Effective this July, sleep subspecialists and dental sleep medicine practitioners can no longer give patients pre-filled applications or in any way help patients sign up for CareCredit or similar cards in their offices.
By Lisa Spear
After a number of people came forward with complaints accusing medical offices of predatory practices, a new law in California will go into effect this July to prohibit medical and dental providers from signing patients up for deferred interest credit cards in their practices.
“The most common scenario we hear about is from low-income people who signed up for far more credit than they could possibly pay off,” says Jen Flory, a policy advocate at the Western Center on Law & Poverty, a sponsor of the bill.
Under the new law, patients will still be able to sign up for these products on their own time. Medical providers can still market these credit cards, but they will no longer be able to help people sign up at their practices or to pre-fill out an application for a deferred interest credit card on behalf of a patient. Providers also will be barred from charging deferred interest medical credit cards for services not yet performed.
“While third-party financing may have a place when patients need services that they cannot immediately pay for, more needs to be done to protect consumers,” says a statement from Senator Holly Mitchell, coauthor of the legislation. “Consumers should not feel pressured into applying for these products and need to better understand what they are signing up for.”
Overall, the law attempts to increase and strengthen consumer protections around medical debt.
According to information provided by Mitchell’s press office, deferred interest credit cards are most prevalent in offices where services are not typically covered by a patient’s health insurance, including some sleep specialists and dental sleep medicine practitioners. In some cases, the services are covered by Medi-Cal (California’s Medicaid healthcare program), but medical providers fail to bill the appropriate payor, instead foisting high-interest debt onto their patients, explains Flory.
The new law stipulates that medical providers who accept Medi-Cal explain to Medi-Cal patients what Medi-Cal does and does not cover.
Currently, deferred interest credit cards can be used to cover sleep medicine services, including polysomnography, positive airway pressure therapy, and hypoglossal nerve stimulation for obstructive sleep apnea. There are as many as 200,000 medical offices and wellness centers across the country that offer deferred interest credit cards through CareCredit.
When the law goes into effect, providers would still have the ability to offer credit cards that include 0% interest promotional periods, which begin charging interest after the end of the promotional period on the remaining unpaid balance, according to a statement provided by Mitchell’s press office, which also says that people confuse deferred interest with no interest credit cards. Deferred interest means that if the patient does not pay off entire balance within the no-interest period, then the patient will be charged all of the interest accrued during the deferral period, including on the parts of the balance that the patient has already paid. Not realizing that they are accruing interest, patients are then shocked to later see high interest charges later added to their accounts, Mitchell’s office states.
The new legislation comes after people came to the Western Center on Law & Poverty explaining that they did not realize that they had signed up for a medical credit card. Others had credit cards opened up in their names while undergoing a procedure or medical treatment. Some people said they had no recollection of signing up for the card, explains Flory.
Flory says the responsibility of properly explaining how these credit cards work will still lie with the medical providers. She advises that providers advocate for their patients by first educating themselves on what these medical credit cards are and the possible repercussions these products may have for their patients.
“Stand up for your patients and keep at it,” Flory says. “We would love for deferred interest credit cards to be kept out of the medical industry entirely.”
Lisa Spear is associate editor of Sleep Review.