Patients paying medical expenses with plastic facing debt

The latest issue of Consumer Reports looks at how some patients, after being encouraged and sometimes pressured to use their credit cards to pay for medical expenses, are now facing debt.

The July report, "Overdose of Debt," says consumer credit businesses such as GE Money, Citigroup and Chase are pushing risky credit for financing medical procedures.

According to the report, plastic is playing an increasing role in paying for these procedures, with the price tag currently at $45 billion and estimated to increase to $150 billion by 2015.

The report warns that credit cards and finance lines of up to $40,000 which are advertised as "interest-free" can suddenly be set at 27.99 percent interest, charged retroactively, if the customer fails to pay within the promotion time or misses a payment.

These cards and financing are promoted to doctors, dentists and veterinarians as a way to make more money and get paid promptly. In turn, physicians are promoting cards and loans during visits when the patient is vulnerable, catching them off guard.

Doctors and dentists have financial incentives under these arrangements to encourage patients to sign for more expensive treatments and to steer them to extending financing plans that take a smaller cut of the practitioner's fee.

The blame doesn't just lie with the doctors the report says, but also with hospitals that check credit scores of patients and offer their own co-branded credit cards.

According to the report, patients should not be pressured into using a credit card or loan to pay for out-of-pocket medical costs because they would lose their ability to negotiate the repayment amount and terms.

Senior Editor Andrea Rock says when hospitals persuade patients to pay for care with a credit card or loan, patients lose their power to bargain for discounts or even obtain charity care.

"Ask questions first," she said. "It's always better to negotiate directly with the hospital."

Sen. Chuck Grassley (R-Iowa) ranking member of the Senate Finance Committee, is calling for hospital scrutiny in this area and is among those demanding clear requirements for charity care that hospitals must provide to qualify for tax exemptions.

The report offers the following tips to help patients when paying their medical expenses:

• Consumers should find out whether they qualify for free or discounted care from their hospital.
• When negotiating discounts or any payment terms, consumers should ask to speak to the manager of patient accounts and get any agreements in writing.
• By paying at the time of service, providers may be willing to cut consumers' bills by more than 50 percent to avoid the expense of billing.
• Although hospitals generally structure payment plans for 24 months or less, consumers should try to negotiate a longer term if necessary to ensure that they can afford the monthly payment.
• Hospital billing errors do occur. Consumers should always ask for an itemized bill and check it for accuracy.
• If consumers must rely on credit, they should shop for the best general-purpose credit card, ideally one with a low interest rate that can be locked in for the life of the balance.

What are your thoughts on this report? Is it too harsh on hospitals and physicians? E-mail Associate Editor Molly Merrill at molly.merrill@medtechpublishing.com.