Making healthcare prices transparent is a good idea. Patients should be able to find out what care will cost before receiving it. Employers paying for health benefits deserve to know what their money is buying. And providers should have to explain why their prices are higher than those of comparable facilities.
But there is a practical question that deserves more attention: If your health plan limits where you can receive covered care, how much power does knowing the price actually give you?
Transparency can expose a problem. Lowering costs requires someone with the authority and incentive to act on that information.
A price comparison is useful only when the alternatives are accessible
Consider a hypothetical patient who needs an MRI. One facility charges $2,000. Another offers the same medically appropriate service for $700. On paper, the choice seems obvious.
But suppose the $700 facility is outside the patient’s network. If the plan will not cover that facility, the patient may have to pay the entire charge. Depending on the plan, that payment may not count toward the in-network deductible or out-of-pocket limit. The apparently cheaper choice can become a more expensive personal decision.
HealthCare.gov explains that HMOs generally do not cover out-of-network care except in emergencies. EPOs similarly restrict coverage to network providers, with emergency exceptions. PPOs offer out-of-network benefits, but at an additional cost to the patient. [1]
That makes the network part of the price. A published charge without information about coverage, benefits, and the patient’s actual financial responsibility is an incomplete comparison.
Networks can serve a legitimate purpose. They can support coordinated care and give plans leverage to negotiate prices. The concern arises when network restrictions prevent patients from using a clinically appropriate, lower-cost alternative without a substantial financial penalty.
Funding and provider choice are different issues
The discussion also needs to distinguish who pays the claims from which providers a patient may use.
In a fully insured plan, the insurance carrier assumes responsibility for covered claims in exchange for a premium. In a self-funded plan, the employer assumes that responsibility, usually with outside administration and often stop-loss protection. Level funding is a form of self-funding that packages claims funding, administrative expenses, and stop-loss coverage into a predictable monthly payment. [2]
None of those funding arrangements, by itself, guarantees broad provider choice.
KFF’s 2025 Employer Health Benefits Survey illustrates the scale of these arrangements:
| Funding arrangement | Reported data |
| Self-funded | 67% of covered workers overall; 80% at employers with 200 or more workers. |
| Level-funded | 37% of covered workers at employers with 10–199 workers. |
| Fully insured | Approximately 49% of covered workers at employers with 10–199 workers, calculated as the complement of KFF’s 51% enrolled in either self-insured or level-funded plans. |
These percentages have different denominators and should not be added together. Level funding is a form of self-funding, and KFF cautions that employers may misclassify these arrangements. Its combined small-employer measure avoids treating the categories as mutually exclusive. The survey’s small-employer category is also broader than the familiar 2–50 employee small-group market. [2]
The employer market should not be described as predominantly HMO coverage: KFF reported 12% HMO enrollment, versus 46% PPO enrollment, in 2025. [3] The broader concern is how network and benefit restrictions affect the ability to act on prices across plan types.
Who can turn transparency into savings?
For a self-funded employer, a lower covered claim can directly reduce plan spending, subject to administrative and stop-loss arrangements. Transparent prices can help that employer evaluate its network, negotiate contracts, or arrange access to providers offering better value.
A level-funded employer may also benefit, but the contract matters. Lower claims do not automatically produce an equal refund. Employers need to understand surplus provisions, fees, stop-loss terms, and renewal pricing before assuming that savings will come back to them.
In a fully insured arrangement, lower claims initially reduce the carrier’s spending. Whether savings produce lower future premiums depends on pricing, competition, experience, and applicable requirements. Employees should not assume a lower provider price will immediately reduce their premium.
For patients in any of these arrangements, the incentive can be weak. A fixed copayment may be the same at an expensive provider and a less expensive one. Someone who has reached the applicable out-of-pocket maximum may have little additional financial incentive to compare covered services. Someone needing emergency care has little opportunity to shop at all.
These are reasons to design transparency around real decisions, rather than simply publish more numbers.
Give the patient a meaningful share of the savings
Where patients have a real choice, sharing savings with them could help turn price transparency into action. If we ask patients to help reduce the cost of care, they should receive a meaningful part of the financial benefit. Asking someone to compare prices, change facilities, and arrange a different appointment is a much stronger proposition when the savings also help that person’s household.
Consider the MRI example again, this time assuming both providers are covered, clinically appropriate, and accessible. The plan’s actual negotiated total price is $2,000 at one facility and $700 at another. Suppose the patient has already reached the applicable out-of-pocket maximum, so the plan would pay the full covered amount at either facility. Choosing the $700 facility saves $1,300. Under a hypothetical program returning 25% of that difference to the patient, the patient receives $325 and the plan retains $975 before program expenses. The 25% is an illustration, not a recommended universal rate.
