Is your doctor checking your credit report?

A growing number of health care providers are, causing privacy concerns

By Kelly Dilworth

When most people walk into a doctor's office, they're probably not expecting to have their credit information pulled. However, many health care providers, including hospitals, surgeons, dentists' offices and fertility clinics, are doing just that.

Health care providers say they check patients' credit in order to assess whether a person qualifies for discounted services or charity care. However, some patients and consumer advocates don't buy that argument and worry that the medical credit checks could do more harm than good.

"I thought it was an invasion of my privacy," says Celeste Bybel of Summit Hill, Pa. "They never told me they were going to be doing this." Bybel recently visited a clinic associated with her regional hospital for some minor tests. "It was just routine blood work. I wasn't going in for surgery."

Then, in March, she and her husband pulled their credit reports and saw multiple inquiries into their credit from St. Luke's Miners Memorial Hospital in Coaldale. The dates of the soft inquiries -- which don't affect a patient's credit score -- corresponded with routine tests they both had, dating back to 2010.

Bybel was outraged. She and her husband Michael had good health insurance, and she couldn't understand why the hospital needed to check their credit.

"It's very alarming for most patients when they find out about this," says Pam Dixon, founder and executive director of the World Privacy Forum. Many people don't read the fine print on their medical forms that ask for authorization to pull a report. Then, when they find out their credit has been checked, they feel like their privacy has been violated. "What people tell us is there's a loss of faith in that health care provider. They don't want to go back."  

A growing market
Hospitals have been checking patients' credit information and assessing their ability to pay for treatment or qualify for financial help for years.

Now, an increasing number of smaller health care providers, such as physicians groups and medical specialists, are partnering with credit reporting agencies such as Experian, TransUnion and Equifax on medical credit checks that promise them a window into patients' finances. 

"This is a growing market," says Milton Silva-Craig, executive vice president of health care at TransUnion. "There's a lot of demand for this."

TransUnion developed a credit reporting tool designed specifically for smaller health care providers about a year ago after getting numerous requests for patients' credit data. "We had physicians buying raw credit reports from us for this same type of purpose," says Jim Bohnsack, vice president of health care at TransUnion. "This was us attempting to make it easier and target it to a specific market."

Meanwhile, Experian entered the smaller health care provider market around the same time. The credit reporting company sold specialized credit reports to physicians' offices as well as hospitals well before 2011, says Dan Buell, senior vice president of product management at Experian Healthcare Services. However, it wasn't until it acquired the health care analytics company Medical Present Value in June 2011, that it began working with a larger number of smaller clinics.

"It's great because the large hospitals, they have access to these tools," says Buell. "But the smaller physicians' practices, they haven't adopted these things because of [lack of] access."

Now that credit reporting agencies such as Experian and TransUnion are offering lighter, less expensive versions of the specialized reports they sell to hospitals, physicians can take advantage of the reports more easily and use them to decide how to work with a patient on billing.

Financial challenges for providers, patients
The timing for these new medical credit reports couldn't be better. For many health care providers, the ability to check a patient's credit has become especially valuable now that financial burdens on both patients and providers are at an historic high.

"This is an unprecedented time of challenges for providers of health care," says Buell. "More and more [patients] are carrying these high-deductible plans, which means they're picking up more and more of their health care" costs. 

The number of patients without health insurance has also skyrocketed. According to the Kaiser Family Foundation, the number of nonelderly Americans without health insurance has risen by more than 5.7 million people since the recession began in 2007.

In turn, the number of people lapsing on their medical bills has also risen, forcing health care providers to send those bills to collections and making it harder to meet their operating costs.

"Managing a physician's office at a financial level is a very difficult task," says TransUnion's Silva-Craig.

As more financially challenged patients walk into doctor's offices, physicians are trying to ensure they get paid for their services and reduce the amount of bad debt they have on their books.  

That's where credit information can also play a role, adds TransUnion's Bohnsack. It allows physicians' offices to determine, "Is this person more or less risky to me in terms of not collecting money upfront and collecting payment after?" he says.  

But is it a good deal for patients?  
Credit reporting companies say that the medical credit checks are good for patients because they help make sure that those who need financial assistance get the help they need. "Otherwise, those consumers will get pushed through into the collections process," says Experian's Dan Buell, which can wreck a patient's credit.

