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Medical credit cards come under scrutiny

  • Article by: JESSICA SILVER-GREENBERG
  • New York Times
  • October 13, 2013 - 9:58 PM

 

The dentist set to work, tapping and probing, then put down his tools and delivered the news. His patient, Patricia Gannon, needed a partial denture. The cost: more than $5,700.

Gannon, 78, was staggered. She said she could not afford it. And her insurance would pay only a small portion. But she was barely out of the chair, her mouth still sore, when her dentist’s office held out a solution: a special line of credit to help cover her bill. Before she knew it, Gannon recalled, the office manager was taking down her financial details.

But what seemed like the perfect answer — seemed, in fact, like just what the doctor ordered — has turned into a quagmire. Her new loan ensured that the dentist, Dr. Dan A. Knellinger, would be paid in full upfront. But for Gannon, the price was steep: an annual interest rate of about 23 percent, with a 33 percent penalty rate kicking in if she missed a payment.

She said that Knellinger’s office subsequently suggested another form of financing, a medical credit card, to pay for more work. Now, her minimum monthly dental bill, roughly $214 all told, is eating up a third of her Social Security check. If she is late, she faces a $50 penalty.

“I am worried that I will be paying for this until I die,” says Gannon, who lives in Dunedin, Fla. Knellinger, who works out of Palm Harbor, Fla., did not respond to requests for comment.

In dentists’ and doctors’ offices, hearing aid centers and pain clinics, U.S. health care is forging a lucrative alliance with U.S. finance. A growing number of health care professionals are urging patients to pay for treatment not covered by their insurance plans with credit cards and lines of credit that can be arranged quickly in the provider’s office.

The cards and loans, which were first marketed about 10 years ago for cosmetic surgery and other elective procedures, are now proliferating among older Americans, who often face large out-of-pocket expenses for basic care that is not covered by Medicare or private insurance.

The American Medical Association and the American Dental Association have no formal policy on the cards, but some practitioners refuse to use them, saying they threaten to exploit the relationship between provider and patient. Doctors, dentists and others have a financial incentive to recommend the financing because it encourages patients to opt for procedures and products that they might otherwise forgo because they are not covered by insurance. It also ensures that providers get paid upfront.

One of the financing companies, iCare Financial of Atlanta, asks providers on its website: “How much money are you losing every day by not offering iCare to your patients?” In the past three years, the firm’s enrollment has grown 320 percent.

Another company posted a video online that shows patients suddenly vanishing outside a medical office because they cannot afford treatment. The company offers a financing plan as a remedy, with the scene on the video shifting to a smiling doctor with dollar signs headed toward him.

A review by the New York Times of dozens of customer contracts for a variety of medical cards and lines of credit, as well as of hundreds of court filings in connection with lawsuits brought by state authorities and others, shows how perilous such financial arrangements can be for patients — and how advantageous they can be for health care providers.

Many of these cards initially charge no interest for a promotional period, typically six to 18 months, an attractive feature for people worried about whether they can afford care. But if the debt is not paid in full when that time is up, costly rates — usually 25 to 30 percent — kick in, the review by the Times found. If payments are late, patients face additional fees and, in most cases, their rates increase automatically. The higher rates are often retroactive, meaning that they are applied to patients’ original balances, rather than to the amount they still owe.

For patients, the financial consequences can be dire.

Gannon said she was happy with her dental care, despite the cost, and there was no suggestion that Knellinger had done anything wrong. But attorneys general in a several states have filed lawsuits claiming that other dentists and professionals have misled patients about the financial terms of the cards, employed high-pressure sales tactics, overcharged for treatments and billed for unauthorized work.

Cameron P. Kmet, a chiropractor in Alaska, said he had stopped offering medical cards. “One missed payment can really ruin a patient’s life,” he said.

They are usually marketed by caregivers to patients, often at vulnerable times, such as when those patients are in pain or when their providers have recommended care they cannot readily afford.

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