Samantha Smith of Harrisburg, Pennsylvania, went into the operating room for emergency removal of an ectopic pregnancy. \u201cI\u2019m grateful I didn\u2019t die,\u201d she said, but she was shocked to see that the outpatient surgery was billed to her insurer for about $100,000.<\/p>\n
Jamie Estrada of Albuquerque, New Mexico, twice received injections of lidocaine in his upper spine to test if a permanent nerve ablation would treat his chronic neck pain. His pain vanished \u2014 until the numbing agent wore off about six hours later. The real zinger: His insurer was billed $28,000 for each 10-minute procedure.<\/p>\n
Mark McCullick of Longmont, Colorado, was sent for a whole-body PET scan to find out whether his prostate cancer was back. The two-hour scan showed no evidence of cancer, but the $77,000 bill sent to the company that administered his insurance alarmed him.<\/p>\n
Medical inflation has steadily outpaced<\/a> general inflation for years, with bills for many brief, routine procedures reaching tens of thousands of dollars.<\/p>\n These cases highlight the questions that haunt the American health system and the patients caught in its grip: What is a reasonable price for any health care visit or procedure, and how is it determined? How hard do insurers, the purported stewards of the patient\u2019s hard-earned health dollars, fight to lower charges, and how closely do they scrutinize bills for accuracy?<\/p>\n Smith, Estrada, and McCullick\u2019s cases are all \u201cchargemaster\u201d bills, calculated from the master price list that health providers place on services. Patients who have insurance don\u2019t generally pay them. But they matter because they are often the starting point for the negotiated price the insurer agrees is reasonable to pay for the services. Patients are typically responsible for 10% to 20% of the negotiated price, their coinsurance \u2014 and when prices are this high, that can be a big number. What\u2019s more, those negotiated rates are difficult for patients to access (until they get the bill) and seemingly arbitrary.<\/p>\n Also, because health insurers can offset high outlays one year by raising premiums and deductibles the next, they have little incentive to bargain hard for good deals for the patients they cover. So patients all pay unknowingly, indirectly.<\/p>\n In the cases of Smith and Estrada, their insurers paid the majority without questions. Penn State\u2019s Hershey Medical Center, which treated Smith, received $61,000, or 62% of what it charged. New Mexico Surgery Center Orthopaedics, which treated Estrada, received $46,000, or 82%.<\/p>\n McCullick\u2019s insurer, on the other hand, said it would pay Intermountain Health just 28% of his $77,000 bill. Then came another curveball: The hospital, which said it had gotten preauthorization, discovered after the fact that his scan was not covered. So it billed McCullick the full chargemaster rate of $77,000 \u2014 or, it offered, he could pay the cash rate of $14,259.<\/p>\n In an emailed statement, Chris Bond, a spokesperson for AHIP, the leading trade group for health insurers, blamed hospitals for the trouble, saying that plans are \u201cfocused on making benefits and coverage as affordable as possible for their members,\u201d and that: \u201cAs the largest single category per premium dollar spent, increases in the cost of hospital-based care have an outsized impact on premiums.\u201d<\/p>\n In a health system in which prices can vary exponentially with little transparency, how can patients afford to get sick?<\/p>\n \t\t \u2018It Makes No Sense\u2019<\/p>\n Americans listed health care<\/a> as a top priority for government in 2026, according to an Associated Press-NORC poll, expressing particular concern about cost, access, and insurance coverage.<\/p>\n The first Trump administration required insurers and hospitals to publish files containing cash, gross, and negotiated prices for various items and services. These raw, machine-readable price lists \u2014 often hundreds of pages filled with medical billing codes \u2014 have proved of little use<\/a> to patient-customers.<\/p>\n Five years later, they\u2019ve been ingested, parsed, and enriched by academics and startups, shedding light on the often-shocking disparities in prices and how they\u2019ve come to exist.<\/p>\n \u201cWhen we look at the data, whether it\u2019s from a chargemaster or what insurers paid, it\u2019s all over the map \u2014 it makes no sense,\u201d said Marcus Dorstel, senior vice president of operations at Turquoise Health, a price transparency startup with payers and providers as clients. \u201cThe variation is huge, even in a specific area.\u201d<\/p>\n When researchers at the Johns Hopkins Bloomberg School of Public Health looked at the data, they discovered that the price different insurers pay for the same billed charges \u201ccan be three or more times different at the same hospital,\u201d said Ge Bai, a professor of health care accounting who was among the researchers.<\/p>\n The prices insurers pay are determined by numerous factors, including what\u2019s in their contracts with health systems. Some health plans, such as Smith\u2019s, automatically pay a percentage of the hospital\u2019s billed charges, incentivizing hospitals to increase their rates. Hershey Medical Center increased its prices for 11 common hospital billing codes by an average of about 30% from 2023 to 2025, Dan Snow, a data scientist at Turquoise Health, calculated for this article. But those prices were not much different than those of other hospitals in Pennsylvania.<\/p>\n In other cases, an insurer might agree to pay a health system a case rate \u2014 a standard rate for a type of care, say a colonoscopy or an inpatient stay for pneumonia.<\/p>\n But there\u2019s a lucrative catch, called a \u201ccarve-out,\u201d which refers to a particular benefit that\u2019s negotiated and paid separately. If the hospital used expensive drugs or devices, for instance, they can be billed in addition to the bundled case rate, with no limits on hospital markups. That was the case with McCullick\u2019s PET scan; about 80% of the charge was not for the scan, but for a new kind of drug injected before the scan to detect cancer.