Hospitals Demand Payment Upfront Amid Rising Costs

A growing number of hospitals are now requesting prepayments from patients before they receive medical services, a practice that marks a significant shift from traditional billing methods. Thomas Zordani's experience exemplifies this trend, where he was asked for a $5,000 deposit by Mayo Clinic despite his insurance being active. This situation occurred even though his insurance plan offered out-of-network benefits, and he was later awarded $47,500 in damages after a legal dispute over the clinic's failure to properly notify him.

This preservice deposit demand is compounded by rising healthcare costs and increasing patient deductibles. Insurers are shifting more expenses to consumers to curb premium growth, leading patients to 'self-insure' more of their medical bills. Experts predict such upfront payment demands will become more common, posing challenges for both providers and patients in accessing and affording care.

While specific data on hospitals collecting these 'point-of-service' payments is limited, major institutions like Johns Hopkins Medicine and MD Anderson also have policies for collecting funds in advance for non-emergency care. On average, hospitals collect about a quarter of the estimated patient responsibility, a figure that has increased in recent years. This practice, however, is occurring even as hospitals face rising uncollected debt, attributed to complex cost-sharing structures in insurance plans.

Consumer advocacy groups report growing concerns from insured individuals facing these prepayment demands, particularly for out-of-network care. Overpayments can occur, and reimbursement timelines vary by state. In one instance, SimonMed Imaging agreed to issue refunds within an average of 60 days following a lawsuit alleging long delays in returning overpaid amounts.