Medical credit card marketing material in a care provider’s office. (Photo: Camalot Todd/Nevada Current)
Nevada law provides some consumer protections against medical debt collection practices, but those protections do not apply to the debt consumers are racking up with medical credit cards.
In the 2021 legislative session, Nevada enacted consumer protections requiring debt collectors to give written notice to people with medical debt 60 days before any action on collecting that debt. Under the law, customers must also be informed of the principal amount of the debt, the names of the medical facility and health providers seeking payment, and the date(s) that goods or services were provided.
That law survived a legal challenge in June, when a Ninth Circuit court panel in a 2-1 decision denied debt collectors’ attempt to overturn the law.
However, the law’s modest protections don’t apply to debt amassed through one of the fastest growing forms of medical debt, that incurred through medical credit cards.
That means consumer protection for medical debtors “is lost when you put it on CareCredit, Wells Fargo, or Comenity or any of the medical credit cards, or for that matter just put it on your credit card,” Peter Aldous, a staff attorney for the Legal Aid Center of Southern Nevada, said.
“It isn’t a medical debt that’s protected, it’s just a regular debt,” Aldous said.
There is no state oversight or protections for medical credit card debts, Teri Williams, a public information officer for the Nevada Department of Business & Industry, which oversees the legal operations of businesses to protect consumers, confirmed via email.
In the last decade three financial institutions – CareCredit, Wells Fargo, and Comenity – have dominated the medical credit card industry with their soaring presence and profits, according to a Consumer Financial Protection Bureau (CFPB) report.
Unlike typical credit cards that accrue interest on the unpaid portion of the debt, many medical credit cards instead retroactively charge interest on the entirety of the debt if it is not paid off at the end of the promotional period, according to the CFPB. That report’s release in July accompanied CFPB’s announcement that it was launching a new investigation of medical credit cards.
Growth spurred by high-deductible plans
CareCredit partners with hundreds of providers in Nevada, from private practices in obstetrics and gynecology and behavioral health services to entire health care systems, including UNLV Health, North Vista Hospital in North Las Vegas, and Saint Mary’s Regional Medical Center in Reno.
Even if the medical care is covered by insurance or there are financial assistance programs that many nonprofit hospitals may provide to help with the cost of health care, providers still pitch the medical credit cards to patients.
The nonprofit care provider UNLV Health began offering CareCredit as a payment option this year as a way for patients who don’t have the funds to pay medical for medical charges, particularly patients with high deductible plans, Paul Joncich, a spokesman for the Kirk Kerkorian School of Medicine at UNLV, said via email.
UNLV Health decided to use the plan after several patients lacked the funds to pay for “necessary medical procedures” he said.
“Staff is careful to explain that with this option, just like any other credit card, it’s important to make payments and pay off the entire balance within the agreed upon promotional period (ranges from 6 to 24 months) before interest begins to accumulate,” Joncich said. “In no way do we benefit from interest that might accumulate.”
UNLV Health was unaware of the federal government’s investigation, Joncich said.
Growing use of the medical credit cards has accompanied the increasing number of insurance plans with high-cost deductibles, said Aldous with the Legal Aid Center.
“With the increase in high deductible insurance plans that are targeted to lower-income people under the Affordable Care Act… there has been an increase in medical credit cards in more traditional health care,” Aldous said.
A spokesman in the Nevada attorney general’s office said the office “can neither confirm nor deny” whether it is working with the federal government in its probe of medical credit card practices, but at this time the AG’s office has not received complaints on medical credit card practices.
Passing the burden to consumers
CareCredit and similar credit cards have become a way for providers to avoid administrative burdens and expenses of negotiating with insurance companies for payment or passing debt to collection agencies. Instead the cards transfer that burden to consumers, according to the CFPB.
Medical credit cards are marketed to patients through their medical providers but are serviced through banks and financial service companies that rely on medical providers to promote the cards to their patients.
Health care providers are given sales and marketing training, promotional materials, and in-housing financing software to help expedite the approval process in their offices.
Finance companies also boast to medical providers that they can enable more expensive treatments, as well as additional services that aren’t in the patient’s best interest, according to this year’s CFPB report.
CareCredit grew from 4.4 million cardholders in the U.S. in 2013 to 11.7 million in 2023, and from 177,000 healthcare providers accepting the cards in 2012 to 250,000 providers in 2023, according to the CFPB.
Two out of five Americans carry some type of medical debt, including one in five who owe a medical debt to a bank, collection agency, lender, or have health care debt from bills they put on a credit card, according to KFF, the nonprofit health policy research organization.
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