Feds Drill Down On Medical Cards

Credit cards designed to cover patient expenses are increasingly being scrutinized by the Biden administration, as are loans and other financial instruments offered to patients to pay for health care customers.

In a rare public health action, three federal agencies -- the Bureau of Consumer Financial Protection, the Department of Health and Human Services and the Department of Finance -- are seeking more information about credit tools to further regulate the government. The campaign shows that consumers are overwhelmingly steered towards these more expensive options.

The agency issued requests for information related to these programs as part of a broader campaign to combat rising consumer health care costs. Researching how health cards work, consumers' experiences with them and the financial incentives that health care providers can offer is part of President Joe Biden's initiative to help consumers get out of the cost and disability of health care debt.

"We are experiencing increased use of credit cards and third-party medical loans," White House domestic policy adviser Neera Tanden told reporters on a conference call Thursday to discuss the agency's agenda. "These credit cards often have higher amortization and interest-bearing features, resulting in higher fees for consumers."

On Friday, the CFPB stepped up its efforts, saying in a statement that it was launching "an investigation into high-cost specialist financial products." The CFPB said in a statement Friday that the agency plans to use the information collected as it "explores ways to address harm to patients caused by this particular financial product."

On Tuesday, the CFPB and Director Rohit Chopra will hold a hearing in Washington on health care delivery products, including health credit cards and installment loans, with senior White House officials and the Departments of Health and Human Services and the Treasury. .

The effort builds on a CFPB report released in May about the growing use of health cards and the costs consumers face when using them. Interest rates on the cards are sometimes as high as 27%, higher than the average credit card interest rate, a senior administration official said Thursday, speaking to reporters on condition of anonymity.

According to a May CFPB report, from 2018 to 2020, consumers paid $1 billion in late interest on credit card and health care loans. Meanwhile, consumers used credit cards and loans to cover nearly $23 billion in health care costs, from emergency room visits and medications to dental and vision care.

According to the CFPB, Wells Fargo, CareCredit, a subsidiary of Synchrony Financial, and Community, a subsidiary of Bread Financial, are the major companies issuing health credit cards.

"A lot of these products have weird tricks and loopholes," an administration representative said on the call, referring to deferred interest that can be added up to a certain future date to force the cardholder to forfeit the full value. "It can be a significant debt."

The way the product is presented to the consumer is also questionable. Sometimes patients are given a card at a healthcare provider's office as a way to pay for future medical procedures and care. Therefore, customers may face risks while evaluating credit products.

There are questions about whether consumers receive the information they need with offers such as debt collection practices and whether those practices comply with the Fair Debt Collection Practices Act .

In non-profit hospitals, products may violate certain regulations applicable in this context Transferring accounts to medical credit cards could affect the application of those protections, administration officials said.

"The CFPB's investigation found that health care providers may be reluctant to disclose legally mandated financial assistance programs or interest-free reimbursement options before offering these products to patients," the CFPB said in a press release statement Friday.

Anxiety goes beyond cost. The increased financial burden is guaranteed to create "negative health consequences," the official said in a phone call.

Requests for more information will allow the agencies to consider "potential policy actions" as they "continue to work to reduce the debt burden," Tanden said.

According to Politico, Tanden took over as head of the Home Policy Council in May after serving as a senior adviser and staff secretary in the Biden White House for the past year and a half . 

US Senator Elizabeth Warren from Massachusetts and Democrat Edward J. Marks spoke about the financial cost of patients' medical records. Specifically, they sent letters to Synchrony Bank and Wells Fargo earlier this year expressing concerns and raising questions about the product.

"Banks have identified these cards as an opportunity to benefit vulnerable patients who cannot afford medical care," the senators said in a January press release .

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