Negotiated commercial rates for the same procedure, within the same market and for the same payer varied widely, ranging from 3.6x to 27.4x across the three Texas CBSAs analyzed, with negotiated rates for HCA Healthcare facilities consistently above the market average.
Negotiated rate differences can translate into hundreds of millions of dollars in spending variation for the same procedure in the same market, such as the variance of $102.7M in reimbursement for 7,000 knee replacements in Dallas-Fort Worth, depending on the provider, payer network and setting.
“You get what you pay for” is axiomatic, except in healthcare, where almost no one understands what they bought, much less what it was worth. “What gets measured gets managed” is also axiomatic, and U.S. employers have consistently avoided quantifying “value for money” for their healthcare expenditures. Value for money in healthcare exists on a continuum and is primarily measured at the intersection of cost and quality, the balance of which is influenced by the acuity of the treatment or procedure.
Health plan price transparency enables employers, who manage and finance the health insurance benefits for almost 180M Americans, to design benefits that are value-based, whereby savings accrue to the actual payer rather than middlemen. With this possibility, every other health economy stakeholder must now consider how evolving benefit design could impact their organization.
This study examines how health plan price transparency data could enable employers to select networks with the highest-value providers.
In October 2020, the longstanding information asymmetry between health insurers, providers, employers and consumers began to shift with the announcement of CMS’s Transparency in Coverage (TiC) final rule.1 The regulation was intended to “drive innovation, support informed, price-conscious decision-making, and promote competition in the health care industry.” The publicly posted TiC machine-readable files (MRFs) include data on negotiated rates between individual health plans and individual providers for specific procedure codes, creating a new source of insight into commercial prices that was not historically available.
In 2025, CMS issued a proposed rule that would expand and refine health plan price transparency reporting requirements, increasing expectations around completeness, standardization and usability of MRFs.2 The proposed rule would amend the 2020 TiC regulatory framework to reduce file size and redundancy by requiring MRFs at the provider network level, rather than for each plan or policy, streamline how out-of-network allowed amounts are reported and improve contextual information to make the data easier to analyze and compare. Additional enhancements were proposed, including new change-log files to highlight data differences between reporting periods, reduced reporting thresholds for allowed amount files, extended look-back and reporting periods and standard navigation and contact information to make MRFs easier to locate and use.
While there are many more health plan sponsors than hospitals, the concentration of commercially insured lives among a small number of national carriers allows for a relatively comprehensive view of negotiated prices with a focused analytical approach. At the same time, data generated from health plan transparency files are not without limitations. The files are often partially incomplete, unaudited and operationally complex, and they include billions of rates, many of which correspond to services a given provider does not perform. Even so, the breadth of these data uniquely enables analysis of the total cost of care across markets, facilities, provider groups, services and patient cohorts in ways that were not previously feasible using claims data alone.
Health plan price transparency creates the potential for data-driven patient steerage by employers. In 2024, approximately 178.6M Americans were enrolled in employer-sponsored insurance, making employers the most influential stakeholder in benefit design decisions.3 As access to negotiated rate data improves, employers and plans are increasingly positioned to design networks and incentives that steer patients away from higher-cost providers toward lower-cost alternatives that deliver similar or better quality (i.e., more value for money). Notably, under Delaware law – where over 60% of Fortune 500 companies are incorporated – directors and officers of corporations owe a fiduciary duty of care to the corporation and its stockholders, which requires them “to make informed business decisions” based on “the information that is material to the decision” and “to review the information critically.”4 Because health benefit costs are a material expense for every corporation that provides them, health plan price transparency implicates the fiduciary duty of care for directors and officers – especially CFOs – to “make informed business decisions” about health benefit costs using health plan price transparency data.
As pricing information becomes more readily available, providers will be forced to compete on value like the rest of the U.S. economy. As many industries rapidly adopt generative AI, employers may come to view benefit design as a financial strategy rather than a recruiting strategy. In such event, health plan sponsors will increasingly scrutinize providers with high commercial rates, particularly providers whose quality is not top quartile. In any event, every provider should assume that they will be pressured to deliver “value for money”: better than average quality at median market rates or average quality at lower than median market rates or – optimally – better than average quality at lower than median market rates. Understanding the relationship between prices, market share and revenue is critical to assessing how transparency-driven changes in benefit design may reshape competitive dynamics in commercial healthcare markets.
