Hospital prepayment requirements are adding a new layer of financial responsibility for patients, a trend highlighted by a recent case involving the Mayo Clinic.
Patient’s Experience Highlights Communication Gaps
Thomas Zordani traveled from Denver to Phoenix in early April 2024 for a consultation with a Mayo Clinic neurosurgeon, believing his insurance covered the visit. Upon arrival, the clinic’s financial office informed him that he needed to provide a $5,000 preservice deposit because the hospital no longer accepted his plan. Although his policy included out‑of‑network benefits, Zordani was automatically labeled “self‑pay,” and the appointment was canceled when he refused to pay.
“I was so livid,” Zordani recalled, adding that a prior estimate sent through his insurer’s portal listed the cost at $565. Mayo’s communications director, Andrea Kalmanovitz, issued an emailed statement saying the clinic regretted the incident and acknowledged that lack of clarity about network status can lead to unexpected deposit requests.
Mayo’s website says it requires prepayments in a variety of cases, including for “non‑contracted” — also known as out‑of‑network — insurance plans.
Industry Shift Toward Up‑Front Payments
Medical providers are increasingly collecting larger portions of anticipated patient responsibility, a move that coincides with rising deductibles. The average family deductible for employer‑provided coverage now stands at $3,762 per person, while ACA plans have seen a 37% increase to roughly $3,786.
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Richard Gundling, senior vice president of the Healthcare Financial Management Association, described the situation as “basically being asked to self‑insure.” He warned that as patients struggle to meet higher deductibles, hospitals will push for more upfront cash to offset potential non‑payment.
Chip Kahn, a visiting senior fellow at KFF and the American Enterprise Institute, echoed this view, noting that preservice deposits are likely to become more common, complicating matters for clinicians and patients alike.
In rural areas, thin margins and potential cuts to ACA and Medicaid funding could tighten finances further, prompting hospitals to scrutinize every cost‑sharing dollar.
Hospitals claim that requiring preservice payments helps them manage cash flow and reduce the risk of unpaid bills, but critics argue that the practice may deter patients from seeking needed care.
Regulatory Setting and Consumer Guidance
Emergency situations remain exempt: hospitals that receive Medicare funding cannot demand payment before stabilizing a patient in the ER, according to Matthew Fiedler of the Brookings Institution. Outside emergencies, the rules are less clear.
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Patients receiving in‑network care may have contractual recourse with their insurers, but out‑of‑network settings lack uniform protections. “I’m not aware of any barriers that would prevent a provider from doing this,” Fiedler said.
Patricia Kelmar of PIRG highlighted the opacity of deposit calculations, noting that patients often receive no breakdown of how a figure relates to deductibles or anticipated costs. She advises patients to request itemized estimates and verify any provider policies with their insurers.
Refund timelines also vary. Florida mandates reimbursements within 30 days of an overpayment determination, while Maryland restricts certain hospitals from requiring prepayment to avoid offering financial assistance. Arizona recently settled a case against SimonMed Imaging, agreeing to issue refunds within an average of 60 days after allegations of delayed reimbursements.
Consumers are increasingly concerned about out‑of‑pocket expenses. A KFF health tracking poll identified lower out‑of‑pocket costs as the top change insured adults desire from their coverage plans.
Patients should stay vigilant, confirm network status before scheduling care, and keep detailed records of any deposits made. Clear communication and transparent billing remain essential to manage this evolving situation.
