Senator seeks investigation of entities that offer credit to patients to pay bills

Some healthcare providers have been offering easy access to credit lines to help patients cover their rising out-of-pocket costs. But critics say the practice can be exploitive and harm patients.

Now U.S. Sen. Ed Markey (D-Mass.) has asked the federal Consumer Financial Protection Bureau to investigate, and possibly take action against, entities that offer credit cards, loans and other financial products that help patients pay for medical and dental services that aren't covered by their insurance.

In a letter to CFPB Director Richard Cordray (PDF), Markey wrote that seniors and seriously ill individuals are often on the receiving end of these financial pitches—which typically come directly from a “trusted” provider or facility administering care, not the third-party company that sets the terms and conditions. He asked the CFPB to investigate the incentives given to providers who offer these financing options, whether consumers are adequately informed about the fine print on repayments and penalties, and how well complaints are handled.

As health insurers hike co-pays and deductibles—and create narrower networks that make it more likely that an individual will go out of network for care—medical debt is expected to skyrocket. And the losses from unpaid bills mean that healthcare providers might not see the expected decrease in bad debt they hoped for with more Americans gaining coverage under the healthcare reform law.

In his letter, Markey cited a New York Times article that found that medical credit cards and loans allow providers to be paid in full after care is delivered, while patients can be on the hook for interest rates that can reach 23%, or even higher if they get hit with certain penalties.

Several large hospital systems are creating their own financing programs for patients, either backing the loans themselves or working with a third party. But the Patient Protection and Affordable Care Act sets limits on not-for-profit hospitals, such as requiring them to check eligibility for financial aid before engaging in aggressive collection practices and capping prices that can be charged to financial aid patients.

Follow Beth Kutscher on Twitter: @MHbkutscher