Sally Giovinazzo was 57 and employed but uninsured when five months of bleeding finally sent her to a doctor earlier this year. The gynecologist wanted $620 before seeing her; a reading of the lab results ($88) showed stage one uterine cancer. The doctor referred Giovinazzo to a specialist at the M.D. Anderson Cancer Center in Orlando, who said he would schedule surgery as soon as she could pay half the estimated $10,000 to $50,000 cost. Giovinazzo, of Dunedin, Fla., would not have been treated but for a stroke of luck: She had a connection who was a friend of Anderson's chief operating officer. She found out her bills would be covered as "charity care," which is doled out on a case-by-case basis.
For years, medical facilities have asked patients to hand over their insurance copayments—normally $10 to $25 per visit—when they sign in. But recently the business office has gotten more demanding. Many institutions, facing a growing mountain of bad debt, are no longer willing to take it on faith that the bills will eventually be paid and are demanding up-front payments in elective or nonemergency situations. "Large majorities of hospitals have organized their admission process where they want to see a check or credit card before they take you to your room," says Ron Luke, a consultant to healthcare providers in more than 25 states. Among them are Inova Fairfax in Northern Virginia and North Shore in Manhasset, N.Y. Insured workers, too, are feeling the pain, as many are choosing high-deductible plans, and copays and coinsurance charges just keep going up.
Since the tax-exempt status of nonprofit hospitals hinges on their providing charity care, how and what they charge the needy has brought congressional scrutiny. "It's one thing to charge underinsured or uninsured patients more than insured patients for the same service," says Sen. Charles E. Grassley (R-Iowa), a vocal critic of such practices. "It's another thing to charge patients up front...or even withhold treatment until they produce a check. This is like applying the principles of home or car sales to nonprofit health care."
Full disclosure of how much hospitals spend on charity care, which will be required starting next year, may put pressure on administrators to back down a bit. But given the $260 billion that went to uncompensated care between 1999 and 2008, the desire for up-front payment won't go away quickly, experts say. Indeed, a whole industry has sprung up to advise institutions on how best to collect. "Hospital executives across the country agree that upfront cash collections are the most immediate fix to improve the revenue cycle," says a website promotion for Managing Upfront Collections: Strategies for Effective Cash Collections, a DVD offered for $299. "Your staff need to understand how to have conversations about money and learn how to manage patients' responses."
Under a 1986 federal law, hospitals cannot make payment a prerequisite for emergency room care, but that's as far as patient protection goes. "I was a little surprised to have to pay up front," says Clint Wolcott, 54, a Labor Department lawyer from Bethesda, Md., who was told when he scheduled carpal tunnel surgery at the Surgery Center of Maryland this spring to bring along a credit card to pay $225, his share of the center's fee under his insurance. According to the center's website, copayments, coinsurance, and deductibles are due the day of the procedure. Those signing up for cosmetic surgery must pay the total estimated cost then, and uninsured patients must pay in full beforehand. "We always try to collect up front," says Charles Cohen, a vice president of operations for Ambulatory Surgical Centers of America, which owns 25 percent of the Maryland facility. "It's like any other business. Once the patient walks out the door, your chance of collecting decreases."
The pain would be lessened if consumers could shop around for the best deal, but medical charges can be almost impossible to discern. Even if hospitals and doctors posted their charges for a coronary bypass or a hip replacement, say, you couldn't effectively comparison shop, says Gerard Anderson, director of the Johns Hopkins University Center for Hospital Finance and Management. "You don't know how many minutes [you'll be] on the operating table or if you'll need an MRI or CT, or how long you're going to stay, or who's making the decision." Some websites do provide general comparisons, and at least 38 states post some form of pricing information. The Healthcare Blue Book says it uses billing and payment data to offer consumers a way to "determine fair prices in your area," usually the average providers accept from insurers for given procedures. Consumer Health Ratings allows patients to compare charges by facility and location, and links to sites that offer price comparisons in a number of states.
Corrected on 8/4/2010: A previous version of this story included Cedars-Sinai among hospitals requiring payment up front for all nonemergency treatment and elective procedures. The hospital does so only in narrow circumstances: elective cosmetic surgery and foreign patients traveling to the United States for treatment.