Protecting Patients From Predatory Credit Offers

We are all concerned about the costs of healthcare and especially cancer care in the United States. Every day, patients and those who care for them face difficult questions about whether needed treatment will be affordable. As patients search for financial options, medical practices, health systems, and patient advocacy organizations may want to exercise increased simple diligence on options and referral opportunities that come to them offering to “help” patients.

Chris Deacon, a principal owner of VerSan Consulting with more than 10 years of experience in legal and public sector roles, including both deputy attorney general and assistant director of pensions and benefits for the state of New Jersey, uses her legal expertise to identify notable areas of concern for healthcare, including employers, patients, and providers. She recently brought to my attention concerns about patient-facing credit applications that hold significantly onerous terms and conditions in their 20 pages of fine print. Even more concerning, financing applications like CareCredit, for example, and others that offer to help patients afford medical care are engaging medical providers to market their offerings and make them available at medical, hospital, dental, and veterinary point-of-care offices.¹

As patients search for financial options…exercise increased due diligence on options and referral opportunities that come to them offering to “help” patients.

For this editorial, I will use CareCredit as an example of one of many possible credit offerings to patients.

What Does CareCredit Promote to Patients?

CareCredit provides materials and website information that offer patients easy application and instant credit decisions, flexible financing options, and acceptance at more than 260,000 locations for health and wellness.² I searched for locations near my home, in the middle of Connecticut, and found 112 providers that are listed as accepting CareCredit within 5 miles, plus many other online-only suppliers and providers. These listed providers included dental, veterinary, pharmacy, a multispecialty medical practice (including oncology), ob/gyn, surgery, and many other practices.

CareCredit suggests that patients may apply for credit for a wide range of medical services, including hospitals and health systems, pharmacies/personal care, primary care/clinics, and specialists. They promote electronic prequalification without impacting patient credit bureau scores and immediate access to funds for approved financing. Marketing materials such as posters, stickers, clipboards, and handouts in providers’ offices present an image of collaboration and alignment between CareCredit and the provider, perhaps giving an impression that the provider has vetted and approved CareCredit as a vehicle for their own patients to use for financing.³

What Does CareCredit Promote to Providers?

The illustrations in the provider section of their website show medical, dental, and veterinary providers in their offices, and a front desk image with a promotional poster for CareCredit posted on the wall of the practice, as well as stickers on room items and integration into the practice technology for enhanced enrollment and payments. They ask for healthcare and wellness, health systems, hospitals, and animal healthcare providers to become part of their CareCredit team in offering “a simple patient financing solution for healthcare and wellness” that “helps empower your patients or clients to pay for the care they want and need while supporting your business goals.”⁴

Providers are encouraged to promote CareCredit as a financing option for care, and CreditCare offers benefits to make it easy for patients and providers to access the financing, including⁵:

• CareCredit orientation and training for staff and physicians on introducing the product, processing applications and accepting payments, furnishing supplies, and offering financial counseling for patients
• Tools, materials, posters, stickers, and ideas for promotional placement all over the practice: waiting rooms, exam rooms, website, mobile apps and devices, etc
• Immediate application decisions and access to approved credit by phone, digital tools, or patient-integrated touchless financial application processing at point of service for the provider
• Rapid electronic application processing and payment aligned with the provider’s billing system for the financed treatment or procedure
• Rewards and prizes that can be earned by the provider and employees for promotions, photos of displays, and competitions related to integration of CareCredit into the practice as a source of patient financing
• Presentation to patients of promotional pricing linked to the provider for payment periods or reduced financial rates—further linking the provider with CareCredit in the patient’s mind

Practices do pay CareCredit processing fees for different financing options but are not charged general annual or monthly fees. Practices are paid for the patient’s credit-approved services within 2 business days via direct electronic deposit, minus the relevant processing fee. Patient defaults on payments to CareCredit do not impact the payments paid to the provider. The ongoing financial relationship from that point is between the patient and CareCredit as the debtholder.

What Is the Potential Harm to Patients?

Patients are encouraged to use these financing options for fees or purchases of $200 or more and are given easy access to application and approval and a paperless payment of their medical bill within 2 business days for approved credit. Then the challenges may start. The details and terms for repayment of this credit are outlined in 20 pages of fine print, and patients may not fully realize any or all of the following conditions⁶:

The minimum annual percentage rate (APR) for purchases is 32.99%, calculated on the daily balance due from the date of purchase until the balance is paid in full—unless it is a promotional purchase;

The penalty APR is 39.99%, which will be applied indefinitely if a late payment occurs;

The minimum interest charge is $2 per month, regardless of the actual interest due that month. Minimum interest charges exceeding the calculated interest become treated as new purchases, thereby themselves starting to accumulate additional interest that then compounds over the life of the loan;

