In early May, the American Association of Healthcare Administration Management (AAHAM), a trade association for the revenue cycle management industry, descended upon Washington for its annual lobbying push. Revenue cycle management (RCM) is the intermediary business process of collecting payments and managing medical billing, which involves liaising between insurance providers, hospitals, patients, and government programs like Medicare and Medicaid.

Hospital systems and insurance companies are all trying to get paid as quickly as possible, which is entirely natural. But in the case of health care, the sheer administrative bloat and red tape one needs to go through to get paid distracts medical providers from their essential function: treating patients.

The drive to streamline payments and avoid insolvency has created an urge to financialize the medical billing process. That’s where revenue cycle managers enter the scene. Hospitals are increasingly interested in outsourcing the process entirely to a third party, even as they report frustrations working with outsiders.

One of the biggest players in the RCM space is the company R1 RCM, formerly known as Accretive Health. Founded in 2003, R1 has expanded its reach across the health care sector, even as it has racked up investigations and scorn from regulators over patient data protection and debt collection practices.

In recent years, R1 RCM has taken over revenue cycle management from nonprofit hospital systems. Among them are District Medical Group’s chain of more than 650 providers and Ascension’s more than 3,000 locations, most concentrated through the Midwest. Though these billing companies are primarily concerned with getting hospitals paid by insurance, those practices can also filter down to patients.

Ahead of AAHAM’s Washington lobbying day, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra spoke to the organization about concerns over the consequences of medical debt from the patient perspective. He explained how the billing and insurance complexities of providing health care can come at the expense of patient welfare. But at the end of his speech, Chopra homed in on how medical providers are encouraging patients to finance their procedures with something called "medical credit cards." He warned AAHAM of "the long-term effects of financialization on medical payments," calling the practice "harmful to the entire healthcare ecosystem."

The quickest way to pay an obligation is to put it on credit. Medical credit cards are not a new form of financing, but in the past they have typically been reserved for elective surgeries and dental procedures. Today, their usage has expanded to basic medical treatment and emergency services. They’re great for hospitals because the parent company for the credit card is paying the hospital up front for the cost of a procedure.

The problem is that these alternative forms of credit are deceptive from the start. Patricia Kelmar, senior director for health care campaigns at the Public Interest Research Group (PIRG), explained to the Prospect that when consumers are talking finances with a medical provider there’s an implicit trust. The last thing someone expects is their doctor upselling them a credit card.

For patients, a medical credit card can be appealing. For example, one of the most popular medical credit cards is CareCredit, a subsidiary of Synchrony Financial. It offers a deferred interest payment plan, sometimes promoted as "No interest if paid within [x] months." But if a payment is missed or a patient doesn’t pay off the balance within the timeframe, they’re liable for all of the interest accrued from the beginning of the loan.

Regulators have taken notice. Earlier this month, the CFPB issued a report titled "Medical Credit Cards and Financing Plans." In the report, it said that medical credit cards "are typically more expensive than other forms of payment due to the higher interest payments." From 2018 to 2020, consumers paid $1 billion in deferred interest payments for health care charges. And according to the CFPB’s analysis, 20 percent of consumers incurred interest on their deferred interest plans. Those with a lower credit score failed to pay at an even higher rate.

Those stories seem to follow the items in the CFPB’s consumer complaint database. More than 200 entries describe consumers getting smacked with retroactive interest payments or being misled about the terms of the loans they were taking out. One particular complaint described paying interest on top of interest, creating a stacking effect. Some consumers are set up for failure. A customer who used a CareCredit card for a veterinary hospital bill warned others in a subreddit that the minimum payment for a 12-month auto-pay plan added up to less than the original loan’s total, meaning there would be payments left over even after the loan was paid "in full."

This isn’t the first time CareCredit’s actions have come under scrutiny from regulators. Back in 2013, the CFPB ordered CareCredit’s former parent company, GE Capital Retail Bank, to refund customers $34.1 million for deceptively enrolling them in medical credit cards.

A report published in April from the National Consumer Law Center based upon surveys from consumer advocates provides a look into the sorts of customers who rely on medical credit cards. Almost half of those interviewed said their clients’ medical bills were submitted for loans without cross-checking their medical insurance, meaning that there’s a chance that the expenses could have been covered by other means. One attorney said: "Medicaid members have paid for services on medical credit cards that Medicaid would have paid had the provider submitted a prior authorization request and/or claim." Another attorney said: "By getting paid directly from the finance company, providers avoid insurer scrutiny of costs and billing practices."

That part is key in this resurgence of medical credit cards. Kelmar noted that over a dozen states have started to implement protections on medical debt, and the CFPB has instituted changes to credit reporting of medical debt. Add to that the No Surprises Act, which limited so-called "surprise billing" for out-of-network services, and medical debt is far less harmful for consumers than it was a decade ago.

Elisabeth Benjamin, vice president of health initiatives for the Community Service Society of New York, described short-term victories that the state had passed on consumer medical debt. One of those bills barred medical providers from garnishing patients’ wages and placing liens on their homes to collect on medical bills. The other required hospitals and other providers to disclose fees in advance to patients. But these protections are forfeited when medical debt is discharged onto a medical credit card like CareCredit.

By having financial firms front a loan for patients, the financial burden shifts from originally being between providers, insurance, and patients, to now being managed between patients and an outside player like Synchrony Financial. Functionally, hospitals are outsourcing financial liability for immediate cash flow, and circumventing consumer protections all in the same move.

"Each year we help around 30,000 New Yorkers and save them about $40 million in health care costs," Benjamin said. "One of the things that we’ve seen in the last couple of years is a 64 percent increase in medical debt cases … It just feels like whack-a-mole on the medical debt issue."