Offering A Price Transparency Tool Did Not Reduce Overall Spending Among California Public Employees And Retirees

Published in: Health Affairs, Volume 36, Number 8 (August 2017), pages 1401-1407. doi: 10.1377/hlthaff.2016.1636

Posted on RAND.org on August 29, 2017

by Sunita Desai, Laura A. Hatfield, Andrew L. Hicks, Anna D. Sinaiko, Michael E. Chernew, David Cowling, Santosh Gautam, Sze-jung Wu, Ateev Mehrotra

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Insurers, employers, and states increasingly encourage price transparency so that patients can compare health care prices across providers. However, the evidence on whether price transparency tools encourage patients to receive lower-cost care and reduce overall spending remains limited and mixed. We examined the experience of a large insured population that was offered a price transparency tool, focusing on a set of "shoppable" services (lab tests, office visits, and advanced imaging services). Overall, offering the tool was not associated with lower shoppable services spending. Only 12 percent of employees who were offered the tool used it in the first fifteen months after it was introduced, and use of the tool was not associated with lower prices for lab tests or office visits. The average price paid for imaging services preceded by a price search was 14 percent lower than that paid for imaging services not preceded by a price search. However, only 1 percent of those who received advanced imaging conducted a price search. Simply offering a price transparency tool is not sufficient to meaningfully decrease health care prices or spending.

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