Introduction to Hospital Price Transparency
By Daniel Chang, KFF Health News
It’s a holy grail of health care: forcing the industry to reveal prices negotiated between health plans and hospitals — information that had long been treated as a trade secret. And among the flurry of executive orders President Donald Trump signed during his first five weeks back in office was a promise to “Make America Healthy Again” by giving patients accurate health care prices.
The Goal of Price Transparency
The goal is to force hospitals and health insurance companies to make it easier for consumers to compare the actual prices of medical procedures and prescription drugs. Trump gave his administration until the end of May to come up with a standard and a mechanism to make sure the health care industry complies.
But Trump’s 2025 order is also a symbol of how little progress the country has made since he issued a similar directive nearly six years ago. Consumers find it only partially useful, and the quality of the information is spotty.
A ‘Bold’ First Step That Fizzled
The 2019 order was “pretty bold,” said Gary Claxton, a senior vice president at KFF, a health information nonprofit that includes KFF Health News. “They basically went at the providers and the plans and said, ‘All this data you think is confidential we’re not going to make confidential anymore.’”
What followed was, to consumer advocacy groups, a disappointment. Hospitals and insurers posted on websites voluminous, complex, and confusing data about their prices. The information has been a challenge for even experts in health care pricing to navigate, let alone consumers. Some members of Congress filed legislation to put the force of law behind price transparency requirements; those bills died. And President Joe Biden’s administration was criticized for not more stringently enforcing the regulations, with one consumer advocacy group even buying a Super Bowl ad featuring the rapper Fat Joe alleging that “hospitals and insurers hide their prices.”
Trump’s new order, signed in February, said that hospitals and health plans “were not adequately held to account when their price transparency data was incomplete or not even posted at all.”
‘Zombie’ Rates and Other Inconsistencies
Meanwhile, independent researchers have found numerous problems with the quality of price data both hospitals and health insurers do share with consumers.
A recent report from the Peterson-KFF Health System Tracker found that data reported by four health insurers in New York City often included prices that they say they pay hospitals for services that those health providers don’t — or can’t — provide. These are called “ghost” or “zombie” rates. For example, the health plans reported dentists, optometrists, and audiologists receiving payments for knee replacements, gastrointestinal exams, and other procedures unrelated to their specialties.
In other cases, the data included different prices for the same service paid for by the same insurer at the same hospital. UnitedHealthcare, for example, reported paying New York-Presbyterian/Weill Cornell Medical Center three rates — $47,000, $64,000, and $70,000 — to treat a heart attack.
What’s a Consumer To Do?
Estimates and total prices aren’t very useful for consumers, who are mainly interested in what they’ll ultimately have to pay out-of-pocket, said David Cutler, a professor of applied economics at Harvard University. That can vary by health plan, depending on deductibles, copayments, and other fees.
“Most of the price transparency information doesn’t have that,” he said.
Next Steps
Hospitals say they want to work with federal regulators and comply with reporting requirements, said Ariel Levin, director of coverage policy for the American Hospital Association, which represents about 5,000 institutions. Levin said consumers should be given the price of services and “a more comprehensive estimate” that represents an entire episode of care and the amount they’ll owe out-of-pocket, based on their health plan.
CMS has developed rules since Trump’s 2019 order to make price information reported by hospitals and health plans easier to understand, and the agency has fined more than a dozen hospitals for failing to comply.
Conclusion
Much remains to be done before price transparency lives up to expectations that it will increase competition and lower costs, said Katie Martin, chief executive of the Health Care Cost Institute, a nonprofit research group.
Price transparency alone is not a silver bullet, Martin said. It’s “a critical first step” for employers, lawmakers, regulators, and others to better understand how money flows through the health care system and how to make it more efficient, she said. “It’s not the whole thing.”
FAQs
Q: What is the goal of price transparency in healthcare?
A: The goal of price transparency is to make it easier for consumers to compare the actual prices of medical procedures and prescription drugs.
Q: What has been the result of the 2019 order on price transparency?
A: The result has been voluminous, complex, and confusing data about prices, which has been a challenge for consumers to navigate.
Q: What are some problems with the quality of price data shared by hospitals and health insurers?
A: Some problems include “zombie” rates, where prices are reported for services that health providers don’t or can’t provide, and different prices for the same service paid for by the same insurer at the same hospital.
Q: What can consumers do to make price transparency work for them?
A: Consumers can use hospital price data to research and compare prices, and can also use cost-estimator tools provided by their health insurer to get a more accurate estimate of their out-of-pocket costs.
Q: What is the next step in improving price transparency?
A: The next step is for hospitals and health plans to work with federal regulators to comply with reporting requirements and to provide more comprehensive estimates of the amount consumers will owe out-of-pocket.
©2025 KFF Health News. Distributed by Tribune Content Agency, LLC.
