Study: Specialties most likely to use medical credit cards

Dentistry, podiatry and chiropractic are among the most likely specialties to partner with medical credit cards for patient collections, according to a new study. 

The study published in JAMA Health Forum scraped websites for three major financial institutions and their subsidiaries that have offered medical credit cards to physician practices to determine the specialties that use the payment type. The financial institutions or their subsidiaries included Alphaeon (Comenity Capital Bank of Bread Financial), CareCredit (Synchrony Financial) and Wells Fargo Health Advantage (Wells Fargo). 

More than 180,000 practice locations contracted with financial institutions to offer medical credit cards, the study found. Of those practices, 67.0% were dentistry, 45.7% were podiatry, 29.7% were chiropractic, 25.5% were physical medicine and rehabilitation and 20.5% were dermatology.  

Medical credit card use was also common for pharmacy (18.3%) and imaging and radiology (14.0%), but less common for orthopedic surgery (8.7%). 

Medical credit card use was also most prevalent among practices in the Northeast. 

Physician practices contract with financial institutions to accept their medical credit cards as a form of payment for patient financial responsibility, usually for a processing fee. In turn, practices usually receive software to process the payments, training and promotional materials to market the medical credit cards to patients. 

Practices benefit when their patients use medical credit cards since consumers can use the cards to pay off medical bills in full, saving providers the resources needed to collect patient financial responsibility. Research shows that patient collection rates have recently fallen for commercially insured patients. 

Healthcare consumers also benefit from deferred interest when they use medical credit cards to pay for healthcare services. They can usually avoid interest payments during promotional periods of six to 18 months, researchers from the University of Chicago said.  

However, consumers must pay accrued interest from the start date if they fail to pay off their medical credit cards by the end of the promotional period. Researchers found that the average annual percentage rate on medical credit cards is 26.99% -- much higher than other types of payment. 

A recent survey from KFF also found that about a quarter of patients who financed through a medical credit card did not pay off their balance before the end of the promotional period. 

"[P]atients with low financial literacy may have a hard time understanding the terms of the cards and may be vulnerable to deferred interest payments after the promotional period," researchers explained in the study. 

What's more, "specialties with the highest offer rates provide services less likely to be covered by insurance," they said. Although, the study did not identify specific services associated with medical credit card use. 

The Biden administration increased scrutiny of medical credit card use, seeking more information about the payment type in the interest of potentially increasing regulation. Since the study was performed, Wells Fargo has stopped accepting credit applications for their medical credit card. 

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.