The latest credit industry end-around? Sneaky ‘health-care’ credit cards, pitched by health providers right in their offices

September 16th, 2010 by Mike Hinshaw

What’s next from the banksters and their credit operations…special cards for funeral costs? credit schemes for veterinary emergencies? Next to personal health issues, these are two of the next most-likely emotionally-charged situations in which to take advantage of someone who’s scared, in pain or in grief.

60-year-old ‘duped at the dentist’s office’

Following up on credit-card loopholes and abuses we discussed here and here, today we begin with the case of  Maxine Veach, in this excerpt from an Aug. 31 piece in The Washington Post:

The 60-year-old retired postal worker has dental insurance through Excellus BlueCross BlueShield and MetLife. Suffering from a sore jaw, she visited a dentist near her Syracuse, N.Y., home who told her she needed three crowns and three extractions. She gave the office information about her insurance so they could bill for the charges. But Veach decided to sign up for the health-care credit card offered by the practice to cover any amounts not paid for by her plan.

After getting her teeth cleaned and a set of X-rays taken, Veach was surprised to receive a bill from the credit card company for $2,300.

Veach made numerous attempts to sort out the overcharge and get the office to bill her insurers for the work that had been done, but eventually she called Cuomo’s office, which negotiated an $1,850 reduction in the amount owed. Now she’s looking for a new dentist.

“I was very upset with them,” she says. “I told them they had a nice little scam going on.”

Circumventing the CARD act

So, yeah, now we have health-care credit cards. Here’s what a blogger at CreditLoan.com has to say: “Health care credit cards are the newest invention of credit card issuers determined to circumvent the CARD Act. These credit cards are designed to help consumers pay for medical expenses not covered by their insurance (e.g. cosmetic procedures, dental, infertility treatments, weight loss treatment, veterinary services) but can also be used to pay for health insurance deductibles.

“However, not unlike the newer business credit cards and professional credit cards, health care credit cards offer none of the protections afforded by the CARD Act, in addition several other factors that pose a serious risk to consumer financial health . . . .”

Cuomo: ‘hundreds of complaints”

New York Attorney General Andrew Cuomo has begun an investigation, says Bloomberg Businessweek, “after receiving hundreds of complaints from consumers who were convinced by doctors and dentists to sign up” for the deceptive programs.

“Investigators will look into financial incentives providers receive for promoting the cards that can leave patients struggling with overcharges and high interest rates, Cuomo said,” reports Businessweek.

In an Aug. 9 PR, Cuomo “announced the expansion of an industry-wide investigation into predatory health care lending where consumers, especially seniors and vulnerable patients, are misled about financing, causing them to be pushed into debt.

“An investigation by Attorney General Cuomo found that some health care providers use fast-talking sales pitches to pressure and deceive consumers into applying for health care credit cards such as Chase Health Advance, Citi Health, and GE Money’s CareCredit. The investigation also found that CareCredit pays kickbacks in the form of rebates to the providers based on how much business they charge consumers on CareCredit cards.

‘No interest’–yeah, right

“The investigation was based in part on hundreds of consumer complaints received by the Attorney General’s Office. Consumers reported that health care providers promised that the credit card had ‘no interest,’ when it often carried retroactive interest of over 25 percent if not paid in full during a promotional period. Consumers were also unknowingly charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored. Meanwhile, the credit card companies typically paid the health care providers in full within 48 hours of the charge.”

Businessweek also quotes Cuomo’s recognition of the tie to filings for bankruptcy protection: ” ‘Health care debt is the number one cause of individual bankruptcy and this scheme is contributing to the economic burden being felt by consumers,’ Cuomo said.”

80-year-old declines credit, gets popped on credit report

Apparently, many folks who sign up do so under the impression that they’re agreeing to an extended-payment plan. Beyond the risks of retroactive interest on the full balance–regardless of any payments that have been made–consumers can also take a hickey on their credit report if they realize it’s not a payment plan and therefore cancel the contract. Says Businessweek, “Philip Palumbo, 80, of Rochester said he signed up for CareCredit to pay for an estimated $5,600 in dental work, not realizing he was agreeing to a credit card. After having the work done elsewhere, he continued to receive bills from CareCredit and wound up with a strike on his credit report.”

Get a real payment plan

An MSNBC article says a payment plan is exactly what consumers should be asking for:

Patient advocates are concerned that practitioners are taking advantage of patients’ trust at a time when they need help and may be in pain. “Some of the people we’ve worked with feel pressured to apply,” says Mark Rukavina, executive director of the Access Project, a Boston-based nonprofit that helps consumers solve medical-debt problems. “They need the services, and the provider is really encouraging them to use these medical credit cards.”

As health care costs continue to rise, more people are struggling to cover their medical bills. Using plastic may seem like a good—and sometimes the only—solution. According to a [2007] study by management consultants McKinsey & Co., credit cards accounted for less than 20 percent of consumers’ out-of-pocket medical spending in 2007, or $45 billion. However, with the “right” business models that make consumer-to-provider payments more efficient, the study predicted, credit card spending could more than triple, to $150 billion, by 2015.

There are better options than putting charges on a credit card, say patient advocates. The simplest: Ask for an extended payment plan.

Many providers will offer it and charge no interest, says Rukavina.

We gotta stay edumacated, folks. It’s pretty apparent the banksters have no shame–but roping health-care providers in to sell their squirmy products? Even if we could trust the lawmakers, they can’t write laws fast enough to stay ahead of the banksters’ “financial engineers.”

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The bankruptcy reform act of 2005 increased the complexity of the law, but if you are overwhelmed by debt, filing for bankruptcy protection may be your most pragmatic alternative. If you are facing foreclosure of your home (sometimes referred to as your “primary residence,” as opposed to a second home, or “vacation home”), bankruptcy protection may be your best route to saving the home. If you are struggling with medical bills, you may be in a special category for setting debt aside, and if you have problems with credit-card debt, you should be aware that some of those laws have changed recently, too. Whatever you do, before making major, life-changing financial decisions, consider consulting a trained, experience attorney. For bankruptcy basics, please see:

Principles of bankruptcy

Basics of bankruptcy

Introduction to Chapter 7

Introduction to Chapter 13