Learn more about Martine on NerdWallet’s Ask an Advisor.
In recent years, it has become common for medical providers to request the payment of your unmet deductible or out-of-pocket cost shares in advance, either for appointments early in the year, or before receiving services at a facility.
High deductibles and out-of-pocket liabilities — the amounts a patient must pay before an insurer pays medical costs in full — have become prevalent as ever more costs are shifted to individuals and employees.
Changes mandated by the Affordable Care Act, or “Obamacare,” profoundly affect the way medicine is practiced. Transforming a vast, complex and well-established system into a cost-effective, efficient, safe, result-based one involves financial disruptions and turmoil. Uncertainty about the future of health care has created major anxiety, as many medical providers feel their livelihoods might be in jeopardy.
The reassessments of fee schedules by Medicare and commercial insurers, the downward federal budget allocation trend, rising operating costs (i.e., for pharmaceuticals, IT and labor) and payment delays due to widespread technical system implementation issues have resulted in a shortage of income for many offices. Making do with less has become a daily game, finding new revenues an endless challenge.
Providers’ point of view
Every billing department knows that early in the year, patients pay off holiday credit card bills and taxes first. Because an office cannot legally or ethically refuse to treat patients if they don’t pay their balances, getting advance payments guarantees a minimum income during those leaner months.
Some specialties such as oncology have suffered significant reductions in reimbursements in recent years. Smaller practices in particular don’t receive the bulk discounts from suppliers, extended payment deadlines or preferential insurance contracted rates that larger entities enjoy. While waiting for patients to pay their balances, many practices must rely on lines of credit or savings to make ends meet.
Every January brings new insurance plans, changes in regulations and a significant number of new patients, especially since the ACA implementation. The addition of staff to absorb this workload increases labor costs.
An important ACA requirement is the use of electronic health records (EHR). Monetary incentives have been offered to medical providers to purchase new systems and upgrade their software. Because they are based on payments made by Medicare in previous years, these incentives were negligible for providers who do not cater to seniors.
Costs are also surging due to a major change coming this fall. The diagnosis-coding system known as ICD-9 will be updated to a vastly expanded version; becoming fluent will challenge staff and physicians. This upgrade is expected to significantly affect or delay authorizations for care, reimbursements, coverage indications and benefit determinations. Starting on October 1, and for at least one year, providers and insurers will use two different systems to process older and newer claims.
When to refuse prepayment requests
If you have government-issued coverage (Medicare, Medicaid, Tricare), do not pay in advance. The Centers for Medicaid and Medicare Services (CMS), the governing administrator, has ruled that a patient may not be asked for any upfront payment before a claim has been processed and the specific liability determined. Your supplemental carrier might also cover it.
The only exception is the set office copay for Medicare Advantage or Tricare plans, due when services are rendered.
Patients covered under a commercial plan and only scheduled for a minor office visit or service should wait until they receive a statement, as it is unlikely they will meet their deductible. If the office cannot financially survive without that early contribution, better management might be in order.
Explain that you have already met your responsibility, or that charges for other prior services are in process, to stop these demands.
What to do if you agree
If you agree to pay, ask for a cost estimate and offer a lower amount.
Always confirm the refund policy. Will any overpayment be held and applied to another open balance or will it be refunded? If so, how long would it take? Will it be automatic or will you have to ask?
As they brace for major cash-flow disturbances in early 2015 and again in the fall, medical providers are certain to request prepayments of cost-shares. Whether you comply should be based on the likelihood and amount of your ultimate liability, as well as your insurance plan.
When in doubt, or if you need help getting the office to back off, contact your insurance company. This behavior is frowned upon, and sometimes it is prohibited by contract. A phone representative will call and demand they stop.