Medical credit cards draw consumer group's scrutiny

Consumer Affairs

US PIRG offers some alternatives that are worth considering

Medical bills are the source of many consumer issues these days. They can lead to bankruptcy and ruin someone’s credit rating if they’re not paid.

Following up on its report “Medical Bills: Everything You Need to Know About Your Rights,” the U.S. PIRG Education Fund is warning consumers that the next time they’re faced with a hefty medical bill, they might find themselves pressured to sign up for a medical credit card. PIRG claims those cards are a win for the financial industry, benefiting from the millions of people who use those cards, but often a loss for the consumer.

PIRG’s latest report – “A bad deal: Why you don't want medical credit cards in your hand” – explains how medical credit cards work, why they add to the cost of a medical bill, and some alternative methods consumers can take to lower and pay off their medical bills. 

What are medical credit cards? 

A “normal” credit card and a “medical" credit card are kin, but they differ in an attractive way: deferred interest with 0% for an introductory period. And that angle is what companies pitch to consumers. 

The problem is that patients may not understand that “deferred interest” means that if they miss a payment, or can’t pay the full balance when it’s due, they’ll have to pay higher interest rates than most regular credit cards. 

According to the report, there's plenty of consumer-side pain. For one, there are loopholes in debt protection laws these cards can exploit.

Secondly, because they’re marketed inside of a healthcare office, the staffers who promote these aren’t prepared to fully explain or answer questions about the financial transaction. 

Thirdly, PIRG says consumers are powerless to keep these wolves keep away from your door. “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 U.S. PIRG Senior Director of Health Care Campaigns Patricia Kelmar. 

Listen to the advice of those who got hurt by a medical credit card

If you want proof, Evelina of El Cerrito Calif., has plenty in her review of Synchrony Financial’s CareCredit, the medical credit card she used to purchase her husband’s $5,400 hearing aids. 

Evelina’s not alone. In the 200 plus complaints about CareCredit to the CFPB, there are allegations of the company refusing to return overpayments, deceptive billing practices, and accounts closed without any explanation

CareCredit doesn’t have the market to itself. There's also AccessOne, PrimaHealth Credit, Wells Fargo Health Advantage, MedCredit Financial Services, and Comenity’s Alphaeon Credit Card. 

In response to this trend, several federal agencies have launched an inquiry into these high-cost specialty financial products, asking consumers to send in their stories

Consider the alternatives

PIRG says that there are four things consumers can do when they’re faced with a medical bill.

Verify your bill. Inside the ton of paperwork that you’ll get after a medical procedure, there should be an itemized list of what each thing costs. If you see something listed twice or a service that you didn’t receive or recognize, ask questions of both the provider and your insurance company.

Negotiate your bill. It doesn’t hurt to ask if you can get a discount and pay a lower amount, especially If you’ve been going to a doctor for a long time and they value you as a patient.

PIRG suggests that you can ask what the Medicare rate is and ask to pay that lower amount instead. “You should explain that you are willing to pay, but explain your financial limits,” PIRG suggests. “As with a payment plan, you should get the agreed-upon discount in writing.”

On top of referencing the Medicare rate, ConumerAffairs recently found an app that finds the cheapest price for medical procedures. You could use it to make more informed decisions when negotiating a price.

If it’s a non-profit hospital, ask about financial assistance. It’s a federal requirement for all nonprofit hospitals to have financial assistance policies, so if that’s where you’re getting your medical procedure done, ask if you qualify for free or discounted care. 

Despite the fact that the provider claims you have already been screened, PIRG says that you may still apply for this aid. “In some cases, financial aid is denied because the provider lacks the information necessary to know if you qualify, and your application can provide that missing information,” PIRG added.

Use another credit source. The first thing you shouldn’t do, says PIRG, is to even apply for one of these credit cards. In short, the credit card company “owns” you. They set the terms, conditions, and rate and you are pretty much powerless to affect any change. 

“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,” Kelmar said.

“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.” 

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