The Employer’s Role in Price Transparency
Imagine running a business where employees make purchasing decisions without knowing the cost—only to find out later they overpaid by hundreds or even thousands of dollars. That’s how healthcare works today.
Employees have little visibility into costs, and employers bear a big part of the financial consequences. Price transparency isn’t about bargain hunting. It lowers costs, improves benefits, and boosts engagement.
The Hidden Cost of Healthcare’s Price Variation
Healthcare price variation is staggering. Employers overpay 20-30% simply because employees lack access to cost information. Consider these examples:
✅ MRI: Costs $150 at an imaging center but $2,200 at a hospital.
✅ Blood Test: Costs $25 at a lab but $150 at a hospital outpatient center.
✅ Generic Drug: Costs 5-10x more depending on the pharmacy or PBM.
Without cost visibility, employees likely default to high-cost providers. Both employers and employees absorb the difference in higher claims costs, premiums, and out-of-pocket spending.
Why Price Transparency Matters to Employers
Price transparency isn’t about turning employees into bargain hunters. It’s about helping them make better choices—resulting in a stronger, more cost-effective benefits program.
- Lower Healthcare Costs: Equipping employees with cost data and options can drive double-digit savings in total health plan spending.
- Higher-Quality, Cost-Effective Care: Transparency pushes providers to compete on both price and quality.
- Stronger Employee Engagement: Satisfaction with benefits increase when employees can make informed decisions.
- More Predictable Benefits Budgeting: Fewer surprise costs mean better financial control over plan expenses.
How To Implement Price Transparency
Employers can improve price visibility and drive cost savings with the following strategies:
Start with Shoppable Services: Some healthcare services are easy to compare. Prioritize transparency in these areas:
- Prescription Drugs: Price variation is extreme and pharmacy choice can save thousands per year.
- Imaging (MRIs, CT scans, PET scans): Costs vary by a factor of 5-10x even within the same local area.
- Lab Tests & Outpatient Procedures: Routine tests and elective procedures often have wide price gaps.
Incentivize Smarter Spending: There are lots of ways to incentivize employees to find high value, lower cost care:
- Remove Rx Copays: Encourage using low cost transparent pharmacies for generic maintenance drugs
- Preferred Lists: Do the homework to identify high-value imaging and lab providers.
- Offer Bonuses: Reward employees who visit low cost providers for common procedures.
Invest in Price Transparency Tools: Employers must offer cost-comparison tools in their health plans. These tools help employees see price differences before receiving care. If your TPA or PBM doesn’t offer this, it’s time to ask why.
Educate Employees on Cost-Saving Options: Transparency tools only work if employees use them. Employers should:
- Educate: Embed cost-comparison education into open enrollment and ongoing benefits communication.
- Communicate: Equip managers and HR leaders with resources to guide employees.
- Evidence: Provide real-world examples of how shopping saves employees money.
- Social Proof: Nothing drives interest more than hearing how much a fellow employee saved or how great an experience they received.
Measure and Adjust
- Watch: Monitor claims data to evaluate employee engagement with transparency tools and options.
- Track: Evaluate utilization and cost trends before and after implementation.
- Adjust: Test and adjust incentives and provider partnerships based on employee behavior, feedback, and cost savings.
Key Takeaways for Employers
- Price transparency isn’t optional—it’s a critical cost-saving strategy: Employers who implement price visibility can reduce healthcare costs by 20-30%.
- Employees need more than just data—they need guidance: Without structured education and lists of good choices, high-cost decisions will continue.
- Incentivize Smart Shopping: Reinforce the importance of shopping by reducing co-pays or offering bonuses to employees who choose high-value, lower-cost care.
The Bottom Line
Price transparency empowers employees and protects your bottom line. The question isn’t whether to embrace it—it’s how fast you can act. Don’t be a bystander.
Change the status quo and reap the benefits of The Health Plan Compliance Advantage.
Act now by scheduling a consultation to protect your organization and unlock the full value of your health plan.
