Expensive medical credit cards and loans can put patients at risk

How do you survive rising medical costs? The answer for more and more Americans is to pay with plastic.

Medical credit cards, once limited to esoteric procedures not covered by insurance, have grown in popularity over the past decade as medical costs continued to rise and Americans began to spend more on even routine procedures. is growing in popularity.

However, these products can cause trouble for patients, many of whom overpay for professional medical financing, sign contracts they don’t understand, or, at worst, end up in debt they can’t get out of. He said it could overlap.in a recent report from Consumer Financial Protection Bureau.

“These new forms of medical debt can spell financial ruin for sick individuals,” CFPB director Rohit Chopra said in a statement.

more brokers

Millions of patients take advantage of this type of loan. CareCredit, a subsidiary of Synchrony Financial and one of the three major health cards surveyed in the report, has 11.7 million cardholders this year, three times more than he did a decade ago. He was discovered by the CFPB.

Medical credit card and installment loan companies market their services to doctors with the promise of saving them time and money. Hospitals are attracted to these types of plans because banks prepay for services, Crain’s Chicago report September last year.

“Lenders see opportunities to take advantage of the widening gap between health care costs and what many Americans can afford,” the outlet wrote.

PrimaHealth Credit, one of the CFPB’s featured lending providers, website To “generate up to 20% more revenue” for healthcare providers. “We handle payment processing, settle overdue accounts, and handle all credit reports so you don’t have to,” the company claims.

Brendon Kensel, founder and CEO of PrimaHealth, said that while most patients use the loan for dental and orthodontic treatment, the company offers procedures such as outpatient surgery, LASIK, cosmetic surgery and hair replacement services. It also said it was providing loans to According to the site, his APR for this loan can go up to 24.99% for those with low credit scores.

According to the PrimaHealth website and the CFPB, there are two classes of patients. For those with good credit, PrimaHealth will make an advance payment to the provider, less fees. However, for patients with low credit, the provider only receives payment when the patient pays off the bill.

“Healthcare providers bear the risk that patients will not pay in full,” the CFPB wrote. By enrolling in PrimaHealth, health care providers can help “those with limited English proficiency, older Americans, and low-income people,” the agency wrote.

Kensel disputes the CFPB’s analysis, saying the service extends access to those who can’t pay their medical bills up front. “High medical costs are truly a crisis in the United States,” he told his CBS MoneyWatch. “Historically, only people with good credit are approved for loans. In my view, unequal access to loans leads to inequality.”

Kensel, who ran an orthodontist before starting PrimaHealth, blamed inadequate health insurance coverage for the cost crisis. Asked whether doctors should consider lowering fees, Kensell said most medical costs are “predictable,” but dental and orthodontic work, which is often seen as “elective,” is healthier. He argued that insurance often saves money.

“Most people don’t have an extra $5,000. Access to monthly payment plans is the difference between access to child care,” he said.

bad decision

The CFPB questions whether specialized medical financing really expands access to the underinsured. Instead, informal, often interest-free payment plans offered directly by medical institutions have given way to formal financial services such as medical credit cards and installment plans, the agency writes. .

Increased convenience for physicians can come at a significant cost to patients. According to the CFPB, patients who are often referred to these financial products while trying to make medical decisions often miss important financial information such as loan interest rates and specific payment terms. Also, doctors are not punished for suggesting less-than-ideal financial products. Because doctors are not bound by the same laws as bankers. I got it.

“Practice employees sell products they know little about without fully disclosing the terms and conditions to the patient,” one patient complained to the CFPB.

Another patient explained that she signed up for a CareCredit card at her dental office. The dental office pitched it as an interest-free payment plan for less than $100 a month, but two years later he was charged $1,400 in interest. A consumer also told her CFPB that her family signed up for the credit card without any notice.

“I am an elderly person and went to my local dentist office for a routine check-up of my wife’s teeth. I received a $14,000 bill from a dental office that opened a credit card in my name to pay for these services without my consent,” the person wrote, adding, “They I can’t speak good English,” he added.

According to the CFPB, “I never received a receipt or a copy until I received an invoice in the mail from my credit card company,” the person wrote.

$1 billion in interest payments

A patient with a specialized medical card will pay significantly more interest than in other situations, even if paid with a standard credit card. For example, many cards offer interest-free periods. During this period, there will be increased interest in medical procedures, but patients will not be billed. If you don’t pay off your debt during this time, you may be forced to pay a large amount of interest at once.

“Our study suggests that many patients, especially those who are unable to pay off deferred interest products during the promotional period, are able to pay significantly more than they would otherwise have,” said the CFPB. increase. “Interest rates on medical loan products are generally higher than interest rates on other products such as general purpose credit cards,” the report notes.

The CFPB found that in the three years from 2018 to 2020, people with health cards or installment plans incurred $1 billion in deferred interest.

According to the report, medical loan offers are essentially indiscriminate, so the CFPB advises that patients who find themselves receiving such pitches should conduct their own investigations. For example, you should not assume that financially compliant medical procedures are not covered by insurance.

Inpatients should also inquire about cost savings through charity care — Discounts for needy patients that non-profit hospitals must offer as a condition of tax exempt status.