Advance payment for certain services is common practice at many hospitals, but some patient advocates argue the practice is unfavorable for patients and make it harder for them to pay for care, Stephanie Goldberg reports for Modern Healthcare.
Asking for payment in advance is common practice for many providers
According to Goldberg, more hospitals and surgery centers are asking patients to pay for nonemergency services in advance, and the practice could become even more common as hospitals struggle to deal with financial challenges from the pandemic.
For instance, most large hospital systems in Chicago—including Advocate Aurora Health, Northwestern Medicine, Amita Health, Rush University System for Health, and NorthShore University HealthSystem—ask patients to pay before providing certain services. According to the hospital systems, the practice promotes price transparency and prevents surprise medical bills, especially if a service isn't covered by insurance or is from an out-of-network provider.
Many hospitals say they only require advance payment from out-of-network or self-pay patients for elective procedures, Goldberg reports, but it can also depend on the procedure, such as whether it is cosmetic or medically necessary.
Richard Gundling, SVP of health care financial practices at the Healthcare Financial Management Association, said hospitals providing patients with an estimated cost and asking them to pay in advance is "very common, if not the norm."
And the practice extends beyond just hospitals—North Shore Endoscopy Center, which is part of ambulatory surgery center management company Amsurg, requires that all patients pay in advance.
According to Gundling, the practice has become more widespread amid a push for price transparency in health care and an increasing number of patients with high-deductible health plans.
Patient advocates argue against advance payment practices
However, Goldberg writes that asking for advance payment increases patients' out-of-pocket costs, as well as the possibility they won't be able to cover the cost of care.
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Many consumers are uncomfortable paying for expensive surgeries and diagnostic tests in advance, based only on estimates and without a chance to evaluate the quality of care provided, Goldberg reports. Some also question why hospitals should collect payment upfront when most other service providers bill customers only after a service is provided.
"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," said Carrie Espinosa, a benefits consultant and insurance adviser who paid in advance for a colonoscopy at North Shore Endoscopy Center.
"There are so many people with so much medical debt," Espinosa said. "The cost of care, to me, is the fundamental issue."
Moreover, according to Goldberg, patient advocates say hospital cost estimates don't consider other insurance claims that have not been processed, meaning that the estimates may not accurately reflect a patient's deductible at the time of a procedure.
In addition, advocates say the estimates often exceed the actual cost of care, leaving patients who pay in advance in wait weeks or months for refunds. Although hospitals say overpayments are either automatically applied to any outstanding medical bills or automatically issued as a refund, advocates argue that patients are the ones responsible for checking for refunds.
"The practice is not very favorable to consumers," said 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."
However, Venanzio Arquilla, a managing director at Claro Healthcare, said while it might be irritating for patients to be asked to pay in advance, "in reality, it's supposed to make it better for [them] as well as the health system."
"I don't want to see seven bills [from a hospital] … It's expensive to continue to bill people," Arquilla added, "and, ultimately, it really raises the cost for people who are paying by shifting costs." (Goldberg, Modern Healthcare, 10/8)