Release: New consumer guide warns against use of ‘medical credit cards’

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WASHINGTON — As the cost of health care rises, many patients are signing up for “medical credit cards.” While these financial instruments may seem like a simple way to pay medical bills, many people offered these cards may have better options, including qualifying for financial assistance or a low- or no-cost payment plan.

U.S. PIRG’s new guide, A bad deal: Why you don’t want (medical credit) cards in your hand released in conjunction with comments submitted to a federal request for information (RFI) on the topic, explains why and how medical credit cards — which are often offered in hospitals or doctors’ offices — can add to an already-expensive bill. The guide also suggests alternative steps patients can take to lower or pay off their medical debt.

“We have to put an end to the peddling of medical credit cards in health care settings. When offered in a doctor’s office, or a hospital, patients might not be in the best state to make a decision about signing up for a high interest card,” said U.S. PIRG’s Senior Director of Health Care Campaigns Patricia Kelmar. “MDs have the expertise to prescribe drugs — not financial advice. You wouldn’t go to an investment banker for a medical diagnosis. Evidence shows that medical credit cards can worsen debt and even lead to bankruptcy. And your provider or hospital can’t cure that.” 

The guide shows a review of Oregon bankruptcy filings found the single most-frequently listed medical debt holder was CareCredit from Synchrony Bank. Across 1,037 filings, people owed a total of more than $2 million to CareCredit, with a median debt per bankruptcy filer of $1,443.

Because the cards offer deferred interest for a short time, patients can easily fall for the promise of a quick solution to paying medical bills. But these cards often charge higher interest rates than other credit cards. Other strict terms and conditions, such as retroactive interest and high late fees, can result in the patient owing more than if they used a regular credit card or set up a payment plan with their health care provider.

“The predatory terms of these financial products exacerbate the cost to the patient down the road. Patients need to know that they have other solutions available to them,” said Kelmar. 

This guide recommends some of those other solutions — some of which hospitals are legally required to provide:

  • Verify your bill. Medical bills are compiled by people and people make mistakes. Always ask for an itemized bill and make sure it only includes services you received.
  • Ask about and apply for financial assistance. Federal law requires nonprofit hospitals to offer some patients free or discounted care. Be persistent in asking for the financial help you need.
  • Ask to be put on a payment plan. Most hospitals and other providers will let you pay in installments, and at a much lower interest rate than any credit card will offer. Explain your financial situation and find a payment solution that works for you and your provider. 
  • Negotiate. Ask what the provider’s typical Medicare rate is and ask to pay that lower amount. You may be able to get a discount if you explain your financial limitations.

U.S. PIRG warns that people who can’t pay off their regular credit card bill every month should not put their medical bills on one. When a bill is a medical debt owed to a provider, not debt owed to a bank, people have more consumer protections. 

The  “tri-agencies” — the Treasury Department, Health and Human Services Department and the Consumer Financial Protection Bureau — will ponder comments from the RFI as they develop regulations for medical credit cards.

“We urge the tri-agencies to move swiftly from this RFI to a rule-making,” said Kelmar. “We have enough information about high health care prices and patients’ desperation for a quick fix to pay those bills.”