Until now, it has been difficult, if not impossible, for self-insured U.S. employers to find out what rates insurers have negotiated with hospitals. That’s changing, thanks to federal disclosure rules. Hospitals are already required to post their negotiated rates, and health insurance plans will have to do so from July 2022. Then, by following three steps, employers can use this information to realize substantial savings.

Although it is well known that some American hospitals are more expensive than others, the rates that health insurers actually negotiate with them have remained secret. This is because the prices insurers have negotiated for the same procedure (like an MRI) at the same hospital vary widely. To save money, self-insured employers who must pay these prices should find an insurer who has negotiated lower procedural prices. It’s not easy, but if they do their research carefully, the savings can be substantial.

A study that Stuart Craig, Amanda Starc, and I recently conducted using health care claims of commercially insured individuals in Massachusetts examined price variation between insurers for the same procedure at the same hospital. We found that the average price variation between insurers is about the same as the average price variation between hospitals. (The standard deviation of the average price between insurers is approximately the same as that between hospitals.)

For example, Blue Cross Blue Shield of Massachusetts has negotiated prices that are, on average, 15-20% higher for all inpatient procedures than the prices of the three major national insurers operating in Massachusetts (Aetna, UnitedHealthcare and Cigna) at the same hospitals. Choosing an insurer that has negotiated lower prices would allow a self-insured employer who bears all health costs for its enrollees $750 to $1,000 per enrollee per year.

Also, since insurers get relatively better prices for some types of services than others, if an employer knows the type of services your employees are likely to use, the savings can be even greater. For example, Tufts Health Plan negotiated lower rates for hip and knee replacements than Massachusetts’ Blue Cross Blue Shield, but had higher negotiated rates for MRIs. Younger employees will tend to use different services than older employees, so a personalized analysis of an employer’s enrollment population can be valuable.

Why are these rates negotiated with service providers so difficult to respect? Partly because there are so many: there’s a price for every procedure for every plan with every insurer at every hospital. These prices may all differ.

Additionally, the health insurance industry has resisted price disclosure rules, calling these prices “trade secrets”. Indeed, due to these concerns, insurers initially objected to our research team’s access to the state of Massachusetts’ All-Payer Claims database that details these awards.

Pricing information is increasingly available due to federal disclosure rules. Hospitals are already required to post their negotiated rates, and health insurance plans will have to do so starting in July 2022. Savvy employers can save money by taking advantage of this data. Rather than relying on employees to gauge prices when trying to obtain health care, employers should shop extensively upfront when choosing an insurer. Here’s how:

When comparing insurance plans, compare total costs — not just premiums and administrative fees — but also negotiated provider prices.

Group all of these prices together based on the hospitals your enrollees will go to and the types of procedures they are likely to undergo. You will likely benefit from a what-if cost analysis that predicts what you will actually pay, although hiring consultants to perform this analysis can be costly.

Pay attention to the network of each plan.

We know that HMO plans can exclude expensive providers. But, as we found in our study, because these plans can steer enrollees to cheaper providers, they have more bargaining power and can negotiate even lower procedure prices from in-network providers. These negotiated procedure prices even vary from one plan to another offered by the same insurer.

Consider the higher prices of self-insured plans when deciding whether to offer a self-insured health plan or a fully insured health plan, where the insurer assumes the risk.

Insurers have more incentive to negotiate lower prices for fully insured plans. We estimate that a plan with only self-insured members will cost about 8% more than a plan with only fully insured members.

Analyzing these hidden prices for health procedures can be labor-intensive, but save employers money and give their employees a better deal.