Hospital price transparency: A primer

This primer reviews the economic implications of hospital price transparency (HPT), delineates federal requirements, and describes how HPT may curb US healthcare spending, with an emphasis on drug costs.

National health expenditures are projected to reach nearly $6 trillion (19.4% of gross domestic product) by 2027. Transparent pricing reduces cost variation in straightforward markets, although its potential impact in the more complex healthcare environment is less predictable. The provisions of the federal HPT rule (which took effect in January 2021) require hospitals to publish machine-readable charge data and consumer-friendly prices for at least 300 shoppable services. However, compliance has been inconsistent, and heterogeneous data formats hamper use of the data. Nonetheless, visible prices can inform patient choices, strengthen payer negotiations, and foster competition, underscoring the urgency of robust HPT.

Low compliance with the HPT rule limits the ability of the Centers for Medicare & Medicaid Services to gauge market effects. While HPT alone cannot resolve structural cost drivers, it establishes a foundation for value-based purchasing, competitive pricing, and future payment reform.