A week before she was due to have knee replacement surgery, Jennifer got a call from the surgeon’s office. She was told that she had not met her annual deductible, so she would owe $700 up-front. Jennifer paid because she thought she had to.
Later, when she got an explanation of benefits statement from her insurance company, Jennifer realized that she’d overpaid the knee surgeon by several hundred dollars. This was because her insurance wound up paying a different medical bill that was submitted prior to the knee replacement surgery, so that by the time her insurance company received the bill for her knee replacement surgery after it was complete, she did not owe as much as the knee surgeon had anticipated. It took multiple phone calls to the hospital and to the insurance company and was a huge headache for her to get her money refunded.
Jennifer’s experience isn’t unusual these days, because of two reasons:
- Insurance companies pay bills in the order received; and
- Hospitals are becoming more aggressive about asking patients with health insurance to pay their share of the bill up-front.
What you must know is that you are not required to pay up-front. And as the above example shows; to avoid spending money up-front unnecessarily and to prevent a potential big headache trying to get a refund, it may be better to wait to see how much of the bill is covered by your insurance plan. However, there are times when prepaying can actually save you money, especially if you use it to negotiate a discount with the hospital, which I’ll explain later.
Why Are You Being Asked to Prepay for Medical Bills?
The prepay trend is happening because hospitals are being stuck with big unpaid bills. While insurers still cover most of a patient’s medical expenses, hospitals now collect approximately 30 percent of their revenue from patients, up from 10 percent in 2002. Those larger out-of-pocket costs are from the growing number of people in health insurance plans with large deductibles, which require you to pay thousands of dollars to health care providers before insurance starts to pay some of the bills.
Hospitals use software to estimate what a patient will owe after insurance pays its portion. They are finding out that people are less reliable payers than insurance companies, and doctors want to be sure that they will be compensated for the care they provide. Clearly, a hospital’s odds of getting reimbursed are much higher if a patient is asked to pay up-front versus when the bill arrives months later. That’s why about three-quarters of hospital systems today ask for payment in advance or when you arrive for a procedure, according to the Healthcare Financial Management Association.
Can the Doctor Withhold Treatment if You Don’t Pay in Advance?
While it isn’t illegal for a hospital or doctor’s office to ask you to pay in advance what they estimate you will owe, withholding treatment is illegal. In fact, in most standard commercial health insurance contracts, health care providers are prohibited from forcing a patient to pay anything but a set co-pay before the explanation of benefits statement is issued and the final patient liability is established.
Please note that this will likely never happen if you’re waiting in the emergency department for treatment, because hospitals understand that federal law requires that you be stabilized and treated before you can be asked about money. The Emergency Medical Treatment and Active Labor Act ensures patients access to emergency care regardless of ability to pay.
What to Do if You’re Asked to Pay Upfront
Here are some options if you are asked to pay your medical bill upfront:
- You can say no. Hospitals don’t always get the estimate right. That’s why we (and many insurance companies) recommend that you wait until you get the bill. The hospital is of course unaware of other claims you may have in process that are going toward your deductible, and it may turn out that you owe a lot less than anticipated or in some cases, you may not owe anything at all!
- If you agree to pay up-front, ask for a cost estimate and find out whether you’ll get a refund if you overpay. Some hospitals will automatically give you a refund, but, in some cases, it may be up to you to follow up. Find out in advance how refunds are handled and how long they typically take to get processed.
- Find out if you can get a discount by prepaying. About 44 percent of hospitals offer “prompt-pay” discounts for patients who pay their share of the bill in full in advance, with an average discount of 20 percent, according to a survey by the Advisory Board, a health care research and consulting firm. If you do decide to pay in advance, ask for a discount!
- Double-check the provider’s estimate with your health plan to see if they’re roughly the same. Keep in mind that the federal government has rolled out some pricing transparency rules over the last few years, which make it easier for consumers to have access to health care costs in advance (as opposed to having to wait for the explanation of benefits after the procedure is completed). Hospital price transparency rules took effect in 2021 and health plan price transparency rules were fully in place by the start of 2024!
- Pay basic essentials bills first. If money is tight, pay your basic essential bills to live for your overall well-being. Your basic needs include food, water, shelter, clothing, and a place to sleep. These essential bills should be the first ones you pay. Prioritize which bills you need to pay, and pay the bills that keep you safe first! If you do have outstanding debt, such as medical debt, this might be a good time to contact the creditor(s) and see if you can make some payment arrangements.
- If it seems that you can’t pay, the hospital can connect you to more options. For example, hospitals can offer payment plans or connect people to financial assistance programs that they might not have known about.
- Older adults: If you apply for and are covered by the Qualified Medicare Beneficiary (QMB) program, doctors, suppliers, and other providers should not bill you for services and items covered by Medicare, including deductibles, coinsurance, and copayments. If a provider asks you to pay, that’s against the law. If the medical provider won’t stop billing you, call Medicare at 1-800-MEDICARE (1-800-633-4227). TTY users can call (877) 486-2048. If you’re a Qualified Medicare Beneficiary, Medicare can ask your provider to stop billing you and refund any payments you’ve already made.
- Veterans: You may qualify for financial hardship assistance including repayment plans, copayment exemption, debt relief, and other assistance. Check the VA’s website on financial hardship to learn what options are available in your situation and how to apply for relief.
- If you think the hospital is being too aggressive, ask your insurance company to contact the hospital and tell them to stop calling you or tell the hospital to talk to your insurance company directly. You can also report problems to your state insurance regulator.
- If you disagree with the charges or want more information, you have the right to file an appeal with your health insurance company. You also have a right to both an “internal appeal” and an “external review” of the charges. Check your health insurance policy documents and the explanation of benefits. Also, you can dispute a medical bill with a debt collector or a credit reporting company.
Plan Now for Long-Term Care
If you have a loved one who has been hospitalized often, it may be time to consider long-term care planning with an experienced Elder Law attorney who specializes in long-term care planning, Medicaid Asset Protection Planning, and Veterans Asset Protection Planning. Did you know that long-term care costs approximately $8,000 – $17,000 a month in the Metro DC area?
To protect your family’s assets from these high costs, the best time to create your own long-term care strategy is now. Generally, the earlier someone plans for long-term care needs, the better. But it is never too late to begin the process of Long-term Care Planning, also called Lifecare Planning and Medicaid Asset Protection Planning.
If you or a family member are nearing the need for long-term care or are already getting long-term care, or if you have not done long-term care planning, please call us as soon as possible to make an appointment:
Elder Law Fairfax: 703-691-1888
Elder Care Fredericksburg: 540-479-1435
Estate Planning Rockville: 301-519-8041
Long-Term Care Planning DC: 202-587-2797
About Evan H Farr, CELA, CAP
