakin, & Fischer, 2015). Thus, the movement towards healthcare cost transparency.

Price Transparency Initiatives

Price transparency initiatives and associated outcome metrics are geared towards consumers as well as stakeholders. Stakeholders include governmental bodies, insurers, providers, and employers. Cost transparency calls upon insurers to provide members with price estimates for various services, out-of-pocket estimates, outcomes and price information on in-network or out-of- network providers, and safety and outcome metric data.

Price transparency also calls upon government agencies to assume a comparable approach towards cost information disclosure prior to tests and medical procedures. Consumers should be provided with resources that support their understanding of healthcare price information and quality. Healthcare facilities, government agencies, employers, providers, and insurers should serve as front-line resources to facilitating consumers’ understanding of value purchasing. Well defined outcome metrics should be established to promote efficacy of cost transparency.

FL HB 1175 Transparency in Healthcare

Health Bill 1175 mandates the disclosure of financial and quality information, along with approximations of potential charges to consumers (Florida Senate, 2016). Certain health insurers are required to provide insurers with cost transparency websites that include methods by which consumers can predict certain costs. In addition, the bill mandates the provision of estimated payment ranges for healthcare services within geographic boundaries. HB 1175 was approved on April, 14th ,2016.

The Case for Price Transparency

The United States healthcare system is facing a rapid rise in healthcare expenditure. Furthering cost are increasing insurance premiums and deductibles. Consumer spending on high deductible health plans have increased by two million dollars from previous year, with approximately 16 million Americans covered under these plans (Zamosky, 2014). The rising cost of healthcare spending has created a movement towards price transparency. It is assumed that transparency regarding healthcare cost and quality will provide consumers with the necessary information to make more informed decisions. Consumers are expected to make decisions based on affordability and quality which will drive competition among providers and ultimately lower healthcare spending. Thus, price transparency is predicted to lead to saving of 100 billion dollars over the next 10 years (Zamosky, 2014).

Price Transparency vs Not Knowing

Woud you rather know the cost of your bill before buying?

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Interventional Studies

In a systematic audit of 46 pediatric hospitals and 39 state sponsored price transparency websites, Wong et al (2016) investigated the readiness and usefulness of cost information to consumers. The study revealed that cost information more readily available to consumers conveyed billed charges instead of out-of-pocket estimates. Adequate price transparency supports consumers’ competencies to compare prices across healthcare facilities. However, lack of patient specific out-of-pocket estimates present a challenge for consumers to properly assess affordability.

Price transparency has the potential to reduce cost; however, specific conditions must be in place to facilitate these initiatives. Price disclosure and value information must be readily available to providers as well as consumers to support consumer decision making prior to choosing a test or procedure. In a randomized controlled study design, Durand et al (2013) investigated the link between provider cost transparency and imaging utilization. Investigators identified the top ten most frequently used imaging tests at a 1025-bed facility; five tests were randomly assigned to the active group and five to the controlled group with cost displayed to the active group. Statistical analysis showed no difference in utilization between groups. The study found that provider only cost transparency does not affect imaging use.

In involuntary out-of-network occurrences, price transparency may not translate to lower healthcare cost. Kyanko, Curry & Busch (2013) surveyed 7,812 individuals in private health insurance plans concerning their use of out-of-network providers. Results suggested that most surveyors who used out of network providers did so involuntarily due to medical emergencies. A large percent of out-of-network users were also unaware of the provider’s out of network status, which affected cost transparency at time of use. Unintentional out of network care occurs frequently and should be considered when launching cost transparency initiatives. Limited provider choices and restrictions in in-hospital networks create a barrier to cost reduction, especially in medical emergencies, despite consumers’ prior knowledge of out-of-network cost.


Healthcare spending can be controlled by a well-made cost transparency plan. A well-designed cost transparency plan will depend on the needs of the focused population. An effective plan will provide price and quality disclosures to both providers and consumers. Cost and quality disclosures must be fitting to stakeholder level and presented in a consumer-friendly manner. Healthcare facilities, providers, government agencies, and insurers are responsible for ensuring consumer understanding of cost information and out of pocket expenses. Prior knowledge of out-of-network cost may not impact consumer choosing of certain tests or procedures due to unpredictable medical emergencies. Thus, further cost controlling measures are required to meet this challenge.


Durand, D., Feldman, L., Lewin, J., & Brotman, D. (2013). Provider cost transparency alone has no impact on inpatient imaging utilization. Journal of The American College of Radiology, 10(2),

Florida Senate. (2016). CS/CS/HB 1175: Transparency in health care. Retrieved from:

Frank, M., & Frank, M. G. (2017). How primary care physicians integrate price information into clinical decision making. Journal of General Internal Medicine, 32(1), 92.

Kyanko, K. A., Curry, L. A., & Busch, S. H. (2013). Out-of-network physicians: How prevalent are involuntary use and cost transparency? Health Services Research, 48(3), 1154-1172.

Wong, C., Faherty, L. J., Feingold, J., Town, R., & Werner, R. (2016). Price Transparency for children and adolescent healthcare in the united states: Still opaque in 2015. Journal of Adolescent Health, 58(2), 48.

Rate of rising healthcare costs slows. (2015). Wound Care Advisor, 4(1), 10-11

Zamosky, L. (2014). BUSINESS OF DERMATOLOGY. The challenges of healthcare price transparency. Dermatology Times, 35(10), 60-68.

This content is accurate and true to the best of the author’s knowledge and does not substitute for diagnosis, prognosis, treatment, prescription, and/or dietary advice from a licensed health professional. Drugs, supplements, and natural remedies may have dangerous side effects. If pregnant or nursing, consult with a qualified provider on an individual basis. Seek immediate help if you are experiencing a medical emergency.

© 2019 Nicky Fuller


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