As millions of Americans navigate open enrollment this fall – whether through employers, HealthCare.gov, state-based exchanges or Medicare – the actual cost of healthcare remains frustratingly opaque. This opacity is similar to, and perhaps a result of, something even more opaque – the commissions that health insurers pay brokers to steer employers and consumers to specific networks.
Despite the advent of healthcare price transparency data that should inform consumer choices about healthcare, consumer choices about health plan options are limited to the providers in the network and the “cost sharing” of the plan, not the negotiated rates paid to providers in the network. While the Federal government has taken unprecedented steps to make healthcare prices transparent, nothing has been done to require that information to be shared with employers or individuals to enable them to select networks based on cost. As a result, price transparency is not yet actionable.
In 2021, Federal price transparency requirements mandated that hospitals disclose a subset of negotiated rates with commercial payers, revealing that the same procedure at the same hospital can cost vastly different amounts depending on an individual’s health plan. However, systemic challenges remain. Many Americans still lack awareness of price transparency data availability, face barriers accessing employer-sponsored insurance alternatives or navigate limited provider networks that constrain their choices. The complexity of healthcare pricing, with its multiple negotiated rates, plan designs and coverage nuances, can overwhelm even sophisticated healthcare consumers.
While hospital price transparency revealed the existence of significant variations in price for the same service at the same hospital, that information was not actionable. During open enrollment, employers provide employees with a limited number of plan options whose key characteristic is a provider network. In theory, a smaller provider network, i.e., limited choice of hospitals and physicians, results in a lower cost network.
Hospital price transparency also neglects to account for two key factors in inpatient utilization. First, it is well known that a significant portion – and frequently 50% - of inpatient admissions originate in the emergency department. Common sense is all that is required to know that few consumers compare hospital prices in transit to the emergency department with an undiagnosed, but acute, event. Second, it is well known that elective hospital admissions are often determined by a physician's admitting privileges, with childbirth being a prime example.
In turn, as a high cost, often planned healthcare event, delivery services offer a useful example to assess how negotiated rate variation across health plans impacts consumer decision-making. For women who, at open enrollment, are planning for pregnancy, the primary criteria in selecting a health plan is a network that includes the hospital where their OB/GYN has admitting privileges. For individuals who have not met annual deductibles, negotiated rates between insurers and hospitals directly determine out-of-pocket (OOP) financial liability. For example, a patient who has not met their $3,000 deductible would benefit from knowing that their health plan’s negotiated rate for a diagnostic colonoscopy at one provider is $1,200, but $800 at a different provider for the same service, as they will be responsible for the full negotiated amount.
Access to comparative pricing information for maternity care constitutes an essential input for data-driven plan selection among families anticipating or planning for childbirth during the coverage period.
Hospital price transparency data were accessed through Oria, an AI–powered query tool developed by Trilliant Health. Oria enables natural-language searches of hospital machine-readable files (MRFs) published under the Hospital Price Transparency Final Rule (45 CFR §180). These MRFs include negotiated commercial rates, cash prices and charge master amounts for hospital-based services. Leveraging an aggregated and standardized MRF file with data for more than 5,000 hospitals across all 50 states and DC, Oria was used to query and examine negotiated rates for vaginal and Cesarean section (C-section) deliveries in Florida. The Medicare base rates for the respective childbirth MS-DRG codes were provided to Oria to serve as a price floor in the results.
Across payers and hospitals, the average commercial negotiated rates for childbirth-related MS-DRGs in Florida ranged from $8,841 (MS-DRG 807: vaginal delivery without major complications (MCC)) to $16,261 (MS-DRG 786: C-section with MCC) (Figure 1). In contrast, vaginal deliveries with MCC (MS-DRG 805) averaged $10,454 and vaginal deliveries with CC (MS-DRG 806) averaged $9,261. C-sections were reimbursed at higher negotiated rates than vaginal deliveries across all severity levels. The average rate for C-section without MCC (MS-DRG 788) was $11,686 and C-section with CC (MS-DRG 787) was $13,815.
