July 2008
Hospitals check credit reports
EMERGENCY VISIT James and Terri Wilkerson of Petersburg, Va., with son Andrew, face a $13,000 debt that a hospital had them put on a credit
card to treat complications of James' cancer.
Photograph by Charles LedfordHospitals increasingly are checking patients' credit reports or using scoring that rates ability to pay. Just walking into
a hospital to request treatment for which you'll owe a portion of the bill gives a hospital permission to obtain a credit
score or report, according to Jennifer Coxwell, who manages health-care relationships for credit report giant Equifax.
Equifax says use of its Payment Predictor and related systems is rapidly gaining favor with hospitals. Coxwell says the system can benefit patients by helping hospitals identify those who may qualify for financial assistance. But it also allows hospitals to determine whether patients have any available credit on existing credit cards. Thus they can try to persuade them to put the charges on their cards.
Jim Bentley, a senior vice president of the American Hospital Association, says his group recommends that hospitals get a patient's permission or wait until billing has been done before checking credit reports. He also says, "As patients are obligated to pay more out of pocket under Health Savings Accounts and higher deductibles, we all have to do our best to make sure patients understand the terms if they are offered commercial credit."
If you finance medical bills on a credit card, you lose leverage to negotiate payments directly with health-care providers, who may charge self-paying patients up to five times more.
The pressure to "charge it" can come when you're most vulnerable, as James Wilkerson of Petersburg, Va., discovered after he was rushed to an emergency room by ambulance in January 2007, when he nearly died of complications from chemotherapy for lymphoma. Wilkerson says he was placed in financial peril when the ambulance took him to Southside Regional Medical Center, a for-profit hospital, rather than to a nonprofit hospital where his expenses had been fully covered by the hospital's charity program. Since being diagnosed with cancer in late 2006, Wilkerson has been too ill to work, and his wife, Terri, has to cover living costs for the couple and their two children on her $18,000 income from a job with the American Legion.
Wilkerson says after he returned home, hospital representatives began calling several times a week about the $28,000 bill for his four-day stay. He says they did not discuss whether he qualified for the hospital's charity-care program or offer to negotiate a reasonable monthly payment plan. The hospital obtained a copy of Wilkerson's credit report, which showed he had a Chase card he had forgotten about with available credit of $13,000. "I didn't even know we had it because we usually throw away all of the credit card offers we get in the mail, but the people from the hospital were threatening to put a lien against our home or freeze our bank account if we didn't agree to use the card for the hospital bill," he says. The couple agreed to charge $13,000 on the card, which the hospital accepted as payment in full. They made the first two months' payments of about $260 but could not keep up and sought legal help.
"I've been doing legal aid work for 20 years and I've never seen anything like this," says Dale Pittman, their attorney. "This is a couple with a good credit history, raising two kids and dealing with a devastating illness, yet still managing to hold it together until the hospital puts the wolf at their door by pushing them into a credit card with predatory terms." The credit card's annual percentage rate is up to 29.99 percent, and late fees of $39 are charged for each month they miss a payment while Pittman attempts to negotiate with the hospital and Chase.
Chase officials would not comment for this story. A spokeswoman for the hospital says it helps patients get charity care, adding, "We did reach a deeply discounted and mutually acceptable payment plan for the care he received at our hospital, and we respectfully disagree with the allegations made by Mr. Wilkerson."
Equifax says use of its Payment Predictor and related systems is rapidly gaining favor with hospitals. Coxwell says the system can benefit patients by helping hospitals identify those who may qualify for financial assistance. But it also allows hospitals to determine whether patients have any available credit on existing credit cards. Thus they can try to persuade them to put the charges on their cards.
Jim Bentley, a senior vice president of the American Hospital Association, says his group recommends that hospitals get a patient's permission or wait until billing has been done before checking credit reports. He also says, "As patients are obligated to pay more out of pocket under Health Savings Accounts and higher deductibles, we all have to do our best to make sure patients understand the terms if they are offered commercial credit."
If you finance medical bills on a credit card, you lose leverage to negotiate payments directly with health-care providers, who may charge self-paying patients up to five times more.
The pressure to "charge it" can come when you're most vulnerable, as James Wilkerson of Petersburg, Va., discovered after he was rushed to an emergency room by ambulance in January 2007, when he nearly died of complications from chemotherapy for lymphoma. Wilkerson says he was placed in financial peril when the ambulance took him to Southside Regional Medical Center, a for-profit hospital, rather than to a nonprofit hospital where his expenses had been fully covered by the hospital's charity program. Since being diagnosed with cancer in late 2006, Wilkerson has been too ill to work, and his wife, Terri, has to cover living costs for the couple and their two children on her $18,000 income from a job with the American Legion.
Wilkerson says after he returned home, hospital representatives began calling several times a week about the $28,000 bill for his four-day stay. He says they did not discuss whether he qualified for the hospital's charity-care program or offer to negotiate a reasonable monthly payment plan. The hospital obtained a copy of Wilkerson's credit report, which showed he had a Chase card he had forgotten about with available credit of $13,000. "I didn't even know we had it because we usually throw away all of the credit card offers we get in the mail, but the people from the hospital were threatening to put a lien against our home or freeze our bank account if we didn't agree to use the card for the hospital bill," he says. The couple agreed to charge $13,000 on the card, which the hospital accepted as payment in full. They made the first two months' payments of about $260 but could not keep up and sought legal help.
"I've been doing legal aid work for 20 years and I've never seen anything like this," says Dale Pittman, their attorney. "This is a couple with a good credit history, raising two kids and dealing with a devastating illness, yet still managing to hold it together until the hospital puts the wolf at their door by pushing them into a credit card with predatory terms." The credit card's annual percentage rate is up to 29.99 percent, and late fees of $39 are charged for each month they miss a payment while Pittman attempts to negotiate with the hospital and Chase.
Chase officials would not comment for this story. A spokeswoman for the hospital says it helps patients get charity care, adding, "We did reach a deeply discounted and mutually acceptable payment plan for the care he received at our hospital, and we respectfully disagree with the allegations made by Mr. Wilkerson."
