Three federal agencies are taking a hard look at medical credit cards and other payment products used to cover healthcare services—including the impact they have on patients’ financial stability and the role providers play in promoting them.
The Health and Human Services Department, Treasury Department and Consumer Financial Protection Bureau launched a joint inquiry Friday into these financial products, requesting information on how they work, the risks they pose and the impact they have on billing services, according to a news release. The agencies opened a 60-day public comment period to gain feedback from consumers, lenders and providers.
“This is an area where all three of the agencies have an interest and want to know more and are trying to understand the magnitude of harm, the source of the harm and what it would take to get to better outcomes for patients and their families,” said Diane Thompson, senior adviser to the director at the CFPB.
In a statement, HHS Secretary Xavier Becerra said the inquiry builds on previous reviews involving medical billing, healthcare costs and transparency.
Medical credit cards and loans have traditionally been used for non-urgent procedures, such as dental care or cosmetic surgery, but more recently, they are increasingly being used for primary, specialty and emergency care, often promoted as a payment option when patients are under stress.
Many credit cards offer a months-long grace period on interest payments, but if patients fail to pay the full balance within that time, they’re responsible for the total deferred interest charges as well as future interest payments.
From 2018 to 2020, patients using these products for healthcare charges paid $1 billion in deferred interest costs, according to a CFPB report released in May. Nearly $23 billion in healthcare expenses was paid during that period using medical credit cards or loans with deferred interest terms, the report found.
HHS leaders were not made available for follow-up interviews. The Treasury Department did not immediately respond to a request for additional comments.
Rebecca Novick, director of the health law unit at advocacy group The Legal Aid Society, said she welcomes the additional scrutiny on payment products, especially considering the disproportionate impact they can have on low-income patients.
“It’s an issue for a tremendous percentage of the population, and certainly what we see is that people who can least afford it are sometimes put in the worst situations with medical debt,” Novick said.
The agencies also want more information on how providers benefit from promoting the payment products, such as sharing part of the revenue or securing lower processing fees based on how many patients sign up. It could also be a way providers sidestep the insurance claims process and financial assistance programs, Thompson said.
In some cases, the payment products could enable providers to charge higher prices to uninsured or self-pay patients, which drives up the overall cost of care, according to the news release.
“We don’t know nearly as much as we would like to know about the incentives in this area. We don’t know really why it is that providers are making these available to patients in the providers’ offices or what providers understand about these products when they make them available,” she said.
Thompson said it is too early to plan next steps, but she thinks additional information could lead to more accountability and potentially shape legislation surrounding medical billing, debt collection and financial assistance programs.
