Struggling To Pay Your Medical Bills? Be Careful If Youre Offered A ‘medical Credit Card.

A report by the Federal Consumer Protection Agency said US patients were sold "expensive specialty financial products" to cover their health care needs, even when existing insurance coverage or financial assistance programs would do little to help them.

The Bureau of Consumer Financial Protection warned Americans last week that Medicare credit cards and mortgage loans, which are increasingly being used by people struggling to pay rising healthcare costs, could hurt them instead of help them.

The agency says interest rates on medical credit cards and personal loans, although they vary, are generally higher than most standard credit cards and can be as high as 25% or more. And while some products come with a deferred interest promotion, these arrangements can incur higher costs for consumers if they are unable to pay the balance in full within a certain time because they owe interest on the total purchase amount, according to the CFPB.

“Many people would be better off without this product for two reasons:

The financial burden may be greater and your ability to dispute wrongful bills

complicated when settlements are made through external financial institutions," the report said.

Between 2018 and 2020 alone, patients paid $1 billion in deferred interest payments, according to the CFPB. The agency added in its report that those with credit ratings below 619 are more likely to receive interest, possibly because they are "more likely to have a shorter time period before deferred interest accrues."

"Fintech and other credit teams are developing expensive credit products to sell to patients trying to meet their medical billing needs," CFPB Director Rohit Chopra said in a statement. "This new form of medical debt can cause financial ruin for sick people."

Medicaid credit cards were originally a way to cover healthcare costs that regular insurers didn't normally cover, such as fertility treatment, dental services, and hearing aids, according to the CFPB. . On the other hand, in the past, pre-treatment installment loans were provided to cover certain medical expenses.

But with healthcare costs skyrocketing in the United States (health care spending accounts for 18.3% of the country's GDP in 2021, up from 13.3% in 2000), financial companies are marketing products to medical providers to achieve this. Minimize your financial risk and receive timely payments from patients.

About half of American adults say they can't pay an unexpected $1,000 medical bill within 30 days, according to a 2022 survey. Certain spending limits have become commonplace for families. As a result, some hospitals reported having difficulty raising funds.

That's where medical credit cards and mortgage loans come in, the CFPB said in its report. The companies behind these products typically provide medical providers with "sales and marketing training, promotional brochures, and materials explaining their financial products" and "financial application software."

"Medical financing products are marketed as cost reductions for medical providers," wrote the CFPB. When a patient is unable to pay their bills up front, medical providers generally incur costs associated with submitting bank statements, processing claims, handling disputes, and hiring a collection agency for reimbursement.

But "when a patient pays for medical services out of pocket or through a credit card or installment loan, the medical provider avoids many of those fees and usually receives payment immediately or within a few days," added the CFPB. "This is especially useful for medical providers who are treating patients who are uninsured or underinsured, don't have a credit card, or don't have enough cash to cover the cost of medical care."

CFPB warns that this is not always good news for customers. According to the CFPB report, medical finance companies can tell providers that they can sell consumers additional or expensive treatments when they offer their products.

It can also be difficult for patients to understand what they are selling, especially if they are concerned about their health: consumers told CFPB they were surprised by the compensation delays and were not fully aware of the modalities. related to financial products and even subscribed to payment plans they said they did not accept.

Rick Gundling, senior vice president of policy and practice at the Society for Healthcare Financial Management, a professional membership organization for healthcare finance managers, told MarketWatch in an interview about the CFPB results that he thinks it's important for consumers to come to them, to save. Enough money you want to cover treatment costs before paying the deductible and find out about all the financing options available to you if you need help paying bills. He said medical credit cards and mortgage loans were only one piece of the puzzle and could be good options for some patients.

"I see it as a tool in the toolbox," said Gondling.

In its report, CFPB mentioned several companies that offer health financing products such as credit cards or loans, including CareCredit which is offered through Synchrony; Fargos are good; single access; PrimaHealth Credit; and others.

In a statement, AccessOne CEO Mark Spinner said the company "works closely with healthcare providers to provide patients with flexible and affordable financing options when they need them."

"For more than 20 years, we have helped more than one million patients pay for and receive their health care," said Spinner. “AccessOne is not a medical credit card, we do not report patients to credit bureaus or do credit checks to serve as many patients as possible. In addition, AccessOne does not offer a "promotional period" for patients. Instead, AccessOne allows patients to choose what's best for their family and financial situation by offering flexible payment options.

Brendon Kinsel, CEO of Prima Health Credit, also said in an interview that the aim of his patient finance platform is to "democratize access to healthcare". He added that as a former operator of the Orthodontic Dental Services Organization, he saw people struggling to pay for their personal expenses and get approved for financial services.

"We're really focused on getting more sponsors to more people with honest finances," said Kinsel.

The CFPB report states that PrimaHealth Credit "provides installment loans to people with 'difficult' credit ratings, and although PrimaHealth provides prepayment for services to people with good credit ratings, PrimaHealth remits payments to providers on a pay-as-you-go basis." credit."

This can encourage providers to withhold care for people who are likely to have limited access to credit or whom financial companies consider a high credit risk, including people with limited English skills, older Americans, and people with limited English skills. people who make money. According to the CFPB report.

However, Kensel said the provider would not offer payment plans to customers with "credit problems" unless they wanted to, replying that they chose to offer this service "to give more patients access to the care they need".

"I think your view that this creates the wrong incentives is incorrect," he said.

Representatives for WellsFargo, Synchrony and the other companies named in the report did not immediately respond to MarketWatch's requests for comment.

Is your insurance deceiving you? | Why are my treatment costs so high?