Hospitals’ growing prepayment trend

 More providers are requiring payment before a medical procedure, the Wall Street Journal reported Sept. 6.

The share of U.S. healthcare providers building prepayment into the estimate process — whether by encouraging it, requiring it outright, or keeping a card on file — has climbed to more than 9 in 10 in 2026, up from 81% in 2025, according to survey data from the Healthcare Financial Management Association and patient payment company PayZen cited by the Journal.

The practice creates financial exposure for patients in more than one way: some end up overpaying upfront and have to request a refund afterward, while others pay a large sum before a procedure only to find out later that separate bills from the hospital, surgeon or anesthesiologist push the total past what they were originally quoted. The Journal pointed to one case that illustrates the pattern: a New Mexico patient was quoted more than $3,500 for hernia-repair surgery and paid it in advance, then spent months disputing additional charges from multiple providers before settling around $6,000 out of pocket.

Providers are leaning into upfront collection largely because it works better than pursuing payment after the fact, American Hospital Association Vice President Molly Smith told the Journal, a dynamic she tied to insurers shifting more of the cost burden onto patients in the first place. Roughly half of what patients owe out of pocket still goes unpaid a year after treatment, per a 2025 JAMA Health Forum study cited in the report.

Nonemergency prepayment is not barred under federal law, though state lawmakers have started drawing narrower lines around it, per the Journal: Maryland now prohibits hospitals from using prepayment plans as a workaround to avoid financial-assistance obligations, while Florida requires providers to refund patient overpayments promptly. Emergency care still cannot be withheld over a patient’s ability to pay, but many medically necessary procedures fall outside that protection, including ACL repairs or minimally invasive cardiac work, where delaying care for financial reasons carries its own risk.

There are signs some providers are pulling back from the strictest approach: of the 17% of organizations that formally require prepayment, 68% still move forward with care when a patient does not meet it, according to the survey data. Prepayment has been climbing steadily regardless; nearly 20% of patient bills are now paid in advance, according to Kodiak Solutions, a healthcare technology and data firm cited by the Journal.

It is not a new trend for hospitals. A separate Kodiak Solutions analysis from 2024 found pre-treatment collections had already climbed from about 20% to 23% of patient debt since 2022, with knee replacements, CT scans and deliveries among the procedures commonly requiring payment in advance.

https://www.beckershospitalreview.com/finance/hospitals-growing-prepayment-trend/