Thomas Zordani, a patient undergoing a debilitating headache treatment, experienced a significant challenge when consulting with a Mayo Clinic neurosurgeon. Upon scheduling the appointment, Zordani was informed that the clinic was operating on an insurer’s network, but upon arrival, he was summoned to the financial office and met with a $5,000 preservice deposit – a sum he was automatically designated as ‘self-pay’ despite his plan’s out-of-network benefits, according to a recent email from Mayo Clinic communications. He subsequently refused this unexpected charge, and his appointment was canceled, reflecting a growing trend of hospitals seeking upfront payments.
This practice, known as ‘point-of-service’ billing, is becoming increasingly prevalent, forcing patients to shoulder a larger portion of the cost of their care. Andrea Kalmanovitz, Mayo Clinic’s communications director, stated, ‘We regret that this individual’s experience did not meet the high standard of communication we strive to provide when assisting patients with their insurance coverage and financial responsibility.’
Mayo’s website clarifies that pre-service deposits are required for various cases, including non-contracted insurance plans, and that patients may be asked to pay an initial deposit determined by the care center, which can be a substantial percentage of the visit’s cost. Historically, patients typically receive bills after treatment, but this practice is escalating, with hospitals increasingly seeking to collect larger amounts upfront. This shift is driven by rising deductibles and costs, forcing providers to shift more of the financial burden onto patients.
Experts such as Richard Gundling, a senior vice president at the Healthcare Financial Management Association, emphasize the double whammy for patients. ‘It’s a bigger issue than just hospitals asking for money up front,’ Gundling explained. ‘The challenge is maintaining access to care when more patients can’t absorb the level of out-of-pocket costs.’
This trend is amplified by a Kodiak Solutions report, which indicates that hospitals are increasingly collecting these upfront payments, particularly in rural areas, due to a fundamental shift in coverage policies – which increasingly feature higher deductibles, greater coinsurance, and complex cost-sharing structures. These changes, according to the report, increase the nominal patient responsibility without improving the probability of collection.
This situation has implications for consumers, particularly those seeking out-of-network care. While consumer protections are less defined, some states, such as Indiana, have introduced laws to prevent hospitals from requiring prepayment simply to avoid offering financial assistance. Patricia Kelmer, a senior director of healthcare campaigns at PIRG, highlighted the issue, stating that patients may be scheduled three months in advance, so the provider wouldn’t know how much was left on the deductible. The challenge lies in ensuring patients get their money back if they overpay. In some cases, the amount of reimbursement can vary and depends on the state’s laws, though a small number of states directly address the issue.
Furthermore, the practice of collecting pre-service payments is opaque. Kastryos, a senior fellow at Brookings Institution, noted that these amounts are calculated by the provider, and can be difficult to understand, and the patient may be unsure about how much is left on the deductible.
The situation is expected to worsen as insurers continue to increase deductibles and costs, potentially leading to increased uninsured rates and a further strain on patients’ financial well-being.
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Source: CBS News
