I recently underwent a colonoscopy and an upper GI. I was asked to pay the amount in full several days in advance. The upside was that I knew exactly what the bill would be. I chose the doctor and the facility based on price and convenience. I was a cash payer using a service that negotiates prices in advance. When I walked into the ambulatory surgery center, I handed them an insurance form that said I had no copay. I did the same when seeing my gastroenterologist for my initial consultation.
Cost sharing and deductibles have about doubled in recent years. Many patients (probably most under age 65) find they are essentially paying all their health care costs out-of-pocket. Unlike my example above, they do not always know how much they will owe prior to care. Nor will they have an opportunity to comparison shop for the best prices. Most have no idea they could get off cheaper paying cash through Assist Health, the service I used.
Years ago, I went to see a new doctor and offered to pay at time of service because I had not met my deductible. My doctor told me to wait for him to bill me because he had no idea what I would owe. Nowadays medical providers are taking no chances. The Wall Street Journal reports that doctors and hospitals increasingly ask for payment upfront. The following is from WSJ:
This year, about 92% of U.S. health providers either encourage prepayment, require it or collect a payment method on file during the estimate process, according to a survey conducted by PayZen, a patient payment service provider, and the Healthcare Financial Management Association. Last year, it was 81%.
It is causing sticker shock for patients, and headaches for patients who overpay and then try to collect refunds. Then there are the cases where a patient pays several thousand dollars, only to learn they owe thousands more.
Hospitals are finding out that collecting large copays from patients is rather difficult after-the-fact. A study in JAMA Health Forum found that when patients have an outstanding balance, about half of patients’ share remains unpaid a year after the service. Patients are far less likely to pay after the procedure compared to being asked to pay prior to the procedure. While hospitals cannot withhold emergency services, they are allowed to collect deposits ahead of time.
Prepayments have been climbing over the past few years and now nearly 20% of patient’s bills are paid ahead of time, according to Kodiak Solutions, a provider of technology and data services to hospitals.
Some providers are being more flexible due to concerns that aggressive pre-service collections could deter patients from getting necessary procedures. Among the 17% of organizations that officially require prepayments, 68% ultimately proceed with care even if the requirement isn’t met, according to PayZen.
Perhaps there is an opportunity to enforce greater transparency and price competition. If hospitals want patients to pay prior to care, there should be an estimate, and that estimate must be binding. Moreover, patients should be able to get a binding estimate with enough time to shop around for services. Repairing an inguinal hernia costs anywhere from $2,900 to $37,000 depending on where you get it done. Let’s assume your health plan deductible under Obamacare is $10,000, and you select an expensive setting. You could be paying nearly $10,000 for your share. Under those circumstances you probably wished you knew about the doctor who would only charge $2,900 in cash.
Some states are passing legislation to regulate how prepayment is administered. They should seize the opportunity also to mandate increased price transparency while allowing patients the time and tools to shop around.
WSJ: Why More Hospitals and Doctors Are Asking Patients to Pay First
Goodman Health Blog: Shopping for Medical Care is a Hassle, but it Works