With increasing numbers of health care professionals urging patients to use medical credit cards to pay for treatments not covered by their insurance plans, New York Attorney General Eric T. Schneiderman has issued a consumer alert on the risks associated with health care financing.
The cards and loans, which first were marketed about a decade ago for cosmetic surgery and other elective procedures, now are proliferating among older Americans, who often face large out-of-pocket expenses for basic care, including dental care, that is not covered by Medicare or private insurance. In Schneiderman’s view, doctors, dentists, and other providers have a financial incentive to recommend the financing because it encourages patients to opt for procedures and products they may not need. According to Schneiderman, this financing also ensures that providers are fully paid upfront even for an ongoing course of treatment, which financial services companies promote in marketing material to providers.
“The explosion of medical credit card debt is a major concern for many Americans, particularly vulnerable seniors and low-to-middle income households. For patients, the financial consequences can be dire,” said Schneiderman. “The problem is made even worse by companies that encourage high pressure sales tactics in our health care settings and companies that charge outlandishly high interest rates.”
In June, following an investigation, Schneiderman’s office reached a pact with one such company, CareCredit, which is a subsidiary of GE Capital Retail Bank. Schneiderman said that the investigation found that the application process is often rushed, providers frequently fail to inform consumers of the basic terms of the card, and patients incur costly credit charges that they initially mistake for payment plans. The agreement with CareCredit requires a three-day “cooling-off” period to give consumers an opportunity to consider the card’s terms and the treatment plan, a limit to what the provider can charge in advance, and additional transparency to make consumers aware of high interest rates if charges are not paid off at the end of the promotional period.
Schneiderman said that because they often are not covered by insurance, the procedures and treatments these cards are used for often result in “tremendous debt” for patients. He said that although the allure of a seemingly harmless payment solution was understandable, particularly when pushed by trusted medical professionals, consumers “need to understand that medical credit cards often cause more financial trouble than they solve.”
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