Growth of Medical Credit Card Market
One of the most widely used cards, CareCredit, is owned by Synchrony Bank and accepted at over 260,000 locations. Beyond private practices, the vendor has multiyear deals with over 300 hospitals, including Kaiser Permanente and the Cleveland Clinic.
Despite growing popularity and acceptance within the medical community, the cards may work well for some, but not all, patients.
According to a CFPB report released earlier this year, deferred interest medical credit cards were used to pay nearly $23 billion in healthcare expenses from 2018 to 2020. Individuals unable to stick to the terms paid $1 billion in deferred interest payments during that period. Three quarters of CareCredit consumers pay no interest, the organization reported.
Healthcare costs are likely driving demand for medical credit cards. In a recent survey by the Commonwealth Fund, almost half of respondents said it was very or somewhat difficult to afford care even when having insurance coverage through an employer, individual, or government plan. Consumers in the survey cited the high costs as a reason why they delayed or skipped care and prescription medication in the past year, including 29% of those with employer coverage and 42% with Medicare.
These dynamics can leave doctors between a rock and a hard place, said Alan P. Sager, PhD, a professor of health law, policy, and management at Boston University School of Public Health. He told this news organization that medical credit cards can keep cash flowing for doctors and provide elective and necessary care for patients, but the double-digit interest rates outside of the promotional periods can put patients at risk of bankruptcy. He views them as a short-term solution to a more significant problem.
“What doctors need and deserve is patients who have full coverage so that there are no medical debts and no need for medical credit cards,” said Dr. Sager.
Doctor Groups Weigh In
The Medical Group Management Association (MGMA), representing more than 15,000 medical groups, said in its public comments that Medicare cuts and staffing and inflation challenges have made running a profitable practice challenging, particularly for rural and less-resourced offices.
The organization said medical credit cards with transparent terms and conditions can help patients afford care and keep practice doors open amid rising operational costs. However, MGMA worries that the CFPB’s inquiry could “perpetuate the notion that it is acceptable for payment not to be rendered immediately after clinical services are provided, and it’s ok that payments are often subject to significant delays.”
Meanwhile, the American Society of Plastic Surgeons (ASPS) has endorsed CareCredit for over 20 years. In response to the CFPB’s request for information, the association said it supports medical credit cards that offer promotional low- or no-interest terms.
Steven Williams, MD, ASPS president, told this news organization that patients appreciate multiple payment options and the flexibility to move forward with care on short notice. Still, he said that it requires due diligence on everyone’s part.
“Lenders have a responsibility to educate their customers, and it’s critical that lending products have full disclosure in plain and clear language. And with any substantial purchase, patients need to analyze how much it adds to the bottom line,” he said.
A version of this article appeared on Medscape.com.