Leveraging all-payer claims and national health plan price transparency data, negotiated rates and visit volumes for a selection of shoppable procedures were examined. Six CPT codes were analyzed: prostate biopsy (CPT 55700), laparoscopic radical prostatectomy with or without robotic assistance (CPT 55866), total knee arthroplasty (CPT 27447), laparoscopic cholecystectomy (CPT 47562), tonsillectomy and adenoidectomy in patients under age 12 (CPT 42820) and routine obstetric care culminating in cesarean delivery (CPT 59510). To assess within-payer variation, these CPT codes were analyzed for Blue Cross Blue Shield of Texas (BCBS TX) commercial patients in three Texas CBSAs: Austin-Round Rock-San Marcos, TX, Dallas-Fort Worth-Arlington, TX and Houston-Pasadena-The Woodlands, TX. For each CPT code, the minimum, average and maximum BCBS TX hospital outpatient department (HOPD) negotiated rates were examined. To examine differences between payers and sites of service, commercial HOPD and ambulatory surgery center (ASC) negotiated rates were examined for BCBS TX and UnitedHealthcare in Dallas-Fort Worth-Arlington, TX.
The BCBS TX rate dispersion for the same procedure across three Texas CBSAs ranged from as low as 3.6x for CPTs 47562, 55700 and 55866 in Houston to as high as 27.4x for CPT 59510 in Dallas. In Austin-Round Rock-San Marcos, TX, HCA Healthcare has the highest negotiated rate in the market for all six codes analyzed. The procedure with the largest price differential in Austin was total knee arthroplasty (CPT 27447), ranging from $14,757 to $68,072, an absolute difference of $53,315 per procedure (Figure 1). In Dallas-Fort Worth-Arlington, TX, the University of Texas System has the highest rate for four procedures, and HCA Healthcare has the highest rate for two procedures. For the same procedure in the same market, the largest BCBS TX negotiated rate difference in Dallas was for Caesarean delivery (CPT 59510), ranging from $6,012 to $81,904. In Houston-Pasadena-The Woodlands, TX, HCA Healthcare has the highest BCBS TX negotiated rates for all but one procedure analyzed, with Memorial Hermann having the highest rate for laparoscopic cholecystectomy (CPT 47562). The largest BCBS TX negotiated rate difference in Houston was for Caesarean delivery (CPT 59510), ranging from $2,946 to $35,109.
Negotiated rates for in-network providers for the same service also vary by payer and setting. In Dallas-Fort Worth-Arlington, TX, commercial negotiated rates for CPT 27447 ranged from as low as $10,500 at Methodist Health System surgery centers for UHC to as high as $82,234 at a single HCA Healthcare hospital for BCBS TX (Figure 2). BCBS TX’s average HOPD negotiated rate for CPT 27447 ($34,744) was higher than UHC ($22,564). Similarly, BCBS TX’s average ASC rate ($20,067) was higher than UHC’s average rate ($15,848). Notably, BCBS TX’s highest negotiated rate for CPT 27447 is almost 2x more than UHC’s highest negotiated rate of $42,000. Relatively speaking, negotiated rates for UHC are also more tightly dispersed than BCBS TX. Across settings, UHC’s negotiated rates range from $10,500 to $42,000, while BCBS TX’s negotiated rates range from $12,935 to $82,234. There are also notable differences between payers at the same provider. An example of this, across the 11 HCA Healthcare HOPD facilities in the market, UHC had one negotiated rate ($42,000), while BCBS TX negotiated rates ranged from $52,363 to $82,233 at the same facilities.
