Hospitals are increasingly requiring patients to pay upfront preservice deposits before receiving non-emergency care, a growing financial trend driven by rising deductibles and complex insurance cost-sharing structures. According to data from revenue cycle technology company Kodiak Solutions, hospitals now collect an average of about a quarter of what they expect a patient to owe based on estimated insurer reimbursements, a percentage that has grown in recent years.
Medical providers are collecting larger shares of out-of-pocket costs up front as rising deductibles leave patients owing more for care. Hospital prices, drug costs, and labor expenses have climbed, pushing insurers to shift more financial burdens to consumers to slow premium growth, according to industry analysis.
People are “basically being asked to self-insure,” according to Richard Gundling, a senior vice president at the Healthcare Financial Management Association. As deductibles rise, hospitals worry patients will struggle to pay bills after treatment, leading health systems to demand as much cash as possible before rendering services.
Major healthcare systems enforce strict prepayment policies for non-emergency care. Baltimore-based Johns Hopkins Medicine states on its website that it is policy to collect all amounts owed before services are rendered. Similarly, the University of Texas-affiliated MD Anderson in Houston requires patients paying for their own care to provide an initial deposit determined by the care center based on the type of cancer.
The Consumer Impact and Legal Risks of Medical Prepayments
Patients facing unexpected prepayments often lack clarity regarding their insurance network status. Thomas Zordani flew from Denver to Phoenix for a consultation with a Mayo Clinic neurosurgeon regarding debilitating headaches after being told the facility was in-network. Upon arrival, clinic staff demanded a $5,000 preservice deposit after reclassifying him as “self-pay,” and canceled his appointment when he refused to pay.
Zordani later learned Mayo had sent a patient portal estimate of $565 shortly before his visit. An Arizona arbitrator later awarded Zordani $47,500 in economic damages and attorney fees after determining Mayo violated a state consumer fraud law by failing to notify him beforehand that his plan was out-of-network. Andrea Kalmanovitz, Mayo’s communications director, stated in an email that the clinic regrets the communication breakdown and noted that unexpected deposit requests happen when patients lack clarity on network status.
Consumer protection advocates report widespread confusion surrounding these charges. Diane Spicer, a supervising attorney for Community Health Advocates in New York state, notes that prepayments typically affect insured individuals seeking out-of-network care with valid out-of-network benefits, as well as uncovered treatments.
Emergency Protections Versus Out-of-Network Rules
Federal law provides clear protections for emergency medical care. According to Matthew Fiedler, a senior fellow and health policy researcher at the Brookings Institution, hospitals accepting Medicare financing cannot legally demand upfront payments before stabilizing a patient who arrives at an emergency room.
Non-emergency and out-of-network settings offer fewer safeguards. Fiedler notes he is not aware of barriers preventing providers from requiring deposits for out-of-network care. Furthermore, calculation methods remain opaque. Patricia Kelmer, senior director of healthcare campaigns at PIRG, points out that providers often demand arbitrary lump sums without clarifying whether the amount covers a deductible percentage or total estimated costs.
Pro Tip: Handling Medical Prepayments
If a medical provider requests a preservice deposit, request an itemized bill immediately and contact your insurance carrier to verify coverage rules, deductible balances, and whether the provider is contracted within your network.
State Regulations on Overpayments and Refunds
Securing refunds for medical overpayments presents another hurdle for patients. Overpayments occur when patients require fewer services than estimated, or when insurers pay separate bills—such as surgeon or anesthesiology fees—first, leaving the patient’s deductible already met while the hospital holds an upfront deposit.
State laws regarding reimbursement timelines vary widely. Florida requires medical providers to reimburse patients within 30 days of determining an overpayment exists. Maryland prohibits certain hospitals from requiring prepayment solely to bypass financial assistance obligations.
Enforcement actions are also rising. Arizona Attorney General Kris Mayes filed a lawsuit under state consumer protection laws against SimonMed Imaging over allegations that patients waited over a year for refunds. SimonMed subsequently agreed in a settlement to issue refunds within an average of 60 days across its 170 locations in 10 states.
Frequently Asked Questions
Can a hospital refuse emergency care if I cannot pay upfront?
No. Under federal law, hospitals that accept Medicare financing cannot demand upfront payment before stabilizing a patient in an emergency room.
Why are hospitals asking for money before treatment?
According to healthcare industry experts, rising deductibles and higher patient cost-sharing responsibilities mean hospitals face increased uncollected debt, prompting them to secure payments before providing non-emergency care.
How long do hospitals have to refund medical overpayments?
Refund timelines depend heavily on state laws. For example, Florida mandates reimbursements within 30 days of an overpayment determination, while specific settlement agreements, such as one involving SimonMed Imaging in Arizona, require refunds within 60 days.
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