Biden administration will probe high-cost medical financial products

President Joe Biden was joined by two CEOs at a June 15 event focused on so-called “junk fees.” On Friday, the Consumer Financial Protection Bureau and two other federal agencies announced a joint inquiry into high-cost financial products for medical purchases.

Nathan Howard/Bloomberg

The Consumer Financial Protection Bureau, the Treasury Department and the Department of Health and Human Services have launched a joint inquiry into high-cost financial products that Americans use to make health care-related purchases.

Medical payment products were originally meant to cover care not typically included in health insurance plans, including dental care, vision care and fertility services, the three federal agencies said Friday. But they have since expanded to include a broader range of needs, such as emergency room visits and primary care. 

The agencies put out a public request for comment on the products, saying that they have been pushed on patients as a way to pay for routine care, which has driven up both health care costs and medical debt.

“Financial firms are partnering with health care players to push products that can drive patients deep into debt,” CFPB Director Rohit Chopra said in a press release.

In a separate fact sheet, the White House said Friday that the CFPB, the Treasury Department and the Department of Health and Human Services will explore whether efforts to convince consumers to sign up for medical credit cards and loans are breaking the law.

The White House on Friday announced a number of other efforts related to health care costs, including one that’s meant to reduce surprise medical billing. For more than a year, the Biden administration has been taking aim at so-called “junk fees” paid by consumers.

In their request for information, the three federal agencies said they want to understand the market for specialty medical payment products, including interest and fee costs, as well as marketing, application and approval processes.

They also plan to explore patient experiences, potential risks and whether consumers fully comprehend the risks associated with the products.

Additionally, the agencies are looking at how medical credit cards and loans exacerbate existing issues in health care billing and collections — particularly for uninsured and out-of-network patients who are often charged higher prices.

The three agencies also want to learn about the incentives that get offered to health care providers to promote financial products. Some providers may receive a share of the revenue generated, while others may pay lower processing fees for enrolling a high number of patients, the agencies said. 

The request for information allows members of the public to provide comments and data within 60 days of its publication in the Federal Register. 

The Biden administration’s inquiry follows up on CFPB research from earlier this year that explored some of the pitfalls associated with medical debt products.

According to the CFPB’s research, health care providers may be disincentivized from explaining legally mandated financial assistance programs or zero-interest repayment options before offering financial products to patients. And certain products can lead to ballooning deferred interest or creditor lawsuits against patients, the agency has found.