Hospitals push for upfront payments as healthcare costs rise

Hospitals are increasingly requesting upfront payments from patients, as healthcare costs continue to rise. Thomas Zordani, a resident of Denver, experienced this firsthand when he was told he had to make a $5,000 deposit before his appointment at the Mayo Clinic in Phoenix. Zordani, who had been informed that the clinic was in his insurer's network, was placed in self-pay status and refused to pay, canceling his appointment.

Mayo Clinic later admitted that the patient was misinformed about their network status and apologized for the issue.

This trend of hospitals seeking prepayments is a result of rising deductibles and out-of-pocket expenses for patients, as insurers try to control premium growth by shifting costs to patients. Richard Gundling, a senior vice president at the Healthcare Financial Management Association, stated that "Things like preservice deposits and those kinds of moves are probably going to become more and more likely."

The issue is not just about hospitals asking for money upfront, but also about how to maintain access to care when patients cannot afford the out-of-pocket costs. A recent KFF health tracking poll found that lower out-of-pocket costs were the top change insured adults would like to see in their coverage plans.

Hospitals are not always forthcoming about their network status with patients, which can lead to unexpected pre-service deposit requests. Mayo Clinic's website states that they require prepayments in certain cases, including for noncontracted insurance plans. Community Health Advocates, a health insurance consumer assistance program in New York state, has seen an increase in patients concerned about prepayments, particularly those seeking out-of-network care with out-of-network coverage.

The exact number of hospitals collecting upfront payments is unclear, but it is becoming more frequent. Kodiak Solutions, a technology company that provides services to health systems, has noticed a growing number of conversations with health systems about this issue. On average, hospitals collect about a quarter of the expected patient cost upfront, with the average deductible in family coverage offered by employers being $3,762 per person and rising.