RFI Industry Commenters Urge CFPB to Stay in its Lane on Medical Debt Payments

American Bankers Association (ABA), Association of Credit and Collection Professionals (ACA International), U.S. Chamber of Commerce (Chamber), Synchrony Bank (Synchrony), and National Consumer Law Center (NCLC) submitted comment letters in response to the Consumer Financial Protection Bureau’s request for information, about medical credit cards and other lending products used to pay for health care expenses. Banking industry groups highlight that the Consumer Financial Protection Bureau (CFPB) lacks authority to regulate healthcare and urge the CFPB to take no action to limit healthcare payment options to avoid unintended consequences.

In July, the CFPB, jointly with the U.S. Department of Health and Human Services (HHS) and U.S. Department of Treasury (Treasury), issued a request for information (RFI) regarding medical payment products. As we previously blogged, the agencies sought information regarding interest and fee costs of medical payment products and information about the following:

• Marketing, application, and approval processes;
  
  
• Outstanding debt on medical payment products;
  
  
• Types of financial entities that offer medical payment products;
  
  
• Risks of medical payment products and patient understanding of risks;
  
  
• How medical payment products may exacerbate existing issues in health care billing and collections; and
  
  
• Incentives offered to health care providers to promote medical payment products and how those incentives affect the promotion of such products by providers to patients.

The ABA, ACA International, Chamber, Synchrony, and NCLC submitted comment letters in response to the RFI.

ABA. The ABA commented that the CFPB lacks the statutory authority to directly or indirectly regulate healthcare and encouraged the CFPB to “pursue policies that promote a variety of fair and responsible options to pay for healthcare-related products and services, permitting consumers to choose the option that meets their needs.” The ABA reminded the agencies that lending products are highly regulated and require comprehensive disclosures of the cost of credit, allowing consumers to make an informed choice. The ABA cautioned the CFPB to refrain from any actions that will reduce consumer payment options, which could create access barriers to medical services. With respect to deferred interest options, the ABA stressed that consumers understand these plans as evidenced by the 80% payoff rate before interest begins to accrue.

ACA International. ACA International expressed concerns about the CFPB’s prior actions to remove medical debt from credit reporting (as we previously blogged about) and its failure to engage with healthcare stakeholders. They emphasized the CFPB’s inability rewrite the Fair Credit Reporting Act and reminded the CFPB that law making is Congress’ function, not the CFPB’s function through arbitrary decisions. ACA International expressed similar concerns about CFPB authority to regulate healthcare and harm to consumers as expressed by the ABA.

Chamber. The Chamber highlighted that financial services providers allow consumer to pay for an incurred medical bill though a variety of payment products (credit cards, debit cards, checks, loans). They further noted that these payment products are already subject to numerous regulatory requirements and consumer protections. The Chamber emphasized that “consumer financial services providers do not have a role in the sale or delivery of medical services, the medical insurance market, or the medical billing system.” The Chamber further asked the CFPB to consider the following three key points:

1. The CFPB should not try to use payment regulations to address perceived concerns with medical billing and business practices.
   
   
2. Any policy actions based on the distinctive treatment of medical debt would be misplaced.
   
   
3. The CFPB should not discourage the use of any particular payment product.

Synchrony.  Synchrony offered to share its experiences with the agencies about its CareCredit – its health and wellness care branded credit card issued to consumers and credit card network brand. Synchrony shared some background on its CareCredit card product used for elective medical procedures, such as veterinary clinics, dentistry, cosmetic procedures, and LASIK surgery and explained how the card enhances access to healthcare and sets industry-leading practices. Synchrony stated that the correct public policy choice is to allow consumers to choose how they pay for their access to healthcare. They also stressed that majority of consumers (75-80%) pay no interest on deferred interest plans and focus groups indicate that consumers are satisfied with this payment option. To address the CFPB’s concerns about complexity of deferred interest plans and perceived harm to subprime cardholders, Synchrony noted that subprime borrowers only accounted for 8% of all deferred interest loans.

NCLC. In contrast, the NCLC focused on the risks posed to consumers by using medical payment products, such as when financed amounts should have been covered by insurance, when payments were made on amounts that were billed in error, when consumers could have avoided interest with a medical provider interest free payment plan, and when such debt was not flagged as medical debt and is reported on a credit report.Notably, consumers have some of these same risks if paying by cash or check and these risks are not mitigated through further regulation of medical payments. The NCLC comment letter explains how medical providers fail to provide clear marketing disclosures for offered financing options. As stated above, there are existing laws and regulations to address marketing and disclosure practices and improper sales practices are addressed by the laws preventing unfair, deceptive and abusive acts and practices. The letter “recommend[s] that the CFPB prohibit lenders from placing a charge on an account or issuing funds before a medical procedure is completed or the medical product is delivered.” This comment suggests lenders are in position to police medical facility billing practices and entitled to receive protected healthcare information validating the medical service performed prior to authorizing a credit card transaction and fails to respect patient privacy or recognize how payment authorizations work. The NCLC suggests the CFPB should conduct more research on medical credit cards, bring more enforcement actions, and ban deferred interest on all credit cards, apparently ignoring the harm that this ban will cause to the 80% of consumers that benefit from deferred interest plans.

We will continue to monitor for further developments from this RFI and any policy statements or proposed rulemaking by the CFPB related to medical debt and medical payments.