HHS Investigates Medical Credit Cards, Installment Loans

Several federal departments, including HHS, recently announced an inquiry into medical credit cards and installment loans after research suggests that these patient payment options drive up healthcare costs and medical debt.

The Consumer Financial Protection Bureau (CFPB) and US Department of Treasury will join HHS in the investigation to determine the prevalence of medical credit cards and installment loans, patient experiences with them, and healthcare providers’ incentives to offer the products to patients.

Medical credit cards and installment loans are high-cost products that may cause patients to bypass the insurance claims process and finance assistance programs, the departments said in the announcement.

"This inquiry builds on the Department's work to protect patients from unfair billing practices, lower costs, and increase transparency in our [healthcare] system," HHS Secretary Xavier Becerra said in a the statement on July 7th. "Hearing directly from patients about their experiences will help shape policies that can prevent families from incurring medical debt."

The inquiry into medical credit cards and installment loans comes on the heels of a May 2023 CFPB report on the patient payment options. The report found consumers may be saddled with more medical debt after using the products, which have increasingly replaced low- or no-cost informal payment plans offered to patients directly by their medical providers.

“Consumer complaints to the CFPB suggest that, rather than benefitting consumers, as claimed by the companies offering these products, these products in fact may cause confusion and hardship for some of their patients,” the report stated.

CFPB reported that medical credit cards and installment loans tend to have significantly higher interest rates than traditional financing options and include deferred interest, which means patients may have to pay all the accrued interest on the balance at the end of the period if they fail to pay off the balance.

The federal departments said providers are pitching medical credit cards and installment loans to patients even when medical care is covered by insurance or financial assistance. Providers then pass on the administration of patient billing and collections to the finance service companies that own the products, according to the announcement.

The inquiry will specifically look into the interest and fees for the patient payment options and their marketing, application, and approval processes. The federal departments are also seeking to understand consumer knowledge and understanding about the product, as well as how the products may be exacerbating medical billing and collection issues.

Finally, the departments will look into healthcare provider incentives and how providers promote patient payment options.

“In some cases, this may include a share of the revenue from these products,” the announcement stated. “Other medical payment product issuers offer lower processing or management fees to providers who enroll high numbers of patients – thereby incentivizing those medical providers to enroll as many of their patients as possible.”

The public can comment on the inquiry and provide data for 60 days after the request for information is published on the Federal Register. Publication is scheduled for July 12th.