From Transparency to Action: Turning Price Data Into Lower Costs

Am J Manag Care. 2026;32(Spec. No. 6):eSP1-eSP4. https://doi.org/10.37765/ajmc.2026.89928

Health care prices in the US have long remained opaque, resulting in large and unclear price disparities for the same service across different providers and regions. An MRI scan that Medicare pays $222 toward may cost you $125 at an imaging facility or $2565 at a hospital. For decades, patients and employers have been blind to these wide cost variations due to a lack of accessible and reliable pricing information. However, in recent years, the emergence of price transparency data has started to unveil the realities of these price differentials.^1,2 Understanding price differentials is an important part of uncovering solutions for lowering health care costs and spending, such as choosing lower-priced networks and steering patients to lower-cost providers. In this article, I argue that the US health care system can significantly lower its costs without limiting access to care. By reframing how we think about prices, we can push employers, providers, and patients to value cost-effective care.

The Historical Opacity Problem

Unlike most industries, health care in the US has long operated with prices hidden from consumers. When buying cars or electronics, posted prices enable comparison and smarter choices before the purchase is made. However, in health care, patients often learn the true price of care only after the service has taken place, limiting their ability to make cost-informed decisions. This opacity was largely intentional: Insurers and hospitals kept negotiated rates secret through contractual gag clauses.^3,4 Combined with the introduction of multiple intermediaries (ie, hospitals, insurers, billing firms, and others), confusing billing codes, and complex negotiation dynamics, true prices were further obscured, producing frustration instead of clarity. The consequences of pricing opacity are severe. Weak transparency and limited competition have helped drive soaring health care costs, and employer-sponsored family premiums now average approximately $27,000 annually, constraining wages and business activity.³ Patients also face unexpected bills: Approximately 1 in 5 insured adults report receiving a surprise medical bill, often tied to out-of-network care.⁵ Low-value care contributes to an estimated 25% of US health care spending being wasted.⁶ Greater transparency would support competition, choice, and accountability.

Examining Price Variation

Price variation does not just occur across markets and services; it also emerges between networks and providers. Understanding price variation across networks and across providers is critical for directing stakeholders to higher-value care and empowering them to make better-informed choices.

Figure 1 shows the variation in negotiated rates for a lower limb joint replacement at the Metropolitan Hospital Center in New York City (each figure used the most recently available data at the time of writing). Using data made available through the Hospital Price Transparency rule, the figure illustrates large price variation across different payers. Surgery for people insured with Fidelis will cost more than 2.5 times what surgery for Aetna members will cost. Meanwhile, patients who pay cash (self-pay) will pay 27% less than Aetna members. Members of the 1199 Union will pay even less than self-pay patients. Understanding the price variation that different insurers have negotiated is critical for employers or other purchasers when deciding which network to use. Choosing a network based on administrative expense is shortsighted, as the underlying negotiated rates will ultimately have a much larger impact on how much an employer will pay. Because employers can choose their network, this type of information can be especially valuable when it comes to evaluating their options.

Along with employer network choice, patients’ choice of providers and hospitals also influences health care costs. Even if an employer has selected a low-cost network, identifying the lowest-cost providers in that network is still an important step for cost containment. Using payer-released data from Transparency in Coverage files, Figure 2 shows how negotiated rates for a lower limb joint replacement vary under UnitedHealthcare at various hospitals in New York, New York. As evidenced by the figure, choosing to have the service performed at the Metropolitan Hospital Center would cost 40% less than at NewYork-Presbyterian Hospital. Helping beneficiaries navigate to lower-cost hospitals and providers is key to decreasing costs, as every network has a range of prices. Although care navigation is a complex issue, it offers a useful opportunity for stakeholders to drive toward lower-priced care.

Price variation is not just limited to the commercial market; it’s also visible in Medicare, which has significant implications for federal health care spending and cost-sharing responsibilities for millions of beneficiaries.⁷ Figure 3 shows the range of Medicare rates for a lower limb joint replacement across hospitals in New York, New York. Two hospitals are extreme outliers: Bellevue Hospital and Metropolitan Hospital Center. Both hospitals serve a large lower-income population and therefore qualify for uncompensated care payments. For each admission for diagnosis related group code 470, the Metropolitan Hospital Center receives an additional $56,950.46, and Bellevue Hospital receives an additional $27,613.83 in uncompensated care payments. In comparison, the other hospitals in the figure receive from $0 to $869.62 in additional uncompensated care payments. Factors such as graduate medical education payments, disproportionate share hospital payments, and value-based purchasing modifiers all impact how much hospitals get paid. When examining the lower-cost hospitals, prices range from $23,206 to $28,205—a 21.5% difference. For Medicare beneficiaries and taxpayers supporting Medicare, a price reduction of more than 20% can have considerable impact.

Price Transparency as an Emerging Solution

For a meaningful subset of planned, shoppable care, lowering health care costs is achievable with tools we already have. Significant savings can be achieved by observing price variations, acting on them, and intentionally choosing lower-cost providers. If sufficient volume shifts from high-cost to low-cost providers, there will be an economic imperative for providers to lower their prices to attract more patients. For planned, shoppable care in competitive markets, steerage plus volume shift can pressure high-priced providers. Although this will not work for every type of care, many expensive, planned operations (including many surgeries) can be selected based on price.

Access to newly available data is necessary but not sufficient to allow us, as a country, to act on pricing. To get to the point where we can truly select high-value providers, I offer 3 recommendations: Improve the quality of the data, make the data available in a way that intuitively makes sense, and make it easier to act on the information.

Improving the data is necessary, as the current iteration of price data is incomplete and contains large numbers of ghost rates, which are effectively junk data.^8,9 The proposed rules to improve the insurer Transparency in Coverage data are a step in the right direction.^10,11 In addition to the proposed actions, the administration should require insurers to release volume information, which is a good proxy for assessing quality for many types of care.^12-14 In addition, it needs to be clear that all prices are made public, including all the components of a bill, such as bundled payment adjustments, pass-through payments, or any form of rebate. Getting access to drug prices (expected in 2026) will also be critical.

Medical billing and coding are complex, and very few people, even those who work in health care, understand all the nuances. To make this more accessible, aggregate data need to be prepared in a format that is understandable and trustworthy for decision makers, including patients, employers, and policy makers. For example, a list of billing codes and amounts makes little sense to a consumer, but showing how much one provider gets paid, relative to another, does make intuitive sense. Furthermore, showing employers the expected aggregate costs for different networks, coupled with information on network size, helps them make informed decisions.

Finally, we need to make the information actionable, meaning the right information gets to the right people at the right time. Much work remains to fully understand which decisions should be made by whom and when. To realize the potential of price transparency, this is where we need to focus.

Conclusions

Price transparency data now make it possible to see—and compare—what different payers and providers are paid for the same services. That visibility creates a practical opportunity: For a meaningful subset of planned, shoppable care, employers, plans, and patients can shift volume toward high-quality, lower-priced options without restricting access or waiting for new medical breakthroughs. The opportunity is here; now is the time to act.

Author Information

Dr Muhlestein is the founder and CEO of Simple Healthcare, based in Sanford, Florida.

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