Patients pay about $45 billion worth of health care costs with plastic, according to a report from McKinsey & Company. By 2015, that number could more than triple to an estimated $150 billion. And big finance companies and medical providers have taken note.
Companies like GE Money, Citibank and JPMorgan Chase have issued medical credit cards or lines of credit intended to be used specifically for elective health care expenses not covered by insurance, including certain dental procedures, Lasik surgery, some cosmetic surgery and even veterinary care. The cards are not used for continuing medical care or emergency room visits.
The issuers market these cards not so much to consumers but to doctors, dentists and other health care providers, who in turn offer them to patients as a payment option. Patients like medical credit cards because payments for care can be spread out over many months and the cards can be used at multiple providers. The providers have embraced them as a way of offloading billing headaches and expenses.
But even as medical credit cards become increasingly popular, they are getting more scrutiny — not much of it flattering. Critics and patient advocates claim that aggressive and misleading marketing tactics can lead to serious headaches for consumers.
In extreme cases, medical providers and associations marketing the cards have been accused of receiving financial incentives for signing up patients or of falsifying financial information to make it easier for patients to qualify for cards.
More commonly, critics say, patients may be led to assume that their providers are simply offering payment plans, not a credit card with all the potential fees, interest rate increases and the impact on credit scores that can entail.
“Ironically, these cards may be best suited to people who already have financial resources," said Mark Rukavina, executive director of the Access Project, a consumer advocacy group in Boston, and co-author of a study on medical debt. “But it’s usually people with limited resources who sign up.”
Consumer complaints concerning aggressive marketing tactics prompted the New York attorney general, Andrew M. Cuomo , to start an investigation into medical credit cards earlier this year. In Minnesota, the state attorney general, Lori Swanson, has filed lawsuits against two chiropractors whose staff is accused of signing up patients for medical credit cards without their knowledge.
A medical credit card is “one payment option among several a provider may offer and represents a very small component of health care financing for elective procedures,” said Stephen White, a spokesman for CareCredit, a medical credit card issued by GE Money. “Benefits to consumers include the ability to plan, budget and pay for certain elective health care procedures over time.”
Whether you view these cards as a convenient way to pay medical expenses or just another way for credit card companies to collect interest and fees, here are some things to consider if your provider approaches you.
ASK FOR ALTERNATIVES First, try to negotiate a lower fee with your provider; he may be more flexible than you think. Then ask about payment options. Your doctor may well offer a payment plan of his or her own, without the high interest rates often charged by a medical credit card company.
“I encourage people to negotiate with their provider, then get an extended payment plan directly from that office with a monthly payment and time period you are comfortable with,” said Mr. Rukavina. “I think most providers are willing to work for patients in this way.”
If you do opt for a payment plan, ask whether you will be paying the provider directly or a third party. If there’s a third party involved, you may well wind up with a medical credit card. If you choose to sign up for it, be sure you’ve read through the terms carefully and that you understand the interest rates and late payment fees.
If your income is low enough, be aware that you may qualify for a public assistance program, especially for dental costs.
DODGE THE HARD SELL “Some patients report feeling pressured by their clinics to use the card to pay for procedures or treatments they may not need or can’t afford,” Ms. Swanson said. That’s no surprise, since these cards are intended, at least in part, to drive more business to dentists, chiropractors, cosmetic and eye surgeons, weight loss programs, hearing aid dispensers and other providers.
But the intense marketing can lead to unethical behavior, according to Ms. Swanson.
One of the lawsuits filed by her office claims that staff members at a chiropractic office told patients they were not signing up for a credit card but rather just going through a credit check. Instead, Ms. Swanson charges, the staff members submitted applications in the patients’ names and falsified patient’s yearly income information to make sure they qualified.
If you sense you’re being pushed, that things are moving too quickly, remember that you don’t have to sign up for anything on the spot. Take a day or two to read through materials thoroughly and research your options.
BEWARE THOSE TEASER RATES Almost all medical credit cards claim zero percent financing. This is what makes them attractive: you can spread out your payments and pay no interest.
But it is important to read the fine print. As with most credit cards marketed this way, the zero percent rate lasts only for an initial promotional period, usually from six to 24 months. Once that time is up, you will start to pay interest — sometimes high interest.
For GE’s CareCredit, for instance, rates jump to 26.99 percent. (The company does offer a fixed rate of 14.9 percent for extended periods up to 60 months.)
High interest isn’t your only concern. Be sure to check your minimum payment, advised Ms. Swanson. If you pay only the minimum, your payments may extend beyond the zero percent financing period, and you’ll end up with the higher rate.
What’s more, if you make just one late payment or go over the initial promotion period, some cards will charge you a high interest rate retroactively on the original balance, Ms. Swanson noted. That can suddenly add hundreds of dollars to your bill.
PAY AS YOU GO Some providers will charge your medical card for an entire multivisit procedure, like a dental implant, all at once. If you change providers midway through, or do not go through the entire procedure for some other reason, it can be difficult and time-consuming to get a refund, warned Mr. Rukavina.
If you are entering into a treatment or procedure that will take more than one visit, make sure your provider is billing you by the visit, not in a lump sum.