That changes the decision. Without a reward, the patient’s additional financial benefit from choosing the less expensive facility is zero. With a reward, the patient has a reason to consider an alternative while retaining the ability to choose appropriate care. Someone with a fixed copayment may face a similar lack of incentive even before reaching an out-of-pocket limit.
The reward could take the form of a direct payment or reduced patient cost sharing, subject to the plan’s design and applicable requirements. Reducing a copayment can help, but a program needs to consider patients who already owe little or nothing. Otherwise, some people whose choices could save the most would receive no benefit from participating.
Measure real savings and make the reward easy to use
A credible program would calculate savings against a reasonable, disclosed benchmark based on actual covered prices for comparable care, not an inflated hospital list price. It should account for the full episode, including facility and professional charges, and distinguish the plan’s savings from reductions in the patient’s own bill. The reward and administration costs must leave a net benefit for the plan.
Before choosing, the patient should know the expected personal cost, the reward amount or calculation, and when the reward will arrive. The plan should confirm coverage, any required authorization, and protection from unexpected bills. A navigator who identifies eligible facilities and helps arrange the appointment could make participation much easier than simply handing patients another website.
Research supports trying this approach, while setting realistic expectations. A 2019 study of an employer rewards program offering payments of $25 to $500 for selected elective services found approximately $2.3 million in annual savings, about $8 per eligible person. The results were modest across the covered population. Rewards can influence choices, but offering them does not mean that most patients will shop or that overall spending will fall substantially. [4]
Make choice possible within the coverage
An HMO or another restricted-network plan could offer rewards where several qualified in-network providers are available. Where an appropriate lower-cost provider is outside the network, the plan could consider a prearranged agreement that covers the service, establishes payment, and protects the patient from balance billing. The patient should have these arrangements confirmed before receiving care.
For self-funded employers, lower claims can provide the funding for patient rewards. Level-funded employers need contracts that make clear how rewards, program fees, and any remaining claims surplus are treated. In fully insured coverage, the carrier would need to build the reward into the benefit or an approved incentive program. A promise of possible future premium relief is a weaker personal incentive than a benefit the patient can see and understand.
This approach fits planned services with legitimate alternatives. Emergencies, complex treatment, rural access limitations, and continuity with a trusted clinical team can sharply limit choice. Participation should be voluntary, quality standards should be explicit, and patients should not be penalized when a lower-cost option is medically inappropriate or impractical.
Transparency, usable choice, and a share of the savings belong together. Prices give patients information. Coverage makes the alternative accessible. Sharing savings gives them a personal reason to act. Where those conditions exist, patients can become partners in reducing costs—and receive something tangible for doing so.
Give patients and employers a way to act
A more useful approach would combine transparent prices with:
- Personalized estimates: The expected total episode cost and the patient’s share, including facility and professional charges.
- Usable alternatives: Accurate network information, appointment availability, and reasonable access to clinically appropriate care.
- A share in the savings: Reduced cost sharing or other incentives when patients choose a provider offering comparable quality at a lower price.
- Employer accountability: Information that lets employers assess administrators, networks, fees, and whether negotiated prices deliver value.
- Quality and access measures: A low price means little if the service is inappropriate or timely care is unavailable.
Allowing access to a lower-cost provider would still require arrangements addressing payment, quality, and protection against unexpected bills. Simply telling patients to leave their network would not solve the problem.
I support healthcare price transparency. It can strengthen purchasing decisions and expose prices that deserve scrutiny. But we should be realistic about what it can accomplish on its own.
We cannot expect patients to create a competitive healthcare market if their coverage prevents them from choosing among the competitors.
Publishing prices is a useful beginning. Giving patients access to appropriate alternatives and a meaningful share of the savings is a practical next step. If patients help produce the savings, they should share in the benefit.
Sources
- HealthCare.gov, “Health insurance plan & network types: HMOs, PPOs, and more”.
- KFF, 2025 Employer Health Benefits Survey, “Self-Funding”, including level-funded enrollment and methodology cautions. The 49% fully insured figure is calculated from the reported combined 51% self-insured/level-funded share.
- KFF, 2025 Employer Health Benefits Survey, “Plan Enrollment”.
- Sinaiko et al., “Paying Patients To Switch: Impact Of A Rewards Program On Choice Of Providers, Prices, And Utilization,” Health Affairs (2019).