More than just a buzzword, healthcare price transparency has become a pivotal tool for helping providers negotiate better contracts with payers. Providers can use price transparency data to enhance contracting efficiency, demonstrate value to improve their position, and, ultimately, help propel greater affordability for patients. 

Understanding healthcare price transparency  

Historically, healthcare contracting, billing practices, and prices have been shrouded in mystery. Patients often don’t know how much a service will cost or how much of it is covered until they get a bill. 

The Centers for Medicare and Medicaid Services (CMS) tried to tackle this problem through its price transparency rules, which went into effect for hospitals in 2021 and health plans in 2023. Under the ruling, each hospital operating in the U.S. is required to publish its pricing information online in two formats: as machine-readable files (MRFs) and as a display of shoppable services. The rule aims to allow patients to easily access and compare the costs of various medical services before seeking care. Health plans and issuers of group or individual health insurance are also required to publish pricing information for covered services online so members can understand their financial responsibility before scheduling care. 

As is true in consumer industries, the expectation is that posting healthcare rates online will boost competition, giving consumers and employers a way to compare prices and make informed choices, ultimately driving down the cost of care. As healthcare shifts to a shoppable model, the industry must follow the example of other industries to increasingly focus on value demonstration and differentiation.

Demonstrating value through data analytics and performance metrics

Combining price transparency data with performance insights unlocks a new model for payer-provider contract negotiations, allowing conversations to center on total value rather than price alone. By pulling back the curtain on prices across an entire market or across different insurers, the market will naturally shift to more comprehensive evaluations of value as the market landscape becomes more competitive. 

“The ability to take raw claims data and create rich intelligence into market pricing is critical to assessing the value of care and enabling more effective contract negotiations,” commented Jean Drouin, MD, founder and CEO of Clarify Health.

Demonstrating value in contract negotiations with healthcare payers is essential to ensure optimal reimbursement rates and will become an important factor in differentiation against competitors. Harnessing the power of next-gen data analytics, health systems can see how they stack up to competitors and showcase their performance metrics more effectively during contract negotiations. 

The relationship between patient outcomes and payer reimbursements is increasingly intertwined as health systems shift towards value-based care. Payers are incentivized to link reimbursement rates to the quality of care and patient outcomes, aiming to ensure that financial incentives align with improved health results and not just volume of services. This approach encourages healthcare providers to deliver practical, patient-centered care, leading to better outcomes and more efficient resource utilization.

Looking at the cost of care provided compared to patient outcomes can help propel value-based care. Hospitals can pinpoint areas of improvement within their operations to effectively reduce costs while improving quality. These insights allow hospitals to identify high-cost procedures, evaluate utilization patterns, and assess the efficacy of different treatments. Hospitals can then implement targeted strategies that enhance efficiency, optimize resource allocation, and lower operational expenses.

Using data to demonstrate outstanding patient care bolsters a hospital’s reputation and enhances its negotiating position with payers. The alignment of these data-backed narratives with payer priorities can result in more equitable agreements that reflect the hospital and insurer’s dedication to driving high-quality, cost-effective care for their shared patients and members.


As the healthcare landscape evolves, price transparency continues to emerge as a catalyst for reshaping payer-provider negotiations, advancing the goals of value-based care through improved care quality, efficient resource allocation, and fair prices.

Leveraging data-driven insights to demonstrate cost-effectiveness, operational efficiency, and exceptional patient care, hospital systems can drive fairer reimbursement rates that align with quality outcomes and patient satisfaction. 

Want more? Dig deeper into strategies for hospital growth and differentiation in competitive markets in our 2023 Growth Playbook.