Blog | November 9, 2021

Navigating the No Surprises Act & Deferred Interest Legislation with Zero-Interest Patient Financing

Deferred Interest and Surprise Bills

Medical debt ranks among the top causes of personal bankruptcies across the U.S., with people often struggling to handle unexpected health care costs even when they are covered by health insurance.

Much of this medical debt is from paying with a personal credit card, a medical credit card or using a patient financing company that charges interest, whether it be simple or deferred interest. While deferred interest plans can appear to be a lifeline for patients who are desperate to pay for care, patients who were already struggling with out-of-pocket medical costs end up paying interest rates as high as 30%. Additionally, 82% of consumers do not understand how deferred interest works, according to a WalletHub 2020 deferred interest study.

In the past 2 years, 1 in 5 insured adults had an unexpected medical bill from an out-of-network provider, according to a 2020 study by JAMA. The same study concluded that two-thirds of adults are worried about affording unexpected medical bills for themselves and their family, and 18% of emergency departments visits across the country result in at least 1 surprise bill (rates vary by state).

Deferred Interest Legislation & The No Surprises Act

With medical debt and surprise bills still on the rise, regulatory bodies are cracking down on high deferred interest plans and price transparency issues. New federal and state regulations increasing consumer protection are gaining steam and becoming law, creating increased regulations for providers.

There has been various recent state legislation that targets high interest rates and deferred interest loans:

  • Maryland: HB-0565 (effective January 1, 2022)
    Hospitals may not charge interest on any debt incurred by a patient who is eligible for free or reduced-cost care. For other patients, any permissible interest amounts cannot be charged before 180 days after a patient bill’s initial due date.
  • California: AB-1020 (effective January 1, 2022) & SB-639 (effective January 1, 2020)
    AB-1020: Providers must require debt buyers to not charge interest or fees on patient debt.
    SB-639: Medical providers are prohibited from offering credit cards or loans that include deferred interest.
  • Washington: HB-1531 (effective July 28, 2019)
    Places a 12% cap on interest expense for medical debt.


Additionally, the Consumer Federal Protection Bureau required CareCredit to refund up to $34.1MM in deferred interest to more than 1 million consumers as most of the consumers were unaware of what they were actually signing up for.

In late 2020, the President signed into law the No Surprises Act, which contains new regulations that protect consumers from the cost of surprise out-of-network medical bills and enhance price transparency. Surprise bills arise in emergencies when patients typically have little or no say in where they receive care, or in non-emergencies when patients at in-network hospitals or other facilities receive care from ancillary providers who are not in-network and whom the patient did not choose.

Key provisions of the No Surprises Act include the following, and providers must update their policies and practices prior to the effective date of January 1, 2022:

  • Health plans must cover surprise bills at in-network rates
  • Balance billing is prohibited
  • Out-of-network providers cannot send patients bills for excess charges
  • Health plans must provide an advanced explanation of benefits and transitional continuity of coverage
  • Health plans must maintain accurate provider network directories and disclose information about broker commissions


Staying Compliant with CarePayment Patient Financing

Providers and their patient financing vendors must maintain compliance with new and existing changing legislation. Unlike CarePayment’s 0.00% patient financing program, regulatory bodies are focused on the predatory nature of surprise bills as well as interest-bearing and deferred interest loans.

CarePayment can help providers not only comply with new federal and state laws — but help ensure that compliance is operationally efficient:

  • We never charge interest. CarePayment is always 0.00% APR over the entire life of the loan.
  • We are not a debt collection agency. We do not engage in any extraordinary collection actions, nor do we sell medical debt to other companies.
  • Patients receive communications directly from CarePayment, ensuring they are fully informed and have total transparency about their payment plan and other financial assistance options.
  • Payment terms are patient-specific and adjustable, simplifying the process of implementing income-based payment plans or staying within regulatory repayment limits


CarePayment’s compliance and legal teams continue to monitor developing legislation and are available to assist providers in developing new policies and procedures that align with new regulatory requirements. For more information on the latest regulatory changes in the patient billing and financing environment, read our latest download Improving Patient Financial Engagement within Rapidly Changing Regulatory Guidelines.

Interested in learning more about CarePayment’s fully compliant patient financing solution? Fill out our Sales Inquiry form and a CarePayment associate will be in touch shortly.