Hospitals asking for payment upfront: generally ok with me

Hospitals in Northern New Jersey (and no doubt elsewhere) are a lot more likely these days to collect patient payments upfront rather than waiting to bill and collect later. Although it sounds a bit cold-hearted, it’s not a bad idea if done properly. In particular if a hospital can determine upfront what a patient’s co-pay or deductible is, it’s reasonable to try to collect it when the patient is there. That avoids the substantial costs of collection and dramatically boosts the percentage of patients who pay. In theory it may also lower the rates a hospital can accept from insurance companies, which ultimately could translate to lower premiums when there is less cost shifting from those who don’t pay to those who do.

As I write this I’m well aware of the problems such a policy can cause including deterring people from needed care, increasing anxiety at a time of heightened stress, delaying clinical triage, and getting the amounts owed wrong. The biggest issue is the first one –for example even an insured patient may not have the $1000 or $2000 co-payment or deductible on hand. But that also shouldn’t necessarily be the hospital’s problem. Rather that’s an issue for the plan sponsor (often an employer), state or federal policy.

I do worry about big institutions such as hospitals acting inappropriately aggressively toward patients, but this problem already exists with post-treatment payments. If anything, taking care of the bill up front may reduce the interest and fees that can pile up, especially when a collection agency gets involved.

January 25, 2012

6 thoughts on “Hospitals asking for payment upfront: generally ok with me”

  1. An unpleasant consequence of the policy to collect upfront is that the facility springs the collection attempt as a surprise at the time of admission. Knowing that there are other claims in process means that the guarantor knows the amount to be collected is certainly wrong, but not by how much. Hospitals are much less aggressive about refunding overpayments than they are about collecting.

  2. one other aspect of the ‘upfront payment’ trend is the chance that hospitals become financing vendors – fronting for lenders charging high interest & fees.

    As noted, post-treatment payments may face the same issues, but a greater share of that burden will rest with the provider of services, rather than the person being admitted and his/her family.

  3. Hospitals and doctor’s offices have historically been slow billers. It is not uncommon for a patient to receive a bill 3 to 6 months after a service has been rendered, many times well after an insurance payment has been made. It’s a little hypocritical for the hospitals to push the problem of their inability to bill on time onto sick patients who show up needing immediate care.

    Besides, how would doctors or hospitals know the answers to simple, important questions, like whether a patient’s deductible had been met? Putting a patient in the position of chasing the provider to correct overpayment doesn’t seem like a reasonable solution.

  4. My hospital in southern New Hampshire offered me a 20% discount on my deductible, if I agreed to pay in advance.


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