Samantha Smith of Harrisburg, Pennsylvania, went into the operating room for an emergency removal of an ectopic pregnancy. “I’m glad I didn’t die,” she said, but was shocked to learn that her insurance company had been charged about $100,000 for outpatient surgery.
Jamie Estrada of Albuquerque, New Mexico, received two lidocaine injections into the upper spine to test whether permanent nerve ablation could treat chronic neck pain. His pain disappeared — until the anesthetic wore off about six hours later. The truth is that his insurance company was being billed $28,000 for each 10-minute procedure.
Mark McCarrick of Longmont, Colorado, will undergo a full-body PET scan to find out if his prostate cancer has returned. A two-hour test showed no evidence of cancer, but he became concerned when he saw a $77,000 bill sent to the company that managed his insurance.
Medical inflation has steadily outpaced general inflation for years, with bills for many simple, routine procedures reaching tens of thousands of dollars.
These lawsuits highlight questions plaguing the U.S. health care system and the patients it serves. What is a reasonable price for medical consultations and procedures, and how are those prices determined? How hard do insurance companies, the supposed custodians of patients’ hard-earned medical bills, fight to lower bills, and how closely do they scrutinize billing accuracy?
The cases of Mr. Smith, Mr. Estrada, and Mr. McCarrick are all “charge master” bills, calculated from a master price list that health care providers charge for services. Patients with insurance typically do not pay premiums. However, they are important because they are often the starting point for the negotiated price that the insurance company agrees is reasonable to pay for the service. Patients typically end up paying 10% to 20% of the negotiated price, or coinsurance, which can be significant when prices are this high. Furthermore, these negotiated fees are difficult for patients to access (until they receive their bill) and are seemingly arbitrary.
And because health insurance companies can offset higher costs in one year by raising premiums and deductibles the next year, they have little incentive to negotiate hard for better terms for their insured patients. In other words, all patients pay money indirectly, without even realizing it.
In Smith and Estrada’s cases, the insurance company paid the majority without any questions asked. Penn State Hershey Medical Center, which treated Smith, received $61,000, or 62% of the bill. The New Mexico Surgical Center Orthopedic Clinic, which treated Estrada, received 82%, or $46,000.
Meanwhile, McCarrick’s insurance company said it would only pay 28% of the $77,000 to Intermountain Health. Then came another curveball. The hospital, which had said it had pre-authorized it, later found out it wasn’t covering his scans. It therefore billed Mr. McCarrick for the full Chargemaster fee of $77,000. Alternatively, he offered to pay a cash fee of $14,259.
In an emailed statement, Chris Bond, a spokesman for AHIP, a major industry group for health insurance companies, said hospitals are responsible for the issue, saying plans are “focused on making benefits and coverage as affordable as possible for our members” and that “as the largest single category per premium dollar spent, increases in hospital-based care spending have had a significant impact on premiums.”
How can patients afford to get sick in a health care system with little transparency and where prices can fluctuate rapidly?
“That doesn’t make sense.”
Americans list health care as the government’s top priority in 2026, and express particular concerns about cost, access and coverage, according to an Associated Press-NORC poll.
The first Trump administration required insurance companies and hospitals to release files containing cash, gross and negotiated prices for various products and services. These raw, machine-readable price lists are often hundreds of pages packed with medical billing codes and have proven to be of little use to patients and customers.
Five years later, they have been captured, parsed, and enhanced by academics and startups, shedding light on the often shocking price disparities and how they came to exist.
“When you look at the data, whether it’s from Chargemaster or what the insurance company paid, it’s on a map and it doesn’t make sense,” said Marcus Dostel, senior vice president of operations at Turquoise Health, a price transparency startup that serves payers and health care providers as customers. “Even within a specific region, the variation is huge.”
Researchers at the Johns Hopkins Bloomberg School of Public Health examined the data and found that the prices paid by different insurance companies for the same billed charges “can vary by more than three times for the same hospital,” said Ge Bai, a medical accounting professor and one of the researchers.
The price your insurance company pays depends on a variety of factors, including your contract with the health plan. Some health plans, like Smith’s, automatically pay a percentage of the fees charged to hospitals, incentivizing hospitals to raise their rates. Hershey Medical Center increased rates for 11 common hospital billing codes by an average of about 30% from 2023 to 2025, according to calculations for this article by Dan Snow, a data scientist at Turquoise Health. But those prices weren’t that different from prices at other hospitals in Pennsylvania.