This variation has significant implications for overall healthcare spending, particularly in a market that is the fourth most competitive U.S. healthcare market based on the Herfindahl-Hirshman Index. If, in the Dallas-Fort Worth-Arlington market, 7,000 annual total knee arthroplasties (CPT 27447) were reimbursed at BCBS TX’s average HOPD negotiated rate of $34,744, annual spending would be $243.2M as compared to $157.9M for UHC at its average HOPD negotiated rate of $22,564 (Figure 3). This would represent an $85.3M annual spending difference for the same procedure that was solely attributable to variation in negotiated rates for each payer. Even within the same payer, if the 7,000 CPT 27447 procedures were reimbursed at BCBS TX’s average ASC rate ($20,067) instead of its average HOPD rate, annual spending would be $140.5M, representing a $102.7M spending difference.
Health plan price transparency reveals that a relatively small number of high-cost providers drive disproportionate spending variation within markets. Leveraging price transparency and quality to focus on “value for money” makes clear that, contrary to an industry-wide focus on “narrow networks,” self-insured employers should maintain broad provider networks, while designing benefits at the service-line level in each market that incentivize employees to use the best-value provider, whoever and wherever they are. The findings demonstrate that negotiated rate differences are not marginal but, in legal terms, “material.”
Notably, the difference in price manifests most obviously in a “narrow network,” depending on how the network is accessed. Within a single CBSA, payer-specific rate differences for the same procedure in the same care setting can produce spending variation exceeding $85M annually, with million-dollar implications for a single employer population. For employers, the most important decision about healthcare benefits is not the group of providers in a network but rather which network provides the lowest-cost access to those network providers.
Under Delaware law, it is possible that every CFO whose health plan accesses HCA Healthcare’s provider network through BCBS TX instead of UHC could be held liable for a breach of fiduciary duty. For example, a Fortune 500 employer in Dallas-Fort Worth choosing HCA Healthcare’s network as a “narrow network” could experience a greater than 50% difference in beneficiary costs for the same services at the same facilities, depending solely on whether it accessed the network through BCBS TX or UHC.
Importantly, value for money is jointly driven by provider pricing strategy and payer network strategy. As shown in Dallas-Fort Worth, selecting UHC yields a narrower range of negotiated rates across facilities, meaning employers can focus more directly on measurable quality differences when designing benefits. Because UHC has a single negotiated rate for CPT code 27447 within each system – HCA Healthcare, Baylor Scott & White, Methodist and Texas Health Resources – the comparison of value for money among those systems involves an analysis of the difference in negotiated rate as compared to the relative quality differences among those systems. Importantly, value for money within each system depends entirely upon the difference in quality between different sites of care within each system.
In contrast, BCBS TX negotiates different rates for CPT 27447 at individual facilities within HCA Healthcare, Baylor Scott & White, Methodist and Texas Health Resources. Because rates vary across both systems and facilities within each system – by nearly $65,000 in an HOPD setting – value for money depends on both negotiated rate variation and quality differences. Because BCBS TX’s negotiated rate for CPT 27447 in an HOPD varies by nearly $30,000 within HCA Healthcare’s network, value for money can be materially different depending on which HCA Healthcare facility is chosen, especially if quality is identical.
Although rates are unlikely to fall uniformly in the near term, having the most expensive price in a market is unlikely to continue being a winning strategy. Health plan price transparency enables employers to identify which payers negotiate comparatively lower rates for the same providers and to align network strategy accordingly. Over time, basic economic principles suggest that prices unsupported by measurable quality will face downward pressure as employers apply data-driven steerage. Providers that anticipate this shift will be best positioned to deliver “value for money” and ultimately compete more effectively.
The shift towards value-based benefit design is already being operationalized, most notably by UHC’s Surest product, which replaces deductibles and coinsurance with upfront, provider-specific pricing transparency. Surest is reportedly UHC’s fastest-growing commercial insurance product. By embedding negotiated rates directly into consumer-facing decision tools, such models operationalize steerage at the point of care. As these models scale, providers with rates materially higher than market benchmarks may face declining commercially insured volume, particularly when those providers do not provide demonstrably higher quality.
Like most things in healthcare, the transition toward value-based competition will be gradual, but the direction is clear. If for no other reason than officers of Delaware corporations being held personally liable for breach of fiduciary duty, health plan sponsors will eventually use health plan price transparency to demand “value for money” in health benefits. When they do, employers will learn that it is relatively easy to constrain costs simply by steering patients away from a few providers who provide comparatively average quality at higher-than-average negotiated rates.