Health care services are expensive enough without patients getting buried in high-interest debt. New York Attorney General Andrew Cuomo says that appears to be happening with greater frequency.

Cuomo says his office is investigating what he calls "predatory" health care lending where consumers, especially seniors and vulnerable patients, are misled about financing, causing them to be pushed into debt.

Cuomo says some health care providers pressure consumers into using GE Money's CareCredit, a health care credit card, through fast-talking sales pitches and deceit. He says the investigation also found CareCredit often pays kickbacks in the form of rebates to the providers based on how much business they charge consumers on CareCredit cards.

The investigation was based in part on hundreds of consumer complaints received by the attorney general's office. Consumers reported that health care providers promised that the credit card had "no interest," when it often carried retroactive interest of over 25 percent if not paid in full during a promotional period. Consumers were also unknowingly charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored. Meanwhile, CareCredit pays the health care providers in-full within 48 hours of the charge.

The investigation also found that CareCredit charges the providers a fee for the right to offer the cards, and then rebates part of the fee based on the amount of money the providers generated through CareCredit sales. Cuomo said this kickback arrangement, plus CareCredit's payment in full to providers within two days of the charge, creates an incentive for providers to push consumers to use CareCredit rather than other methods of payment. In fact, he says providers pushed CareCredit over cash.

Bankruptcy

"Health care debt is the number one cause of individual bankruptcy, and this scheme is contributing to the economic burden being felt by consumers," Cuomo said. "People are being tricked by misleading offers that have them paying for services they never received as well as interest charges they never knew about -- and they are ignored and given the runaround when they try to get their money back."

Cuomo issued subpoenas to 10 providers that promote CareCredit, as well as to the companies that manage CareCredit, Chase Health Advance, Visa Health Benefits, and Citibank Health Card. The subpoenas seek marketing materials, applications, terms of credit, contracts and rebate agreements, policies and procedures, consumer complaints, and regulatory inquiries. The investigation is continuing.

In addition, Cuomo is asking several nationwide and state-based medical associations, including the American Dental Association and the New York State Dental Association, to explain why they endorsed CareCredit and whether they received compensation for doing so.

CareCredit is accepted by more than 125,000 health care practices nationwide. The New York State Dental Association asserts that more than eight million dental patients and 80,000 dental practices use CareCredit nationwide. The credit card is advertised as a way to pay for services often not covered by insurance.

In recent years, Cuomo says, his office has received hundreds of complaints from consumers indicating that they were lured and misled by providers into applying for, accepting, and using CareCredit. Among the complaints received by the AG's office regarding what he terms a scam.

"Attorney General Cuomo's investigation shines a badly-needed spotlight on deceptive practices used to market health care credit cards to elderly and low-income consumers,"said Chuck Bell, Programs Director for Consumers Union, nonprofit publisher of Consumer Reports. "We are concerned that some health care providers are aggressively marketing these high-interest credit cards to patients, without providing appropriate disclosures, protections, or refunds. Consumers Union strongly supports the attorney general's investigation, and applauds his ongoing efforts to protect consumers across the nation."