Rising bad debt and limited benefit plans causing more hospitals to require payments upfront before

The Wall Street Journal focsued attention on an increasing trend by hospitals to require patients with inadequate health insurance to pay large sums of money before providing treatment (Source: ("Cash Before Chemo: Hospitals Get Tough," The Wall Street Journal, April 28, 2008).  The article primarily focused on the case of Lisa Kelly who was required to provide $105,000 in cash before M.D. Anderson would admit her for treatment for leukemia.  The hospital required this payment because it refused to accept her limited benefit plan insurance, a plan that would only pay a maximum of $37,000 per year.

M.D. Anderson stated that it went to its payment policy because of a large jump in its amount of unpaid bills, from $18 million in 2004 to $52 million in 2005.  This policy is not unique to M.D. Anderson.  Fourteen percent of non-profits hospitals reported in a 2006 voluntary IRS survey that they require patients to make payment arrangements before being admitted.

According to the article, the increasing amount of bad debt across hospitals which is fueling this prepayment requirement, "is driven by a larger number of Americans who are uninsured or who don't have enough insurance to cover medical costs if catastrophe strikes. Even among those with adequate insurance, deductibles and co-payments are growing so big that insured patients also have trouble paying hospitals."