<\/p>\n Most often the final prices depend on the relative negotiating power of the insurer and the health system: Which side has enough market sway to walk away if the other doesn\u2019t meet its demands?<\/p>\n Such factors \u201ccan explain the price variations and patterns that we see,\u201d Dorstel said. \u201cIn some markets insurers are price-makers, and in others they are price-takers.\u201d<\/p>\n For Insurers, Paying More Is Profitable<\/p>\n Insurers aren\u2019t incentivized to lower prices, because high prices mean they \u201cget a slice of a bigger pie,\u201d Bai said.<\/p>\n By law, insurers must spend 80% or 85% of premiums on patient care. But when prices rise, they can pass on the increase to customers in the form of higher premium costs and still meet their legal obligation. So higher premiums mean less money for the patient and more profit for the insurer.<\/p>\n For each spinal injection Estrada received, his insurance company\u2019s contracted rate was $23,237.50. Estrada\u2019s coinsurance was $5,166.20. With a high-deductible plan, he was asked to pay all of that more than $5,000 bill.<\/p>\n When he called to challenge the big bill, he said, the surgery center\u2019s administrator told him the charges were the result of a \u201clegacy contract\u201d with the insurer that is \u201cadvantageous\u201d and \u201cfavorable\u201d to the center.<\/p>\n New Mexico Surgery Center Orthopaedics\u2019 charges are many times those of the hospital where the center\u2019s doctors admit patients, for example; there, Estrada\u2019s insurance company\u2019s contracted rate for the same spinal injection is just $2,058.67. And compared with the roughly $20,000 the insurer paid for each of Estrada\u2019s injections, other insurers pay the center about $700 for the same procedure, Snow found.<\/p>\n The surgery center is part of a national group that owns more than 535 surgical facilities, United Surgical Partners International, which in turn is owned by Tenet Healthcare, a for-profit health conglomerate. That kind of market dominance can lend companies the negotiating power to charge \u2014 and get paid \u2014 what they want, Bai said.<\/p>\n The surgery center, United Surgical Partners International, and Tenet Healthcare did not reply to multiple requests for comment from KFF Health News.<\/p>\n With charges prenegotiated, insurers have little incentive to scrutinize questionable bills. When Smith asked for an itemized bill for her surgery, she discovered that she had been billed for two surgeries: one for the ectopic pregnancy removal and another because the surgeon noticed signs of endometriosis and performed a biopsy. Both were billed at the contracted rate of $37,923.<\/p>\n She was livid at the charges, which to her seemed like double-dipping. \u201cThat was one surgery,\u201d she said. \u201cThere was one incision.\u201d<\/p>\n A Yale University-trained lawyer, Smith consulted the federal Centers for Medicare & Medicaid Services\u2019 correct coding guidelines<\/a>, which note the two billing codes used for her surgery generally can\u2019t be \u201cbilled together for the same patient encounter\u201d because one more or less is bundled with the other.<\/p>\n Smith said she reached out to the Penn State hospital, the insurer, and even the state attorney general without resolution. So she expects she will, reluctantly, have to pay the $5,250 coinsurance that the hospital and insurer say she owes.<\/p>\n In response to questions from KFF Health News, Scott Gilbert, a spokesperson for the health system, did not respond to the specifics of this case, but wrote: \u201cPenn State Health recognizes that health care billing can be confusing and often overwhelming for patients. The process involves many factors, including the type of care provided, where it\u2019s delivered and the details of a patient\u2019s insurance coverage.\u201d<\/p>\n A \u2018Reasonable\u2019 Price?<\/p>\n After a reporter sent multiple inquiries to Intermountain Health, McCullick said an agent asked him what would be \u201ca reasonable amount to resolve the situation.\u201d<\/p>\n Sara Quale, a spokesperson for Good Samaritan Hospital, the Intermountain affiliate where he got the PET scan, wrote: \u201cWe sincerely regret the frustration this situation has caused Mr. McCullick,\u201d noting that \u201cwe have been in consistent contact with him and will continue to follow up as needed.\u201d<\/p>\n McCullick said he wants to pay his fair share but is still trying to figure out what that is \u2014 certainly less than the different self-pay prices he\u2019s been offered, which all top $10,000. \u201cThe fluid nature of these numbers is mind blowing,\u201d he wrote in an email.<\/p>\n As for Estrada, he was so angry that he decided not to go ahead with the nerve ablation. While he was being prepped for the procedure, Estrada recalled, the physician said he had \u201cheard he might sue\u201d and chastised him for being a troublemaker. The hospital did not respond to a request for comment on the allegations, and Estrada said he had never threatened legal action.<\/p>\n Estrada got off the table and put his shirt back on. \u201cI\u2019m not going to let this person put a big needle into my back.\u201d<\/p>\n Bill of the Month is a crowdsourced investigation by KFF Health News<\/a> and The Washington Post\u2019s Well+Being<\/a> that dissects and explains medical bills. Since 2018, this series has helped many patients and readers get their medical bills reduced, and it has been cited in statehouses, at the U.S. Capitol, and at the White House. Do you have a confusing or outrageous medical bill you want to share? Tell us about it<\/a>!<\/p>\n \n\t\t\t\t\t\t\t\t\t\t\tElisabeth Rosenthal: \t\t\t\tRelated Topics\t\t\t<\/p>\n \t\t\t\t \t\t\t\t\t\t\t
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