Instead of "the doctor will see you now," it could be "the doctor will see your credit now," according to a tidbit found in an extensive report on credit released this week from watchdog group Demos.
The group culled anecdotal evidence showing that hospitals and other health care providers are increasingly using a patient's credit report or score to decide how to get payment for medical bills. The report also mentioned that several companies, including Equifax, FICO and SearchAmerica Inc. offer predictor methods to determine a patient's ability to pay medical expenses.
"We worry that hospitals may look at what credit cards households may have and what their credit limits are, and pressure patients to charge their entire hospital bill upfront as opposed to looking into other options the hospital may have," says Amy Traub, a senior policy analyst at Demos and one of the authors of the report.
The Demos report cites an example of that practice in a Consumer Reports investigation in 2008. A patient said representatives of a Virginia for-profit hospital persuaded him to put part of his $28,000 medical bill on a Chase credit card after they pulled his credit report and discovered he had $13,000 of available credit on it. The patient fell behind on the payments within two months and sought legal help. Meanwhile, the balance swelled because of late fees and a 29.99 annual percentage rate.
Traub noted that patients likely will end up paying a higher interest rate if they use a credit card rather than a payment plan that hospitals may offer. She also said if patients pay upfront, they may not be able to negotiate the cost of care with the provider later on.
"I'm sure we've seen this happen, but the practice isn't extremely widespread," says Rick Gundling, vice president of health care financial practices at the industry trade group Healthcare Financial Management Association.
Gundling said hospitals try to work with patients and offer different methods of dealing with their medical expenses. Hospital personnel will check if the patient is eligible for other types of insurance or assistance depending on his or her needs. Other hospitals have charity care programs for patients with income below a certain level.
Instead of waiting until the ambulance comes, consumers should take preventive measures to help gird against a medical emergency, which is the No. 1 cause of all personal bankruptcies.
Good medical insurance and old-fashioned savings are the best prescriptions. But if that isn't enough, compare the costs of using health care credit cards, if offered, to the credit cards in your wallet or bank lines of credit specifically for out-of-pocket medical costs. Know the terms, especially if the interest rate rises after a set period. Otherwise, you may find your finances on crutches.