Pricing Methodology
Understanding how we calculate and compare healthcare costs
Our Pricing Methodology
Our goal is to bring clarity to healthcare costs by providing simple, transparent, and actionable price comparisons. We achieve this by analyzing vast amounts of healthcare data and presenting it through a straightforward metric: the Cost Score. This document outlines where our data comes from and how we calculate these scores.
Our Data Sources
To provide a comprehensive view of healthcare pricing, we synthesize information from a wide range of public and private data sources, including publicly available data from CMS, Transparency in Coverage files, Hospital Price Transparency files, and licensed proprietary datasets.
The foundation of our pricing information is insurance claims data.
- • What is a claim? Every time you visit a healthcare provider, a bill known as a "claim" is sent to your insurance company. This claim details every service or procedure you received and the amount the provider charged for each one.
- • How we use it: We aggregate millions of these insurance claims from over one million providers across all 50 states. By analyzing the charges from these real patient bills, we can determine the average prices for procedures in different geographic areas.
The Cost Scores displayed on our site are calculated using the self-pay or out-of-network price. This price represents the amount a patient would be charged without health insurance or when visiting a provider that is out-of-network.
Understanding the Overall Cost Score
Each provider has a single Overall Cost Score. This score represents how expensive that provider is on average compared to the local market median for similar providers, typically within a 25-mile radius.
For example, a specific dermatologist's prices would be compared to the median prices of other dermatologists in their local area.
How We Calculate the Overall Cost Score
The Overall Cost Score is a weighted average that accounts for how frequently a provider performs different procedures. Procedures performed more often have a greater impact on the final score.
Here is a step-by-step example of the calculation:
1. Calculate the Price Difference for Each Procedure
First, we compare the provider's price for each procedure to the local median price to find the price difference.
| Procedure | # Performed by Doctor | Local Median Cost | Cost at this Doctor | Price Difference |
|---|---|---|---|---|
| Procedure A | 47 | $377.89 | $500.00 | +32.3% |
| Procedure B | 15 | $543.76 | $750.00 | +37.9% |
| Procedure C | 5 | $68.72 | $60.00 | -12.7% |
2. Calculate the Weighted Average
Next, we calculate the weighted average of these price differences. Each procedure's price difference is weighted by its share of the total procedures performed by the provider. In this example, the doctor performed 67 total procedures (47 + 15 + 5).
The formula is:
(47/67) × 32.3%+(15/67) × 37.9%+(5/67) × -12.7%
Overall Cost Score:+30.2%
Important Considerations
- • Data Accuracy: The prices are pulled from real patient bills to reflect what patients were actually charged. However, providers can update their prices at any time, so the figures on our site represent the most recent data we have available and may not reflect the provider's current rates.
- • The Role of Insurance: Our Cost Scores are based on self-pay or "sticker" prices to provide a consistent benchmark for comparison across all providers. Your actual out-of-pocket cost will likely be different if you use in-network insurance.