February 18, 2007
Portland company promotes a zero-interest medical card

A Portland company is promoting a medical credit card with an unlikely promise: zero interest and finance charges -- ever.

The CarePayment card marketed by Portland-based Aequitas Capital Management Inc. charges hospitals a hefty fee for the service, but patients pay nothing extra.

When patients charge services to the card, Aequitas pays the hospital, after subtracting a fee of 17 percent to 20 percent of the patient's bill. The company then collects monthly installments on the original amounts that patients owe. The payments are fixed at $25 a month or 4 percent of the starting balance owed, whichever is greater.

"We offer this to every patient without screening," said Steve Wright, a senior managing director with Aequitas. "If you owe the hospital money, you qualify for CarePayment."

The company announced its first hospital partnership in Oregon, with St. Charles Medical Center in Bend, in December. It plans to aggressively market its program nationwide this year.

The program, Wright said, helps patients and hospitals cope with a changing market in which patients must cover more costs of care.

Hospitals, he said, have experienced a dramatic rise in the accounts receivable they must collect from patients. At the same time, hospitals have stirred outrage and legal action over billing and debt-collection practices that patient advocates have called unfairly aggressive toward the uninsured.

In the last two years, for instance, Providence Health System and Legacy Health System have each settled class-action lawsuits by agreeing to refund money to uninsured patients. The lawsuits, filed against more than 40 hospitals around the nation, challenged the common hospital practice of charging higher rates to uninsured patients than the rates negotiated with health plans. In other states, nonprofit hospitals have been pilloried for sending bill collectors after recently discharged patients and seizing their assets.

"We're really out to help our clients fulfill their mission to their communities," Wright said. "We want to keep people out of collections."

Twenty hospitals in eight states have signed on with Aequitas since the company began offering the program 11/2 years ago, Wright said.

Diana Mahnke, an executive for St. Charles in Bend, said the hospital used to offer patients an 18-month interest-free loan. "But it was difficult for us to manage," she said. "This way, I think we'll have better customer service."

The hospital, she said, is trying to get out of the business of financing loans, "and have the money available to take care of patients."

Some consumer advocates remain concerned that when financial services companies insert themselves between patients and hospitals, patients can miss out on better options. Mark Rukavina, executive director of the Access Project, said a patient encouraged to use a credit card might overlook the option of a sliding fee scale or other price break from a care provider.

Moreover, he said, patients may find it harder to correct billing errors, common in complicated hospital bills, if a credit card has already paid in full.

Wright said his company's partner hospitals screen patients for eligibility for charity care or government aid before offering them credit cards. He said the company relies on reminder letters and phone calls to encourage nonpayers. If customers fail to pay for 90 days, Wright said, his company lets hospitals decide whether to turn accounts over to a collection agency or write them off.

back