Predatory Medical Loans Receiving Increased Government Scrutiny

The federal government has been paying increased attention to the “predatory” practices of companies and healthcare providers that offer financing products to patients in need of financial assistance to pay for expensive medical treatments and procedures. These products typically come in the form of medical loans or credit cards. In addition to the methods used to sell these products, the government is concerned that the terms of these agreements are unfair to consumers and deceptive in nature.

There is concern that providers are recommending these products so that they can be reimbursed for procedures not covered by the patient’s insurance. Even if the intentions of recommending these products are genuine, there is worry that medical office staff lacks the proper training to correctly explain the complex terms of these products, resulting in patients receiving incomplete or faulty information.

Many of these medical loan and credit card companies are subsidiaries of major banks and financial institutions. Their products are mainly geared toward uninsured, underinsured and elderly patients. These arrangements carry interest rates much higher than other types of loans and include hidden penalties for late or missed payments, often resulting in further debt for patients.

Break Away from the Static

On December 10th, under jurisdiction from the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Board (CFPB) ordered one of these medical loan companies, CareCredit, to refund $34.1M to one million consumers for “deceptive health-care credit card enrollment” practices. The order cites misleading enrollment processes, inadequate disclosures and poorly trained staff, among other issues.

Additionally, there is evidence that some of these financial companies are providing kickbacks in the form of rebates to providers for selling their products to patients. Medical providers are charged a fee by the financial companies to sell their products and receive discounts on this fee based on how much business they bring in for the loan companies. Some offices have refused cash payments, instead insisting that patients open lines of credit through sponsored medical loan companies.

It is not clear whether the implication of a “kickback” could trigger the Medicare anti-kickback provisions in the event the patient was a Medicare beneficiary, or a possible Stark law violation.  Under the Stark Law, physicians are not allowed to refer patients to any entity for health services in which the physician has an ownership interest so that physicians may not profit from their own referrals.  

In October, The New York Times published an article examining many of these practices. The article emphasized the vulnerability of patients when they are offered this financing.

ADVOCATE will continue to keep you informed on this and all issues impacting your radiology practice.

With best regards,
Kirk Reinitz, CPA