After enduring the unpleasantness of colonoscopy preparation, Carrie Espinosa got another distasteful experience when she arrived for the procedure—a demand for payment in advance.
“I figured, ‘Are they really going to make me come up with this money?’ I didn’t think they could,” says Espinosa, a benefits consultant and insurance adviser. She ultimately agreed to pay the amount she expected to owe based on her deductible and out-of-pocket maximum. But the experience left her fuming.
“Expecting a patient to come up with money upfront when it hasn’t even been put through insurance, that doesn’t seem right to me,” she says.
More hospitals and surgery centers are asking people to pay in advance for nonemergency services as health care costs rise alongside deductibles, increasing patients’ out-of-pocket expenses and the likelihood that they won’t be able to cover the cost of care. The practice could become even more pervasive as hospitals grapple with the financial effects of the COVID-19 pandemic.
But many consumers are uncomfortable paying for pricey surgeries and diagnostic tests in advance, based on estimated costs and without the opportunity to assess the quality of care provided. Some question why hospitals should collect payment upfront, while most other service providers, all of whom risk bad debt, send bills only after providing services.
“The practice is not very favorable to consumers,” says Courtney Hedderman, AARP Illinois’ associate state director of advocacy and outreach. “You don’t realize that you could and should say no, because you’re already in a very vulnerable state.”
Most large hospital systems in the Chicago area ask patients to pay before providing certain services. They say the practice promotes price transparency and prevents surprise medical bills after the fact, particularly if a service isn’t covered by insurance or a provider is out-of-network.
And while the federal Emergency Medical Treatment & Labor Act requires hospitals to treat patients in need of emergency services, regardless of their ability to pay, nothing prevents hospitals from requesting payment before providing elective care.
The estimates hospitals provide don’t take into account other insurance claims that haven’t been processed, which means they don’t necessarily reflect a patient’s deductible at the time of service, patient advocates say. And estimates often exceed the actual cost of care, leaving those who do prepay to wait patiently for refunds, which can take weeks or months, they say.
Most hospitals say overpayments are automatically applied to any outstanding medical bills a patient may have, or a refund is automatically issued. But advocates say the onus is on patients to check for a refund.
Hedderman says she occasionally gets calls from AARP members asking whether they need to prepay for medical services—with the most recent call coming in late last month from a Northbrook man.
Advocate Aurora Health, Northwestern Medicine, Amita Health, Rush University System for Health, and NorthShore University HealthSystem are among chains that engage in the practice. Many say they only require deposits from out-of-network or self-pay patients for elective care, but it also depends on the procedure.
For example, Evanston-based NorthShore, which requires payment before cosmetic procedures, says “medically necessary services are not rescheduled based on the ability to pay or provide a deposit.”
Some of the systems started billing patients in advance after the Affordable Care Act was signed into law a decade ago. Rush is the latest to engage in the practice, implementing its policy in 2019.
Cook County Health, which operates safety-net hospitals serving many patients without private insurance, says those who pay upfront get discounts, but it’s not a prerequisite for care.
Loyola Medicine, the University of Chicago Medicine, and Edward-Elmhurst Health didn’t respond to requests for comment.
And it’s not just hospitals. North Shore Endoscopy Center in Lake Bluff, where Espinosa got her care, requires that all patients pay in advance.
“In line with industrywide health care practices, we work with each patient and their health insurance plans to determine the patient’s responsibility, including copay and deductible, in advance and ask that services be paid for at the time of care,” says a representative for the center, which is part of ambulatory surgery center management company Amsurg.
Today, providing patients with an estimated out-of-pocket cost and asking that they pay in advance is “very common, if not the norm,” says Richard Gundling, senior vice president of Healthcare Financial Practices at the Healthcare Financial Management Association.
The practice has become more widespread, given the push for health care price transparency and the prevalence of high-deductible health plans, Gundling says.
Such health plans have lower monthly premiums, but come with yearly out-of-pocket expenses for in-network care ranging from $7,000 to $14,000, according to the Centers for Medicare & Medicaid Services.
Meanwhile, national uncompensated care, which includes charity care and unpaid bills, has increased 15% to $41.6 billion since 2015, according to the American Hospital Association.
“It might be an irritant for me going in and saying, ‘Wait a second, I didn’t get my MRI and you want $200 right now?’ But, in reality, it’s supposed to make it better for me as well as the health system,” says Venanzio Arquilla, managing director Chicago-based consultancy Claro Healthcare. “I don’t want to see seven bills (from a hospital). … It’s expensive to continue to bill people and, ultimately, it really raises the cost for people who are paying by shifting costs.”
An interim final rule released by the Biden administration late last month also aims to increase health care price transparency by preventing excessive out-of-pocket costs among consumers who unknowingly get care out-of-network.
“There are so many people with so much medical debt,” Espinosa says. “The cost of care, to me, is the fundamental issue. … I don’t hate the player, I hate the game.”