Is your doctor checking your credit report?
A growing number of health care providers are, causing privacy concerns
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
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
"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."
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
Medical credit checks:
What you should know
1. Medical credit checks are legal. Under the Fair Credit Reporting
Act, health care providers are allowed to check a patient's credit if the patient has a balance owed or is applying for financial help. Otherwise, the provider must ask for authorization.
2. Health care providers can't refuse emergency treatment. Hospitals
that receive federal funding for Medicare and Medicaid are required to
treat all patients seeking emergency care, regardless of a patient's
ability to pay.
3. The credit inquiries won't hurt your credit score. Because the inquiries
are "soft inquiries," they won't appear on the credit reports that are issued
to lenders and they won't affect your credit score.
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.
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
"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.
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.
The Access Project
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.
is it a good deal for patients?
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 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."
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
"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
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
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.
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?"
I would rather have that conversation upfront than to find bills 30, 50 days later that are very confusing or sent to collections.
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