Under Fire, Cleveland Clinic Backtracks on Copay Mandate

Faced with an uproar from outraged community leaders, the Cleveland Clinic has pulled back on its plan to refuse outpatient treatment to privately insured patients unless they pay copays before appointments.

Now, patients with commercial insurance or Medicare Advantage coverage will be offered a new 0% interest payment plan if they can’t pay their outpatient copays, the health system announced 3 days before the new requirement was set to go into effect on June 1. However, copays will still be required.

As the system noted in a statement, “in 2024, more than half of copays were not paid when Cleveland Clinic provided services.” Previously, patients were billed for unpaid copays, and interest-free payment plans were not available specifically for copays.

Bradley Herring, PhD, a professor who studies health policy at the University of New Hampshire, Durham, New Hampshire, told Medscape Medical News that Cleveland Clinic likely buckled in response to public backlash over the pay-or-else copay mandate. “It’s just not a good look, especially for nonprofit providers,” he said.

But copays, Herring said, do have a purpose: To discourage patients from seeking healthcare they don’t need. “The goal is to try and cut down on some overuse of healthcare utilization,” he said. “If you can increase some cost sharing and have the patient pay something, that might cut down on some of those patients who don’t really benefit from it a lot.”

How the Copay Policy Was Supposed to Work?

The Cleveland Clinic runs 23 hospitals and serves 3.5 million patients, mostly in Ohio. Earlier this year, it announced that it would require copays before or at check-in for outpatient appointments such as scheduled office visits, services such as physical and occupational therapy, outpatient diagnostic testing, and outpatient procedural visits.

Emergency services, surgeries, inpatient hospital stays, cancer treatments were slated to be exempt. Urgent/express visits were to be excluded too “at this time.” The new policy wouldn’t have applied to Medicaid or traditional Medicare patients.

“If you can’t make your copay,” the health system said, “we’ll help you reschedule your visit.”

Critics put the clinic on blast at a City Council meeting in May. According to Cleveland.com, Councilman Richard Starr declared the policy is “slap in the face” to local citizens. “People are going to be scared to trust the hospitals because it’s always about the dollar and not about the healthcare that is needed, and needs to be provided, for those individuals,” Starr said.

A 69-year-old man told WKYC-TV that his monthly copays would cost nearly $500. “In my opinion, it’s making the Cleveland Clinic look like patient care is secondary and finances are first,” he said. “I’m not happy with it, not one bit.”

However, a health system representative “told City Council that with $70 million in unpaid copays in 2024 and a slim 1.7% operating margin, the Clinic must collect more revenue to maintain services and invest in community programs,” Cleveland.com reported.

Why Do Copays Exist in the First Place?

Cleveland Clinic’s revised policy will still require copays to be paid by “the time of service,” Cleveland Clinic Spokeswoman Angela Smith told Medscape Medical News.

Will patients be refused care if they decline to pay even if they are offered a 0% interest payment plan? Smith didn’t answer this question directly but said “patients who do not have the means to pay for services provided at our facilities may request financial assistance.”

Alison Evans Cuellar, PhD, MBA, professor of Health Administration and Policy at College of Public Health, George Mason University, in Fairfax, Virginia, told Medscape Medical News that copays translate to higher prices for consumers and lower demand overall.

The Affordable Care Act eliminated some cost sharing precisely because of evidence that patients forgo valuable care when faced with copays or deductibles, she said. “Not all care is high value and we want to avoid overuse but not for important preventive services, insulin, and so forth.”

80% of Something or 100% of Nothing

Herring pointed out that copays are imposed by insurers, but providers collect and keep them. “Margins are getting tighter,” he said, “and you can understand the financial incentive to do something to try and increase that collection rate.”

Providers could waive copays. But an online post by Jackson LLP, a healthcare attorney firm with offices around the country, noted that this can be legally dicey, especially if patients don’t have proven financial hardship.

For one thing, “routinely or regularly waiving copays for Medicare or Medicaid patients poses several potential problems for your practice,” the post said. “Because both Medicare and Medicaid are federally funded programs, you risk violating multiple federal laws.”

Waiving private insurance copays can put providers in legal jeopardy too, the post said.

On the other hand, there’s a financial downside to cancelling an appointment because a patient doesn’t cough up a copay, he said. “To not provide the service right then and there, when you’ve got the provider ready to provide it, seems really wasteful.”

If the copay is 20%, he said, “isn’t 80% of something better than 100% of nothing?”

Herring had disclosed no relevant financial relationships. Cuellar disclosed relationships with the Robert Wood Johnson Foundation, NIH, and Casey Family programs.