The hospital price transparency rule is working, but patients still need help using it

In January 2021, a new federal rule went into effect requiring hospitals to publish the prices of hundreds of services in a machine-readable format. Policymakers hoped that this would make health care more like a typical marketplace, where consumers could compare prices and choose better-value options. The legal mandate to publish prices creates a previously unavailable source of data, granting patients access to critical information for the first time. This opens new opportunities for both innovation and entrepreneurship, enabling the development of technology tools and applications that can enhance patient decision-making and overall wellness. 

From the outset, many were skeptical. Hospitals were slow to comply, and the data they published were often difficult to interpret. At the same time, insured patients rarely search for prices before receiving care, resulting in fewer than one in five U.S. adults being aware of health care costs beforehand 

Still, the policy created a rare opportunity to study what happens when pricing information is suddenly made available. In a new study, forthcoming in the journal Production and Operations Management, we examine how both hospitals and patients responded to this change. Using detailed data from Florida hospitals, we find that price transparency has measurable effects. Patients seeking elective, self-paid care responded by choosing hospitals that were transparent about their prices. Hospitals, in turn, responded by simplifying their pricing and reducing the intensity of services, measured by length of stay and the average level of resources required to treat a condition.

The policy is working but only in specific settings and for certain patients. To unlock its full potential, the health care system must go further. While valuable pricing data is now publicly available for many hospitals, availability does not guarantee accessibility or effective use by patients. This gap presents a significant opportunity for technology companies to develop applications, interfaces, and tools that make the data more usable and actionable. Equally important is the need to create supportive structures that encourage and enable patients to engage with this information in their health care decisions. A notable example is the Trump administration’s launch of a new Digital Health Ecosystem, developed in partnership with major technology and health care companies. This system aims to aggregate medical records, health app metrics, and consumer wellness data into a unified platform, leveraging tools like conversational AI, QR code check-ins, and personalized medication tracking. Integrating publicly mandated hospital price data into this ecosystem would create tremendous opportunities: Consumers could compare costs and care options directly, while developers could build user-friendly interfaces that translate raw pricing data into personalized, actionable insights. Additionally, more transparency rather than less would be of great benefit to patients. 

What the study examined 

As mentioned, the study explored the use cases in Florida. The state has some of the most robust hospital reporting requirements in the country and was among the first states to enforce the federal transparency rule. This made the state an ideal setting for evaluating the policy’s effects. We compared changes in pricing and patient volume at hospitals that complied with the transparency rule to those that did not, using a difference-in-differences approach that accounts for time trends and hospital-level characteristics. 

How hospitals responded 

Hospitals that complied with the transparency rule made notable adjustments, but these changes were strategic. For self-pay elective patients seeking elective procedures, compliant hospitals simplified their pricing structures and reduced the intensity of services provided. However, these behavioral changes were not observed for insured patients. Hospitals did not alter pricing patterns or treatment intensity in cases where the patient was covered by commercial insurance or public payers. This selective response likely reflects the unique incentives associated with self-pay patients: Because these individuals pay out of pocket and are more likely to shop based on price, hospitals had stronger motivation to respond visibly to transparency rules in this market segment. For insured patients, where prices are largely determined by negotiated rates and patients face lower marginal costs, hospitals’ incentive to change behavior was far weaker. 

How patients responded 

Self-pay patients in the study appeared to take advantage of the available price information. After hospitals published their prices, these patients were more likely to choose compliant hospitals for elective care. This shift in patient volume, combined with the reduction in service intensity, suggests that patients are indeed responsive to pricing data when it is available, relevant, and easy to act upon. 

However, these effects were limited to elective and self-paid procedures. Patients covered by insurance or those treated in emergency settings showed no similar pattern. This underscores the importance of financial exposure and provider discretion in enabling effective price shopping. 

What the results mean 

The findings show that hospital price transparency, when enforced, can influence how care is delivered but only under specific financial and clinical conditions. Hospitals did not respond uniformly across all patient types. Instead, they selectively adjusted their behavior for self-pay elective patients, whose decisions are most sensitive to pricing. For these patients, hospitals simplified their charges and reduced service intensity. For insured patients, however, hospital behavior remained largely unchanged. This is likely because insured patients are insulated from the full cost of care and have less flexibility in choosing where to receive services. 

These results highlight both the potential and limitations of transparency-based reforms. Price transparency can shape provider behavior, but only when hospitals believe patients will see the data, understand it, and use it to make decisions that affect the hospital’s bottom line. Without accompanying tools, incentives, and systems that enable patients, especially insured ones, to act on pricing data, the reach of transparency will remain narrow. 

Policy implications  

The results reveal a few opportunities and considerations for policymakers. First, it shows that stronger enforcement is needed. Many hospitals have not fully complied with the federal rule. As of last year, only 34.5% of hospitals were complying with the rule. Centers for Medicare and Medicaid Services (CMS) should increase enforcement and establish clearer standards for how price data must be published. Without consistent participation, patients cannot make meaningful comparisons. 

Second, leveraging existing technologies could lower search costs and further amplify the benefits of price transparency. While the transparency rule primarily provides price data, patients must often look elsewhere for quality information. Integrating these sources would be ideal, allowing tools to combine price and quality data for more informed decisions. For instance, mobile apps and web platforms could merge hospital price files with insurance details and quality ratings from CMS Hospital Compare, providing users with side-by-side comparisons of both cost and quality during provider searches, much like how travel sites aggregate flight options. Enhanced search engines or browser extensions might automatically pull and display relevant pricing alongside quality indicators when patients query procedures online, while electronic health record systems could embed comprehensive cost and quality estimates directly into patient portals. By promoting open APIs and collaborations between tech companies, insurers, and regulators, policymakers could encourage the development of user-friendly tools that reduce barriers for insured patients. Ultimately, technology bridges the gap between data availability and patient empowerment, making transparency a practical tool for everyday decision-making. 

Lastly, we should support legally sound and accessible tools. Federal laws, including the Anti-Kickback Statute, prohibit referral payments tied to patient volume or provider choice. While this limits the use of direct incentives, it does not preclude other models. Ad-supported platforms, licensing agreements with insurers or employers, and public grant funding can all help support the development of legally compliant, patient-facing tools that improve access to hospital pricing information. Public investment in these tools may be especially warranted. If market forces alone are not sufficient to encourage innovation in this area, then targeted support from CMS or state agencies may be necessary to ensure that transparency translates into real consumer empowerment. 

What’s next 

Hospital price transparency is not a panacea, but it is working in targeted ways. Patients who see prices are making different choices. Hospitals are adjusting how they price and deliver care. To extend these benefits to more people, we need better enforcement, smarter tools, and a policy environment that rewards innovation while protecting patients. Price transparency has laid the groundwork. Now we must build on it.