Hidden hospital prices harm patients: Can this new pricing tool make a difference?

The day before she underwent surgery to remove an ovary, Laurie Cook drove to a Nashville hospital for a written estimate of how much its operation would cost.

She’d already paid the $783 surgeon’s fee. But she needed to know what the hospital would bill for the operating room, nurses, medications, lab tests and other charges. She left the billing department with a written estimate: $5,535.

This was far from a trivial detail for the elementary school teacher and mother of two. She knew she'd have to pay the full amount the hospital charged under her insurance plan, which required $12,000 out of pocket before her coverage kicked in. Armed with this information, she and her husband determined they could fit the surgery into their household budget using a payment plan.

The following day, the operation was completed without complications. She was home within a few hours.

Weeks later, she received the hospital’s bill: $61,314.

Cook knew health care pricing is notoriously mysterious, but getting a bill more than 11 times what the hospital had estimated astonished her. She asked the hospital to audit the bill and explain why it's so much more, but they haven't given her a breakdown of billing codes.

“It's an astronomical charge,” Cook said. “And it’s just not fair.”

A federal law that went into effect in 2021 is designed to prevent surprise medical charges like those Cook experienced. The price transparency law requires that hospitals post cash prices and rates negotiated with health insurers for a broad list of procedures in a computer-readable format so the information can be analyzed.

But price comparisons have been hard to come by until now.

A free searchable database launched this week by a consumer nonprofit compiles pricing data from nearly 6,000 U.S. hospitals. The Patient Rights Advocate, or PRA, tool Hospital Price Files Finder is aimed at empowering patients, employers, unions and others to compare and potentially save on medical bills.

PRA officials said the tool fulfills a necessity, letting people compare prices and save on medical procedures and services. The group notes that the vast majority of health care is nonemergency care. The idea is that consumers should have time to shop and compare prices charged by different hospitals and clinics before they undergo a procedure. With 100 million Americans in medical debt, having a tool like this could help consumers shop for better prices and avoid big bills, they said.

Cynthia Fisher, founder and chair of PRA, acknowledged the data is incomplete because many hospitals have not posted all pricing data as required by the federal price transparency law.

The majority of hospitals have not complied with the law, she said.

In a letter Monday to U.S. Department of Health and Human Services Secretary Xavier Becerra, Fisher noted that as of July just 36% of the nation's 2,000 largest hospitals had fully complied with the law. She said she hopes the PRA database convinces the federal agency it's time to "expedite enforcement" of the price transparency law.

"Every day that prices are withheld from consumers, Americans are harmed by overcharges, unexpected bills, and unwarranted debt collection," Fisher wrote to Becerra. "Once actual prices are revealed by all hospitals and all insurers at every point of care, consumers can shop and compare."

Bill collectors 'blow up my phone daily'

Had such a database been available to Cook, she would've used it to compare prices. She likened it to shopping for a car with Kelley Blue Book or other websites that list car values by make and model.

Instead, she's fought the charges levied by the hospital for her January surgery. The hospital has not provided a full accounting of the billing codes used for the charges. Her insurance paid a portion of the bill, and the hospital has hired a collections agency to get nearly $8,800 from Cook. She also received a separate $2,700 bill from an anesthesiologist that caught her by surprise.

Bill collectors "blow up my phone daily," Cook said, when she's teaching school and during family time. It's a new experience for her because she's always paid her bills on time and earned a lifetime of good credit before the surgery.

"People want to be responsible," Cook said. "They should have the ability to do so."

Insurance doesn't guarantee the lowest price

Several health insurance companies in recent years have introduced price-lookup tools for their customers. These tools are often tailored to an individual's plan and network of doctors and hospitals. The tools often include information about members' out-of-pocket requirements, deductibles, copays and coinsurance.

But these insurance company tools also include average costs, not the actual billed amount, according to a paper in Health Affairs. Hospitals and doctors are more accountable when their actual prices are listed rather than estimates. Consumers and employers that purchase health care have little use for estimates, the authors argue.

Ge Bai, a Johns Hopkins University professor of accounting and health policy and management, said price transparency has tremendous potential for patients and employers seeking to keep tabs on spiraling health costs. But she also says that people need better incentives to seek lower-cost services.

In a recent study, Bai found that in nearly half of cases hospitals charged patients who paid cash less than those who used insurance for the same medical service. In other words, consumers with high deductible plans would have a lower bill if they'd paid in cash rather than using their insurance plan to cover the bill.

But consumers and employers would only know this if they shopped around and asked for prices. And people might not be willing to do that unless they have a financial incentive to do so, Bai said.

"We engage in comparison shopping only when the financial benefit directly flows to our own wallets," Bai said.

Some state insurance plans are beginning to use price information when making coverage decisions for employees and retirees. The California Public Employees Retirement System directed retirees and their families to lower-cost surgeons for joint replacements and outpatient operations. Montana's state employee health plan administrators demanded better rates when they discovered hospitals charged up to five times as much as they charged Medicare, the federal health program for older and disabled Americans.

Consultants predict employers and other health care purchasers will use the hospital pricing tool from PRA or something like it to scrutinize medical charges and insurance claims.

Stephen Carrabba, president of Claim Informatics, which analyzes insurance claims on behalf of unions, companies, states and local governments, said the PRA tool could be a boon because it "will help us more easily track and fight waste, fraud and abuse that makes coverage and care unaffordable for employers and their members."

Knee injury reveals wide price disparity for MRI

Suzette Sontag learned to shop for medical prices when her adult son slipped off the tailgate of a truck and injured his knee a few years ago.

He needed an MRI to find out the extent of his knee injury. Because her son was uninsured at the time, Sontag, who lives in Somerset, Wisconsin, suggested he call several hospitals and clinics to find out how much they would charge for a person without coverage for an MRI.

Her son phoned eight hospitals and clinics and received prices from four of them. The prices ranged from $499 to $7,000, Sontag said. He ended up going to the least expensive imaging clinic, located in the Minneapolis-St. Paul region, and paid $499 for the MRI, which included a radiologist’s review of the image.

Sontag said she was “just floored" by the price difference.

Since that experience with her son, she has tried to find out prices for medical services such as mammograms, skin cancer removal and blood pressure checks with mixed success.

Sontag said paying for health care has been challenging because she and her husband are farmers. They have to buy their own health insurance.

On a 600-acre farm, they grow soybeans, corn and hay. She also trains and boards horses. She lists her training and boarding prices on a website so customers aren't surprised. Some seek out more inexpensive places. Others don't mind paying more because they're seeking fancier stalls with more amenities.

She said she would like to see hospitals, doctors and labs be more open about the prices they charge.

"It's the more honest way," Sontag said. "This is what the price is. That's the fair way to do it."

Ken Alltucker is on X, formerly Twitter, at @kalltucker, or can be emailed at alltuck@usatoday.com.

This article originally appeared on USA TODAY: Efforts to help save on expensive hospital prices, bills underway