In other cases, insurance companies may agree to pay health systems a case fee, a standard rate for a type of treatment, such as a colonoscopy or hospitalization for pneumonia.
But there is a lucrative catch-all called a “carve-out,” which refers to certain benefits that are negotiated and paid separately. For example, if a hospital uses expensive drugs or equipment, there is no limit to the hospital’s markup and it can charge them in addition to the bundled case fee. That was the case with McCarrick’s PET scan. About 80% of the charges were not for the scan, but for a new class of drugs injected before the scan to detect cancer.
In most cases, the final price depends on the relative bargaining power of the insurance company and health plan. In other words, which side has enough market power to exit if the other does not meet its demands?
Dostel said these factors “explain some of the price movements and patterns that we’re seeing.” “Insurers are price makers in some markets and price makers in others.”
It is profitable for insurance companies to pay more
Bayh said insurance companies have no incentive to lower premiums because higher premiums mean “getting a bigger piece of the pie.”
By law, insurance companies must spend 80% or 85% of their premiums on patient care. However, if prices rise, companies can pass the increase on to their customers in the form of increased premiums and meet their legal obligations. Therefore, higher premiums mean less money for patients and more profits for insurance companies.
The insurance company’s policy fee for each spinal injection that Estrada received was $23,237.50. Estrada’s coinsurance was $5,166.20. A high deductible plan required him to pay all bills over $5,000.
When he called to dispute the high bill, he said he was told by the surgery center’s management that the charge was the result of a “legacy contract” with an insurance company that was “favorable” and “favorable” to the center.
For example, orthopedic surgery fees at the New Mexico Surgical Center are many times higher than those at the hospitals where the center’s doctors admit patients. There, Estrada’s insurance company’s contracted rate for the same spinal injection was only $2,058.67. And compared to the roughly $20,000 that Estrada’s insurance company paid for each injection, Snow found that other insurance companies paid the center about $700 for the same procedure.
The surgery center is part of United Surgical Partners International, a national group that owns more than 535 surgical facilities and is owned by Tenet Healthcare, a for-profit medical conglomerate. This kind of market power can give companies the bargaining power to charge what they want and get paid, Bai said.
The surgery center, United Surgical Partners International, and Tenet Healthcare did not respond to multiple requests for comment from KFF Health News.
Because rates are pre-negotiated, insurance companies have little incentive to scrutinize suspicious bills. When Ms. Smith asked for an itemized bill for the surgery, she discovered that she had been charged for two procedures. One was surgery to remove an ectopic pregnancy, and the other was because the surgeon noticed signs of endometriosis and performed a biopsy. Both were billed for a contract fee of $37,923.
She was furious at the accusation, but it seemed like a double dip to her. “It was one surgery,” she said. “There was one cut.”
Smith, a Yale-trained attorney, consulted the federal Centers for Medicare and Medicaid Services’ guidelines for correct coding. It points out that the two billing codes used for her surgery are more or less bundled with the other, so they generally cannot be “billed together for the same patient visit.”
Smith said she contacted Penn State Hospital, her insurance company and even the state attorney general’s office with no resolution. As a result, she expects she will have to reluctantly pay the $5,250 coinsurance that the hospital and insurance company say she will have to pay.
In response to questions from KFF Health News, health system spokesperson Scott Gilbert did not go into specifics about the case, but wrote, “Penn State Health recognizes that medical billing can be confusing and often overwhelming for patients. Many factors come into play in this process, including the type of care provided, where it is provided, and the details of the patient’s insurance coverage.”
Is it a “reasonable” price?
McCarrick said that after a reporter sent multiple inquiries to Intermountain Health, a representative asked what a “reasonable amount of money would be to resolve the situation.”
“We sincerely regret the disappointment this situation has caused Mr. McCarrick,” Sarah Quayle, a spokeswoman for Good Samaritan Hospital, an Intermountain-affiliated hospital where he underwent a PET scan, wrote. “We have been in constant communication with him and will continue to follow up as necessary.”
McCarrick said he wants to pay his fair share, but is still working out what that is. Certainly cheaper than the various out-of-pocket costs offered so far (all over $10,000). “The fluid nature of these numbers is astonishing,” he wrote in an email.
As for Estrada, he was so upset that he decided not to proceed with the neurectomy. Estrada recalled that while he was being prepared for surgery, doctors scolded him for being a troublemaker, saying, “I heard they might sue.” The hospital did not respond to a request for comment on the allegations, and Estrada said he had never threatened legal action.
Estrada got off the table and put his shirt back on. “I can’t let this guy stick a big needle in my back.”
