Assessing utilization of a marketwide price transparency tool

Most transparency tools are provided by individual insurers for enrollees shopping for services within their networks. This paper seeks to understand the impact of a marketwide price transparency tool with an embedded randomized experiment to offer provider-level charge information.

In September 2017, FAIR Health released an independent, publicly accessible statewide consumer shopping tool, New York Healthcare Online Shopping Tool, or NYHOST, that displays individual provider charges (list prices) for common procedures in each of New York State's 3-digit geozips, as well as the estimated insurer-allowed amounts and educational resources. The rollout was accompanied by an extensive, multipronged marketing effort. It also incorporated a randomized experiment: The set of procedures with provider-level information varied across areas.

We characterized the types of services that were most searched on the consumer shopping tool. Utilizing negative binomial models with procedure and area fixed effects, we report on market and procedural characteristics that influence price search.

Consumers utilized the tool strategically, searching more in procedure markets with provider-specific price information availability, more frequent out-of-network utilization, higher charges, significant charge dispersion, and substantial provider competition. We also found that the majority of searches using the tool were for emergent services not usually classified as shoppable, suggesting that consumers may also have used the tool to compare searchable prices against those in bills for services already received.

Our findings confirm aspects of price search theory that have been developed by studying other industries and may prove instructive for further study of price transparency tools.