July 10th, 2023 7:00am PDT
(PenniesToSave.com) – In an effort to tackle the escalating costs of healthcare and the burden of medical debt, three U.S. government agencies have come together to investigate specialty financial products that are aggressively marketed to patients for routine medical expenses. These costly offerings include medical credit cards and installment loans. The Consumer Financial Protection Bureau (CFPB), the U.S. Department of Health and Human Services (HHS), and the U.S. Department of Treasury (Treasury) are collaborating to gather information on the prevalence of these products, patients’ experiences with them, and why healthcare providers choose to offer them. The objective is to address the negative impacts caused by these high-cost financial options and explore potential solutions.
CFPB Director Rohit Chopra has voiced concerns about the partnership between financial companies and healthcare institutions that promote products leading patients into debt. The public inquiry aims to gather valuable insights into how these practices affect patients.
Secretary of Health and Human Services, Xavier Becerra, expressed the department’s dedication to safeguarding patients from unjust billing practices and lowering healthcare expenses. By directly obtaining feedback from patients, policies can be shaped to prevent families from facing medical debt.
Wally Adeyemo, Deputy Secretary of the Treasury, emphasized the importance of collaboration between different agencies to address exploitative practices that target vulnerable patients. Seeking input from stakeholders will play a vital role in creating measures to safeguard patients and consumers.
Collectively, these agencies are working together to emphasize the importance of transparency and equity in the financial aspects of healthcare. Their goal is to alleviate the financial challenges that patients encounter.
In the past, medical payment products were mainly used for non-traditional healthcare expenses such as dental care, vision care, fertility services, and cosmetic surgery. However, these products have now expanded to cover a wider range of services including emergency room visits and primary and specialty care. Healthcare providers sometimes promote these products to patients even when insurance or financial assistance could cover the medical expenses. By doing so, they shift the responsibility of billing and collections to financial service companies. Research conducted by the Consumer Financial Protection Bureau (CFPB) has revealed that healthcare providers may not adequately inform patients about legally mandated financial assistance programs or zero-interest repayment options before offering these products. As a result, patients may face increasing deferred interest charges or creditor lawsuits.
Navigating the complexities of financial assistance programs and insurance plans can pose challenges for healthcare providers when it comes to receiving timely payments for the care they provide. As a solution, some providers may propose that patients consider financing their healthcare through specialty credit products. While this approach can alleviate administrative burdens for providers, it also places the financial responsibility on patients.
The agencies are seeking information to better comprehend the adverse effects and financial difficulties that specialty medical payment products present. This request gives consumers a chance to share their experiences and concerns, influencing future actions taken by the agencies. Specifically, the Consumer Financial Protection Bureau (CFPB) aims to address the credit origination, debt collection, and credit reporting practices of financial companies involved in providing and managing these products. The areas for which the agencies are seeking information include:
The market for specialty medical payment products is currently under scrutiny by regulatory agencies. They are gathering information on the expenses, including interest and fees, associated with these products. Additionally, they are seeking insights into the marketing, application, and approval procedures involved. Of particular interest to the Consumer Financial Protection Bureau (CFPB) are trends related to the utilization of medical payment products. This includes an examination of overall consumer debt on medical credit cards, medical installment loans, and similar offerings. By collecting this data, a more comprehensive understanding can be gained regarding how these products are employed, the extent of their usage, and who has control over their utilization.
Patient Experiences and Consequences: The agencies are interested in collecting information regarding the risks involved with these products and whether consumers fully comprehend these risks. Utilizing medical payment products to cover healthcare expenses can potentially expose patients to various drawbacks, such as reduced ability to negotiate medical bill settlements, aggressive debt collection practices, legal actions, and the possibility of losing credit reporting protections.
Billing and financial challenges: The agencies are investigating the potential impact of medical credit cards and loans on existing issues with healthcare billing and collections. For example, uninsured or out-of-network patients often face higher costs for medical services compared to negotiated rates with in-network insurers. Medical payment products could potentially allow healthcare providers to continue charging excessive prices to uninsured or self-pay patients who would otherwise have difficulty affording such expenses.
Healthcare provider incentives: The agencies are interested in understanding the incentives that healthcare providers receive for promoting medical payment products and how these incentives impact their behavior towards patients. In some cases, providers may receive a share of the revenue generated from these products. Additionally, certain issuers of medical payment products offer lower processing or management fees to providers who enroll a large number of patients, which encourages them to enroll as many patients as they can.
The agencies plan to conduct investigations in order to gain a full understanding of the specialty medical payment product landscape. This includes examining patient experiences, identifying potential risks, addressing billing challenges, and understanding healthcare provider incentives. By gathering this knowledge, they aim to resolve any issues and ensure the protection of consumers in the healthcare financial sector.