Credit bureau representatives also say the information provided by the soft credit checks help foster an honest dialogue about payment between the health care provider and patient and that can be a good thing for everyone involved.

It empowers the front-office staff to talk with patients if they see there could be a potential problem, says TransUnion's Silva-Craig, and it gives the patient the ability to talk about payment options and about how much they'll likely have to pay. "I would rather have that conversation upfront than to find bills 30, 50 days later that are very confusing or sent to collections," says Silva-Craig. "The intent is to remove that ambiguity upfront."

Consumer advocates disagree
Not everyone, however, buys the argument that medical credit checks are beneficial to consumers. For example, consumer advocates worry that the credit checks open an avenue for health care providers to pressure patients into immediate payment.  

"The danger, really, is that health care providers, particularly hospitals, may find lines of credit that people have open and really ask people to tap those lines of credit," says Amy Traub, a senior policy analyst at the think tank Demos.

Traub is especially worried that consumers with access to plastic will be pressured into putting their bills on a high-interest credit card, which could make the already high cost of receiving health care multiply. "It's no longer the hospital's problem if you have a credit card bill," she adds. "I think it's important to see that there is a very serious potential downside for consumers."

Credit reporting executives say they haven't heard of that happening. However, at least one provider, TransUnion, said that available credit (meaning, the difference between what you already owe on a credit card and the amount you're allowed to charge) was included in the report. Experian, in turn, said they mostly provide credit scores to health care providers, but didn't disclose what information went into generating those scores.       

Value of credit information unclear
Some consumer advocates also dispute the argument that credit information is useful in determining charity care eligibility.

"Let's not confuse what's in a credit report and assume that's information that in some way gives a sense of income or a financial state. It gives information on credit history," says Mark Rukavina, executive director of the health care advocacy group The Access Project. "Just to be clear, there's no information about someone's income on their credit report. There's information about how they paid their mortgage or their credit cards or whether they have legal judgments. There's nothing in there on someone's income."

Some of the medical credit check tools, such as the one offered by Experian, do include estimates of a patient's income. However, it's unclear how that information is gathered.   

Will bad credit impact care standards?
Pam Dixon of the World Privacy Forum says that physicians' use of credit reports also raises important questions about what happens to people who have bad credit. "What are the implications for people?" she asks. "Do we have to have good credit to get health care?"

How the credit information is used depends on the health care provider, and it's unclear whether some providers use it to make decisions about treatment. Michael Bybel of Summit Hill, Pa., says that the hospital that checked his credit said it didn't use the information to make decisions about his care. However, "I have concerns about it influencing the care that they give. For them to say upfront that it doesn't affect the care makes me a little concerned," he says.

Regardless, consumer advocates say the issue is important enough that providers should be scrutinized to make sure patients aren't being denied treatment or put on hold for important tests or costly procedures.

"If a health care provider is going to check credit, there have got to be some very solid, legal procedures in place for determining treatment," says Dixon. Otherwise, they open themselves up to legal problems, she says. "It really becomes an ad hoc, case-by-case determination," says Dixon, and that's not good for patients or providers. "If [patients] have been denied service or have been given less health care, that could be a real problem if there's a health care issue down the pike."   

Credit reporting companies should also be watched, says Demos's Amy Traub. "This is an industry that has never been properly regulated or been overseen or even understood by the general public," she says. However, that will change soon, she notes. The Consumer Financial Protection Bureau announced in February that it would extend its oversight to credit bureaus.

Meanwhile, everyone agrees that health care providers should clearly inform patients that their credit information is being checked. "If a health care provider is going to check credit, put that in your privacy policy," says Dixon.

Patients should also be told what's in the specialized credit report, especially if adverse information is found, adds The Access Project's Rukavina. "It's only fair to disclose and discuss if that information is being used to make a decision about a patient," he says. "Otherwise, assumptions could be made about patients that aren't really accurate. Just because somebody has a good payment history doesn't mean they don't have a financial need and their medical bills would not be a burden to them."

See related: Medical FICO score sparks controversy, questions, Medical credit cards: Watch for these warning signs, The truth about 7 common credit report myths

Published: May 1, 2012

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