• Late or returned payment fees (for whatever reason, even electronic issues on their end) are up to $41 per month;
• Promotional purchases (often linked to participating providers as an inducement for patients to choose to finance the purchase) could offer no interest if paid in full within 6, 12, 18, or 24 months. Fine print exclusions to these promotional offerings can include:
• Minimum monthly payments are required;
• Suggested minimum payments may not result in the balance being paid in full within the offered time period. Patients must calculate to ensure that they are paying at a rate sufficient to pay within the 6, 12, 18, or 24 months of the contracted financing term;
• Failure to pay in full by the end of the contracted 6, 12, 18, or 24 months will result in the full 32.99% interest being charged retroactively to the date of purchase;
• Promotions for reduced interest offerings require fixed monthly payments with high penalty terms if payments are late or missed, and interest is charged from the date of purchase.

They ask…providers to become part of their team offering “a simple patient financing solution for healthcare and wellness that helps empower your patients or clients to pay for the care they want and need while supporting your business goals.”

Additional general terms and conditions buried in the loan paperwork that may be missed by vulnerable patients in time of medical circumstances appear to include:

• Automatic acceptance of all electronic notifications and permissions for this account and all other related accounts with the banking sponsor—no more paper statements, notifications, etc. Patients must request any desired switch to paper transaction by separate request on the financial website, for each affected account. Monthly paper statement fees will be charged to the account and accumulate interest as a new purchase if not paid;
• The financial lender can limit the number and dollar amount of any transaction at will, or decline particular charges for any reason;
• There is a section in the lending documents on arbitration. If the patient does not reject that section, all disputes are automatically to be resolved under the terms of this section, which means the patient waives the right to a class action lawsuit or jury trial, and appeal rights will be limited;
• The lender can close the account at any time, but the full amount must still be paid on time, or in full on demand if the account is closed.

We cannot risk their care and financial and emotional well-being to adverse consequences from aggressive or predatory practices.

What Can Practices Do?

We need to advocate for our patients. If a lender approaches your organization with an offer to “help to improve the payment experience for patients and your own financial performance”⁴—check out all the fine print and details. Look to see how patients are paying for medical services. Your financial counselors should understand the fine print and consequences of predatory financial services and discuss such terms with patients before accepting payment from these organizations. Even if the patient applies and is approved, and your bill has been paid, the impact on your patient will still influence their relationship with your organization. If they are hurt by onerous fees, collection demands, retroactively applied high interest rates of more than 30% or even up to 40%, and burned by multiple penalties, fees and interest charges accumulating on those fees, they will eventually link that financial pain to you as their provider.

Questions to consider include:

• Has any vendor approached you or your staff about aligning promotion of financial credit services for your patients?
• If a vendor does approach you for any referrals or visibility to patients for any services at all, do you have a process for vetting such vendor and services?
• Does anyone in that vetting process read all the fine print for terms and conditions that will be applied to your patients and consider whether those are satisfactory or potentially detrimental to your patients?
• Do you have a process for educating patients about the practice of predatory financial credit services as part of your financial counseling—and the need for full transparency of terms and conditions?
• Have you shared similar concerns or information with providers who refer to you or providers to whom you refer to see if they also have similar reviews or concerns?
• Do you see such vendors being promoted at the front and financial public areas for patients in hospital systems or other providers with whom your practice may affiliate? Do you know whom to speak to about concerns regarding the impact on your patients from any of those vendors?

Our patients are vulnerable and do trust their providers to guide them in safe and reasonable directions. We cannot risk their care and financial and emotional well-being to adverse consequences from aggressive or predatory practices, even for services beyond the care we provide. It is worth taking a good look around our offices and buildings to protect patients where we can.

Reach Out

We are our patients’ best advocates when it comes to predatory financial vendors making their health battles even more challenging. Share comments with me at This email address is being protected from spambots. You need JavaScript enabled to view it.. I would be interested in hearing if you are seeing the impact or marketing of these programs for your own patients.

References

1. Deacon C. LinkedIn. June 2024. Accessed July 20, 2024. www.linkedin.com/feed/update/urn:li:activity:7207728585841741824/
2. CareCredit. Get care today. Pay over time. Accessed July 15, 2024. www.carecredit.com/
3. CareCredit. For consumers. Ways to use your health and wellness credit card. Accessed July 15, 2024. www.carecredit.com/procedures/
4. CareCredit. For providers. Accessed July 20, 2024. www.carecredit.com/providers/
5. CareCredit. For providers. Dedicated support you can rely on for your business; frequently asked questions. Accessed July 15, 2024. www.carecredit.com/providers/faq/
6. Synchrony Bank. Section I: Rates and Fees Table. Accessed July 15, 2024. https://apply.syf.com/cs/groups/public/documents/et_tcdoc/e073098.html