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Medical credit cards are an appealing solution to physicians, dentists, veterinarians, and other health professionals, who often have to wait for months for patient payments and freqeuntly are forced to write off a portion of outstanding patient debt. But are they good for patients’ health?
According to New York Attorney General Mario Cuomo, that is a question that needs looking into. The AG recently launched an investigation into medical credit card issuer GE Money CareCredit, following hundreds of complaints from New York consumers about the lending practices of the issuer.
Medical credit cards give doctors the ability to offer a credit card to which medical expenses automatically can be charged, giving them full payment for services rendered within 48 hours of billing. While the proposition seems like a win-win, according to the New York AG, the odds may be stacked against consumers. While the medical credit card comes with an attractive 0 APR intro period, when that wears off patients may be are saddled with interest rates of 25 percent or higher. Worse, the interest in some cases is retroactive, which means that cardholders who don’t pay off the full debt before the 0 APR period expires will get charged interest all the way back to the first day of the charge for the balance remaining on the card. The upshot for many consumers is that what was once a challenging medical bill, quickly mushrooms into unmanageable debt.
Further, some medical credit card issuers, like GE CareCredit, offer doctors kickbacks based on the amount of money they can generate through credit card charges. This rebate deal combined with the two-day-pay incentive makes it lucrative for health care practitioners to push the credit card program onto patients in lieu of accepting other forms of payment. In the worst-case scenarios, health care practitioners allegedly have pushed the card onto impoverished patients to avoid negotiations over charity care programs; some providers have even pushed the CareCredit card over cash. Further, some consumers report being charged in advance for services they never received, and having difficulty getting the charges refunded.
“Our ongoing investigation has uncovered conflicts of interest and predatory practices in the health care industry that are hurting New Yorkers and patients across the country,” New York Attorney General Mario Cuomo said in a statement. “Patients are being misled into paying for services they never received by the people they should be able to trust the most — their doctors. Doctors are supposed to represent patients, not credit card companies, no matter what kind of kickbacks they are offered.”
While medical credit cards are a new arrival on the credit card scene, they have proliferated in recent years. According to a Consumer Reports investigation, the amount charged to medical credit cards is predicted to reach as high as $150 billion by 2015.
GE Money’s CareCredit is one of many different medical credit cards issued across the nation. The card, accepted by over 125,000 health care offices nationwide, is most often advertised as a means for consumers to pay off bills for procedures not covered by insurance. These services frequently include chiropractics, cosmetic procedures, infertility treatments, vision procedures, veterinary services, and more.
Cuomo opened the investigation into the card issuer’s lending practices after receiving hundreds of complaints from New York consumers. The AG has issued subpoenas to 14 health and dental practitioners, who promote the medical credit cards. The subpoenas, which ask for applications, terms of credit, policies and procedures, marketing materials and more, have also been sent to other issuers of medical credit cards, including Chase Health Advance, Citi Health Card, and Visa Health Benefits. Cuomo aims not just to diagnose and treat CareCredit’s practices, but also to run tests on other medical credit card issuers to determine whether or not their practices are causing the health of the patients’ finances to take a turn for the worse.
