Hospitals' high-interest payment plans can mean more patient debt

More health systems are offering high-interest payment plans and credit cards to their patients, but the ethics of the practice have been called into question, according to a Nov. 17 NPR article published in partnership with Kaiser Health News

Financing platform AccessOne has partnered with major systems — including Charlotte, N.C.-based Atrium Health, Chapel Hill-based UNC Health and Augusta, Ga.-based AU health —  to offer payment plans to their patients. Everyone is approved through AccessOne, and patients do not need good credit to get a loan, according to NPR.

As a result, many pay high interest rates, which can add thousands to their care costs. In turn, low-income patients who cannot make high monthly payments are particularly vulnerable to mounting interest, NPR reported. 

These financing arrangements can be confusing to patients who are usually approached with them while stressed about care for themselves or a loved one. This can cause them to miss payments or agree to high interest rates without understanding their true cost, and there can be hidden caveats, NPR reported. 

For example, a patient signed a no-interest payment plan to pay off a $3,000 hysterectomy in 2017. When the hospital switched her to a high-interest AccessOne plan, she began receiving late notices despite making payments. The payments were being applied only to the surgery, leaving an account for appointments past due and accumulating 11.5 percent interest, according to NPR

"We're dealing with sick people, scared people, vulnerable people," Mark Rukavina, program director at nonprofit organization Community Catalyst, told NPR. "Dangling a financial services product in front of them when they're concerned about their care doesn't seem appropriate."

One in five U.S. adults are on a payment plan for medical bills, and 25 percent of them are paying interest, according to a Kaiser Family Foundation poll conducted for the article. 

Those numbers are increasing. Before UNC Health began contracting with AccessOne in 2019, most patients were on no-interest payment plans. Since the entities linked, 13 percent of patients have enrolled in the payment plan with the highest interest rate, and that population is rising, according to NPR. Two-thirds of patients on AccessOne plans at AU Health pay the highest interest rate, according to billing records obtained by Kaiser Health News in January. One in five owners of a CareCredit card from Synchrony, the nation's leading medical lender, faces a nearly 27 percent interest rate because they failed to pay off their loan during a no-interest promotional period. And at least half of patients on AccessOne plans at Atrium Health are on the highest-interest plans, according to a KHN analysis of 2021 billing records. 

AccessOne's CEO sees the payment plans as a useful option for patients.

"By offering AccessOne, you're creating a much safer, more mission-aligned way for consumers to pay and help them stay out of medical debt," Mark Spinner told NPR. "It's an alternative to lawsuits, legal action and things like that."

AccessOne borrowers who miss payments can have their accounts returned to the hospitals, which can sue them or report them to credit bureaus and collection agencies, according to NPR.

A spokesperson for UNC Health told NPR health systems have a responsibility to remain financially stable to "assure they can provide care to all, regardless of pay." The spokesperson also said any payment plans above zero-interest with AccessOne are requested by the patient. 

Market research firm IBISWorld estimated the patient financing industry sees profit margins of 29 percent, seven times what is considered a solid hospital margin, NPR reported. 

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