A doctor with a stethoscope around his neck and money in his pocket.

Two days before Katherine Lynch was due to give birth to her daughter, she got a call from the billing department at the hospital where she planned to have the baby. Lynch was asked if she wanted to pay in advance the $1,044 she would owe after insurance picked up the rest.

“I was surprised and annoyed,” says Lynch, 33, a psychologist who lives in Novato, Calif. “I was in grad school at the time. Money was tight.” But she paid because she thought she had to.

Later, when she got an explanation of benefits statement from her insurance company, she realized that she’d overpaid by several hundred dollars. It took multiple phone calls to the hospital for Lynch to get her money refunded.

“It wasn’t easy to find the time to do that with a new baby at home,” says Lynch.

More On Managing Your Healthcare Costs

Lynch’s experience isn’t unusual these days. Hospitals are becoming more aggressive about asking patients with health insurance to pay their share of the tab up front.

In most cases, consumers can't be required to pay up front. And as the above example shows, it's usually better to wait to see how much of the bill is covered by your insurance plan. But there are times when prepaying can actually save you money, especially if you use it to negotiate a discount with the hospital (more on that below). 

The prepay trend is happening because hospitals are being stuck with big unpaid bills as Americans foot more of the cost of their medical care and struggle to pay those expenses. While insurers still cover the bulk of a patient’s medical expenses, hospitals now collect 30 percent of their revenue from patients, up from 10 percent in 2002. Hospitals are finding out that people are less reliable payers than insurance companies.

“No one would say ‘pay up or we won’t treat you,’ but we’re saying you have a large out-of-pocket cost and we want to know how are you going to pay for it,” says Jonathan Wiik, a principal at TransUnion Healthcare, a data analytics company that works with hospitals on revenue management systems.

Those larger out-of-pocket costs are being fueled by the growing number of people in health insurance plans with big deductibles, which require you to pay thousands of dollars to a healthcare provider before insurance starts to pay some of the bills.

About 44 percent of people under 65 were in high-deductible health plans (HDHPs) in 2017, according to the National Center for Health Statistics. That’s up from 39 percent in 2016 and 25 percent in 2010. On top of deductibles, patients also may owe a copay and a growing number pay coinsurance, which is a percentage of the total bill.

The Problem of Uncompensated Care

As people pay more for their healthcare, hospitals pay a price too. Uncompensated costs—patients who either don't or can't pay their bills—totaled nearly $40 billion in 2016, up from $22 billion in 2002, according to the American Hospital Association.

A hospital’s odds of getting reimbursed are much higher if a patient is asked to pay up front vs. when the bill arrives months later, says Keith Slater, national vice president of sales and business development at Change Healthcare, a healthcare technology company. 

Today, about three-quarters of hospital systems ask for payment in advance or when you arrive for a procedure, according to the Healthcare Financial Management Association (HFMA), an association for people in healthcare financial management professions. 

Hospitals use software to estimate what you will owe after your insurance pays its portion. Your deductible is the biggest chunk, but there are also copays and often coinsurance, which is usually 20 percent of the total bill.

Once the hospital has an estimate, a representative will reach out to talk about payment. Typically, you’ll get a call a few days before a scheduled procedure or be asked how you plan to pay when you get admitted to the hospital. Some hospitals hire financial counselors and use scripts to guide them on how to talk to patients about money.

It isn’t illegal to be asked about paying what you owe in advance, says Martine Brousse, a medical and insurance billing consultant who works with patients to sort out billing issues. Withholding treatment for not paying is a different story. If you're waiting in the emergency department for treatment, federal law requires that you be stabilized and treated before you can be asked about money.

If you have government-sponsored insurance such as Medicare, Medicaid, or Tricare military insurance, the Centers for Medicare and Medicaid Services says you can’t be required to pay as a condition of admission or treatment. That’s not so clearly spelled out with private insurance contracts, says Brousse.

