With healthcare costs rising and payer reimbursements dwindling, many physicians are focusing even more on collecting outstanding patient balances.
Medical credit cards can be a popular choice to fill this gap because doctors get reimbursed upfront while patients receive special financing offers and the care they seek or need.
But, in recent months, federal officials have questioned whether these arrangements are genuinely win-win or if the cards prey on low-income and vulnerable individuals and warrant tighter regulatory oversight.
In July, the Consumer Financial Protection Bureau (CFPB), the US Department of Health and Human Services, and the US Department of Treasury announced an inquiry into medical credit cards. The agencies sought public comments from patients and providers to determine how much they are used.
Medical credit cards typically offer 0% or low-interest terms ranging from 6 to 24 months. Minimum monthly payments are required, often as low as $30 and not usually enough to pay the balance by the end of the promotional period.
After the introductory rate, card issuers may charge interest rates approaching 30% — not just on the remaining balance but on the original amount financed, adding considerably to total out-of-pocket costs.
Ophthalmologist Michael A. Brusco, MD, FACS, specializes in laser-assisted in situ keratomileuses and vision correction at his practice in the greater Washington, DC, area. He told this news organization that nearly all his patients are self-paying, and just under half utilize one of two medical credit cards he offers through third-party vendors, CareCredit and Alphaeon Credit.
“We are clear with our patients that it is interest-free only if they make all payments on time, and if they don’t, then the penalties and fees skyrocket,” Dr. Brusco said.
Patients pay no interest if they make the minimum monthly payments and pay the entire balance by the end of the term. Brusco said those who qualify and abide by those conditions can benefit from spreading healthcare expenses over several months and reducing the stress and financial strain associated with a larger, one-time payment.
He acknowledged that deferred interest can be problematic if patients are caught unaware but said his staff has received training from both vendors on clearly explaining the plans to patients. If someone doesn’t think they can pay off the balance in the timeframe, he suggests they pursue an alternative payment method.
Community Catalyst, a nonprofit health advocacy organization, has joined 60 other groups urging the Biden Administration to ban deferred interest medical credit cards.
They say that patients don’t understand what they are signing up for due to comments like these:
“Even though I’ve made monthly automatic payments on my account, as long as I have any balance on my account by [the end of the promotion], I’d be charged a 26.99% interest rate on the whole medical bill of [$2700].”
“I had nearly [$700] of interest that had accumulated within 4 months…based on one [$2000] charge. The employees at medical offices are selling a product they know little about without fully disclosing the terms and conditions to their patients.”
Historically, patients who apply for the cards have tended to use them to finance cosmetic or other lifestyle medicine procedures, but the CFPB said patients increasingly rely on them for routine and emergency care, which may contribute to growing medical debts and collections balances.
Federal authorities have expressed concerns that doctors may direct patients toward these financial arrangements instead of properly screening them for assistance programs or pursuing the sometimes arduous claims process to capture reimbursement from payers.