What do you think of this doctor's policy ... and my letter?

If it is an emergency, you will have to front the money. Many doctors have these weird policies now that everyone in on the anti-Medicare rant and the economy is in shambles. I recommend first getting an invoice for the procedure so that you know what you are paying toward and do not end up getting overcharged. I also recommend getting a receipt of payment towards procedure when you pay the $500 and asking for a statement that acknowledges this payment. good luck