“It would be unethical to withhold treatment and I don’t hear about that happening,” says Brousse, who is also a certified mediator. Brousse says in most standard commercial health insurance contracts, healthcare 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 established. 

“I was so surprised. I thought it was crazy. How did they know what my bill would be?”

— Michele Bateman, with her wife Lorena and their son Gael, was asked to prepay $4,000 when she checked into the hospital to have their baby.

The Patient Conversation

When Michele Bateman arrived at the hospital for a scheduled inducement of her son Gael last April, she expected to go right to the maternity ward after filling out some paperwork.

But before she and her wife Lorena could head over, Bateman was asked about covering her share of the bill.

“I was told I would owe $4,000 for the delivery and they asked how I would like to pay for it,” says Bateman, who works for a technology company in San Francisco.

She refused, saying she’d wait till she got her bill from the insurance company. “The woman who asked wasn’t aggressive about it, but payment was the least of our concerns when we were checking in to have a baby,” says Bateman.

Some hospitals are more persistent than others when it comes to asking for prepayment. A week before her 5-year old son had surgery last November to repair an undescended testicle, Adrienne Carroll got a call from a hospital scheduler saying she needed to register and pay $700, which they estimated was her portion of the bill.

“I thought it was strange. How could they know what my bill was going to be until they had actually performed the surgery?” says Carroll, a Realtor.

Carroll decided to pay $200, which she says was her hospital copay, but the hospital billing department kept calling her, sometimes several times a day, in the week before the surgery.

“Even after I paid the small amount, they continued to contact me to see if I wanted to pay more or to keep a credit card on file with them,” says Carroll.

Patient advocates like Brousse worry that people will delay or even skip getting care if they’re concerned about coming up with a big chunk of money. But people in the hospital industry say that patients benefit if they understand their financial obligations before they get hit with a bill.

“Hospitals don’t want to scare people,” says Wiik from TransUnion Healthcare, formerly a chief revenue officer at a hospital system in Colorado. “But if it seems like you can’t pay, then the hospital can connect you to more options. By having that conversation, hospitals can help patients who can’t afford a bill find another way to pay.”

For example, hospitals can offer payment plans or connect people to financial assistance programs that they might not have known about, says Slater from Change Healthcare. Some are partnering with companies that offer no-interest loans.

Or a hospital might help you dig up coverage you didn’t even know you had that could pay some of your bills—say from your home or auto insurance, which could cover care needed if you are in a car accident or get hurt at home. 

What to Do If You're Asked to Pay Up Front

If you're asked to prepay for medical care, here's how you should handle it:

  • Know you can say no. Waiting until you get the bill is in fact what insurance companies typically advise, says Brousse. While hospitals use sophisticated software to estimate your portion of the bill, they don’t always get it right. “They don’t necessarily know how many other claims you have in process that are going toward your deductible,” says Brousse. “You may owe nothing.”
  • Don’t rely on the hospital’s estimate. You don’t have to wait for the hospital to tell you what you owe. If you’re having a scheduled procedure, contact your insurance company. Ask how much you have paid toward your deductible and what other out-of-pocket costs, such as a copay or coinsurance, you may owe.
  • Find out if you can get a better deal 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 healthcare research and consulting firm. If you do decide to pay in advance, ask for a discount.
  • Understand how hospital loans work. Another growing trend: Hospitals are partnering with companies like ClearBalance, AccessOne and Commerce Bank to offer low or no-interest medical loans that don’t require a credit check. That can be a better option than putting the payment on a high interest credit card if you can’t pay what you owe quickly. Still, not all medical loans are low- or no-interest and some come with fees, so make sure you read the fine print.
  • Ask questions. 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, as Katherine Lynch found out, it may be up to you to follow up. If you pay more than you owe when the final bill is tallied, ask how refunds are handled and how long they typically take to get processed.
  • Know where to turn for help. 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 insurer directly. You can also report problems to your state insurance regulator. To find out where to file a complaint in your state, use the lookup tool on Consumer Reports’ End Surprise Medical Bills site