Even within the same market, commercial negotiated rates ranged from $4,260 to $45,573 in Miami for MS-DRG 807 (Figure 3). The median negotiated rate was $8,652, and the average was $8,858. The 25th and 75th percentile negotiated rates were $4,260 and $13,730, respectively, while the 10th percentile was also $4,260 and the 90th percentile was $14,266. These results reveal an 11x range in negotiated rates within Miami hospitals for uncomplicated vaginal deliveries.
Hospital-level data can be used to understand which hospitals in a given market have a higher or lower cost for the same procedure. HCA Kendall Hospital had the highest median negotiated rate at $9,766 (Figure 4). University of Miami, an academic medical center, had a negotiated rate of $8,235. Jackson South had the lowest negotiated rates, $5,871. The rate differential between the highest and lowest negotiated rates spans $3,894.
Even with the same hospital, negotiated rates for the same procedure vary across insurance products. Commercial negotiated rates for DRG 807 At University of Miami ranged from $5,925 to $11,111 (Figure 5). Health insurance exchange products show the most competitive pricing, with Aetna of FL at $5,925, UnitedHealthcare at $6,466, Molina Healthcare of FL at $7,040, Oscar Health of FL at $7,887 and AmeriHealth Caritas FL at $7,997. Blue Cross Blue Shield of Florida (Florida Blue) had negotiated rates ranging from $6,932 to $10,192. AvMed's negotiated rates range from $8,320 for Jackson First to $11,111. for Broad Network products.
For the millions of Americans making plan decisions during open enrollment, these findings reveal how the choice of health plan matters far more than most people realize, and the same care can cost dramatically different amounts depending on which insurance card is in your wallet, even when provided at the same hospital.
With the advent of health plan price transparency, the cost of a provider network is now knowable, but rarely known. For both health benefits consultants and health insurance brokers, taking the time to compare the expected costs of a provider network is additional work that most employers don’t demand. For a health insurance broker, an additional consideration is that guiding an employer to a lower-cost network may result in a lower commission. The “broker’s dilemma” is a reality in both employer-sponsored and Marketplace exchange products.
Instead of demanding transparency from health insurance brokers, employers have purchased numerous “price transparency” solutions to encourage and/or incentivize their employees to make “good” choices about “high value” providers. What employers have failed to understand is that the time to maximize their cost-savings opportunity is prior to open enrollment. After the network has been selected, it is too late to maximize savings. What determines whether an individual hospital or physician is “high value” is entirely dependent on the network, which means the same hospital or physician can be “low value” in one network because that network pays higher negotiated rates than the other networks in which the hospital or provider participates.
When it comes to major healthcare decisions like family planning, understanding negotiated rates between payers and hospitals enables prospective parents to make informed choices about coverage that could save thousands of OOP dollars. While individual plan design elements, such as deductibles, OOP maximums, copays and coinsurance, ultimately dictate what patients pay, the underlying negotiated rate serves as the foundation for these costs. For families who have not yet met their deductibles, they bear direct financial responsibility for these negotiated amounts, making price transparency data essential for budgeting and planning.
It is self-evident that an employer or consumer cannot make an informed decision about a network without knowing expected costs prior to choosing one. For price transparency to be actionable and lead to material changes, brokers must be required to provide employers and consumers with their commission from each insurer or network that they promote together with the expected cost of each such network for a basket of typical and customary services.
As a result, price transparency is only a potential catalyst for broader healthcare system reform if prices are accessible before a consumer needs healthcare services.
Tools like Oria that translate complex hospital MRFs into accessible, actionable information represent a critical step in evidence-based healthcare decision-making. These platforms help Americans make informed decisions during open enrollment and beyond. As open enrollment continues, families equipped with this knowledge can select coverage that not only aligns with their financial plans but also protects them financially when they need healthcare most.