In advance of a hearing scheduled for today on medical billing and collections in which the focus will be medical payment products such as medical credit cards and installment loans, the CFPB, jointly with the U.S. Department of Health and Human Services (HHS) and U.S. Department of Treasury (Treasury), has issued a request for information (RFI) regarding medical payment products. Comments on the RFI must be received no later than 60 days after the date the RFI is published in the Federal Register. The RFI appears to be part of a larger initiative by the Biden Administration to reduce health care costs.

The RFI indicates that because patients’ use of medical payment products occurs within the larger context of medical billing and collections as well as health insurance practices and affects access to health care, such products implicate the jurisdictions of the CFPB, HHS, and Treasury. In the background discussion, the agencies make the following observations:

• Medical payment product market. Medical payment products were once used primarily to pay for care not traditionally covered by health insurance plans, such as dental and vision care, fertility services, and cosmetic surgery. However, medical payment products are now also used to pay for a broader set of services, including emergency room visits and primary and specialty care. Available data shows significant growth in the medical payment products industry over the last several years.
• Patient experience and downstream consequences; potential for consumer harm. Coupling the sale of financial products to consumers with the provision of medical care may create consumer harm, such as consumers feeling pressure to use such products under stressful circumstances and without adequate information about alternate payment options, including financial assistance, and the potential insurance coverage implications of using a medical payment product. Interest and fees charged on medical payment products, including deferred interest, may significantly increase the amount patients owe for their credit. Some financial services companies offer health care scoring products designed for health care providers, such as financial clearance scores and propensity-to-pay scores, that can be used to restrict access to care (for those with low financial clearance scores) and promote payment products rather than financial assistance for those eligible (for those with high propensity-to-pay scores). Unique features of medical credit cards such as shorter deferred interest periods and shorter billing cycles compared to other lines of credit may create a heightened risk that patients with medical payment products will be sent to collections and reported to credit reporting companies.
• Risk of exacerbating billing and financial assistance issues. Medical payment products may make it more difficult for patients to resolve billing inaccuracies and allow certain patients to be upcharged for services. The availability of such products may allow health care providers to charge higher prices to uninsured, self-pay, or out-of-network patients who would otherwise be unable to pay such prices and might instead seek more affordable care. The use of such products may undermine patients’ medical billing rights including their rights under the No Surprises Act to dispute surprise bill and their rights under the Affordable Care Act to insurance appeals and reviews.
• Potential distortion of health care provider incentives. Changes to private health care coverage (e.g. growing deductible and copayments that patients cannot pay upfront) and slow insurance reimbursement may incentivize providers to promote medical payment products. Such products result in faster payment, lower administrative costs, and more overall revenue for health care providers compared to alternatives such as financial assistance and provider-administered health payment plans. Certain financial companies offer incentives to health care providers to promote medical payment products, such as a share of the revenue from such products. Some companies advertise that their products allow health care providers, debt collectors, and credit reporting companies to attempt to avoid (1) Internal Revenue Code restrictions on tax-exempt hospitals that concern collection actions such as credit reporting and third-party collections, and (2) the limits on reporting medical collection items adopted by the three nationwide credit reporting agencies.

The questions on which the agencies seek comments are divided into four sections. One section contains general questions, with a set of questions about the market for medical payment products and another set of questions about individuals’ experiences with such products. The remaining questions are divided into three sections that contain questions specific to each of the three agencies. The CFPB questions are intended to allow the Bureau “to better understand consumer financial issues raised by medical payment products, including the credit practices of medical payment product companies as well as the debt collection and credit reporting practices utilized by both health care providers and medical payment product companies.”

The issues in which the agencies are interested include:

• Interest and fee costs of medical payment products;
• Marketing, application, and approval processes;
• Outstanding debt on medical payment products;
• Types of financial entities that offer medical payment products;
• Risks of medical payment products and patient understanding of risks;
• How medical payment products may exacerbate existing issues in health care billing and collections; and
• Incentives offered to health care providers to promote medical payment products and how those incentives affect the promotion of such products by providers to patients.

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