N.Y. attorney general warns patients about risks from companies offering healthcare financing

The New York attorney general has joined the chorus of regulators warning patients against high-pressure pitches from companies that offer medical credit cards and loans.

Attorney General Eric Schneiderman on Thursday issued a consumer alert about the risks associated with these forms of healthcare financing. As patients increasingly are required to pay more of their medical expenses upfront—thanks to higher deductibles, copayments and co-insurance—medical credit programs offer easy access to cash but can carry high interest rates and fees.

Another issue is that these programs often are offered directly by the healthcare provider rather than the company imposing the terms and conditions, making it less likely patients will scrutinize the terms of the arrangement. Last month, U.S. Sen. Ed Markey (D-Mass.) asked the federal Consumer Financial Protection Bureau to investigate and possibly take action against entities offering financing options to patients.

In a news release, Schneiderman said medical credit cards create a financial incentive to physicians and dentists to recommend the products as a way to encourage patients to agree to potentially unnecessary procedures. Moreover, providers receive payment upfront while patients are on the hook for “outlandishly high” interest rates and potential penalties.

The attorney general has already gone after CareCredit, part of GE Capital Retail Bank, reaching an agreement in June after an investigation discovered that the application process is “rushed” and consumers are inadequately informed about the terms and hidden charges.

The agreement requires a three-day “cooling off” period for consumers to review the card's terms and the treatment plan, and to provide greater transparency around interest rates. In addition, it places limits on how much providers can charge in advance of services.

Follow Beth Kutscher on Twitter: @MHbkutscher