Medical credit cards came under scrutiny in the past year or so: former New York Attorney General Andrew Cuomo launched an investigation into GE Money’s CareCredit health care credit cards for questionable marketing practices. Now, the Star Tribune reports that a Minnesota chiropractor was found guilty of improperly enrolling his patients in credit card plans, overbilling, and charging patients for treatment they did not receive. Despite the worrisome charges against him, the chiropractor received only a $30,000 fine and what amounts to a slap on the wrist.

Healthcare credit cards: the intent…

Medical credit cards (dedicated health care credit cards, or DHCCC’s, in medical parlance) are a way to extend lines of credit to those who for whatever reason cannot use a regular credit card, and need or want procedures not covered by insurance. Common treatments include plastic surgery, dental care, weight loss procedures and even veterinary care.

Usually arranged between the patient and his health care provider, the terms of a medical credit card require the patient to pay his bill in full over a period of 12, 18, or 24 months, with interest, while the provider is paid upfront by the company that issues the card. Used properly, healthcare credit cards benefit both the patient and the hospital or doctor: the provider is paid upfront and saved the hassle of tracking down and collecting unpaid bills, and the payment plans allow the millions of Americans with limited or no insurance to receive adequate medical care.

…and the investigation

However, former Attorney General Cuomo and others allege that medical credit card issuers engaged in questionable practices to enroll patients. In a press release, Cuomo alleged:

“[CareCredit] charges [healthcare] providers a fee for the right to offer the cards, and then rebates part of the fee based on the amount of money the providers generated through CareCredit sales. This kickback arrangement…creates an incentive for providers to push consumers to use CareCredit rather than other methods of payment. In fact, providers pushed CareCredit over cash.”

“Our ongoing investigation has uncovered conflicts of interest and predatory practices in the health care industry,” said Cuomo. “Patients are being misled into paying for services they never received by the people they should be able to trust the most – their doctors.”

While healthcare credit cards may have low interest rates, a missed payment triggers a penalty interest rate that is then applied retroactively to the entire balance. For example, if a patient is late on the last $1,000 on a $30,000 bill and faces a penalty APR of 30%, he will now owe $9,000 for the entire bill rather than $300 for the unpaid amount.

Further, healthcare credit cards are non-refundable. If a patient takes out a line of credit to pay for five cortisone shots but only uses four of them, he will not receive a refund or see his debt reduced.

Allegations of reciprocal relationships and kickbacks between health care credit card issuers and practitioners drew unwelcome attention from a number of media sources, including the New York Times, and the attorneys general of both Minnesota and New York have issued warnings and guidelines for patients.

A Minnesota chiropractor’s abuse of medical credit cards becomes outright fraud

Jeffrey M. Styba, owner of Exodus Chiropractic in Blaine, Minnesota, was found guilty by the Minnesota Board of Chiropractic Examiners Complaint Panel. In late February, Styba appeared before the panel to counter allegations of overcharging for treatment, unethically enrolling patients in GE’s CareCredit plans, and billing the insurance company for procedures he did not perform. Styba and his staff were alleged to have:

• Inflated patients’ incomes on healthcare credit card applications, to increase the probability of acceptance
• Enrolled patients in CareCredit without their knowledge
• Failed to obtain patients’ signatures on paperwork acknowledging that they had heard and understood all their payment options
• Failed to record payments or credits to patients’ accounts
• Billed his patients for x-rays that were never performed
• Performed irrelevant or redundant x-rays, exposing his patients to radiation unnecessarily

FULL STORY