Three federal agencies are joining forces to investigate potentially predatory practices in medical-payment products, including credit cards and installment loans used by patients to pay for healthcare. The Consumer Financial Protection Bureau (CFPB), Department of Health and Human Services, and Treasury Department are seeking more information on the prevalence of these products and whether they harm consumers with excessive deferred interest fees. The agencies have expressed concerns about financial firms partnering with healthcare organizations to promote products that can plunge patients into overwhelming debt.
Although no specific banks or companies were mentioned, popular providers of medical credit cards include CareCredit (a subsidiary of Synchrony Financial), Wells Fargo & Co. with its "Health Advantage" card, and Comenity (a subsidiary of Bread Financial Holdings Inc.). CareCredit, for instance, claims that their financing options have been around for decades, reducing healthcare expenses for cardholders and making procedures like dental work and pet care more affordable.
The driving force behind the investigation is the shift in usage of these medical-payment products over the years. Initially, they were primarily used when health insurance didn't cover certain medical treatments. However, they are now more commonly used as a means to manage debt, even for procedures covered by insurance. The agencies have highlighted the potential harm caused by deferred interest offers, which may seem appealing initially but can negatively impact a consumer's credit if payments are missed.
The increasing levels of medical debt in the US have raised concerns. Medical debt has become a significant source of consumer credit and has prompted the CFPB to examine its impact on consumer credit. This scrutiny led major credit-reporting companies, such as TransUnion, Equifax, and Experian, to remove over 70% of existing medical-debt entries from consumer reports.
In their joint statement, the agencies are specifically requesting public input on various aspects of the payment-product market, including patient experiences, billing issues, and healthcare provider incentives. They aim to gain a comprehensive understanding of the landscape in order to protect consumers from potential predatory practices.