A week after launching an investigation into the marketing practices of GE Money's CreditCare credit card, New York Attorney General Andrew Cuomo has expanded his probe of what he calls predatory health care lending.
Cuomo disclosed last week that his investigation found that some health care providers use fast-talking sales pitches to pressure and deceive consumers into applying for health care credit cards such as Chase Health Advance, Citi Health, and GE Money's CareCredit. The investigation also found that CareCredit 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, the credit card companies typically paid the health care providers in full within 48 hours of the charge, Cuomo said.
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. 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, providers pushed CareCredit over cash.
Conflicts of interest
"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," Cuomo said. "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."
Cuomo issued subpoenas to 14 dental and health care clinics that promote CareCredit, as well as to GE's CareCredit, Chase Health Advance, and Citi 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 continues.
In addition to the 14 subpoenas, Cuomo has written letters to a number of medical organizations that promote CareCredit or other health care financing cards. The letters, asking why they endorse these credit products, were sent to the American Dental Association, American College of Eye Surgeons, and American Hearing Aid Associates, among others.
Widely accepted
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, including:
• Chiropractic procedures
• Cosmetic procedures
• Dental procedures
• Infertility treatment
• Hearing procedures
• Vision procedures
• Weight loss procedures
• Veterinary services
In recent years, Cuomo says, his office received hundreds of complaints from consumers indicating they were lured and misled by providers into applying for, accepting, and using health care credit cards.