Debate Sharpens on Medical Payment Products as CFPB Seeks More Info

The debate over medical payment products — and, by extension, consumer choice — is sharpening between banks, innovators and regulators.

To that end, the Bank Policy Institute (BPI) and Consumer Bankers Association (CBA) sent a letter Monday (Sept. 11) to the Consumer Financial Protection Bureau (CFPB), the Department of Health and Human Services and the U.S. Treasury Department on medical payment products. The letter referenced the agencies’ request for information that, according to the BPI and CBA, “wrongly asserts” that such payment offerings are responsible for high costs and “disfavored practices” of the providers themselves.

Per the letter: “Many consumers do not have access to sufficient funds to pay the full cost of a particular healthcare service using liquid funds … Having different options to pay for medical care, each with different terms and features, provides consumers with the ability to select a payment product that best suits his or her individual needs and finances.”

The letter also notes that the term “medical payment product” is not defined and “does not constitute a separate product category in the marketplace. There are simply different options available to consumers to pay for medical care and services just as they pay for any other goods or services in the economy.”

What’s on Offer

The CFPB, it must be noted, has through the past several months examined, and spurred changes across various areas of financial services and lending. Amid some examples: bank overdraft fees, which have been curtailed by several banks and in some cases eliminated entirely.

But the medical payments space, we’d posit, offers up some different considerations. The interplay between patients, providers, the rising costs of healthcare via higher deductibles all lend themselves to a collaboration at the front desk, so to speak, as data and FinTechs also join the fray to broaden consumer choice. In just one example, Proceed Finance offers lending to providers to enable patient financing.

Way back when before the pandemic, joint research between PYMNTS and Flywire revealed that keen willingness for consumers to understand and tackle their medical-cost obligations. Our data at the time showed that nearly half (46.1%) of consumers surveyed had to pay out-of-pocket medical bills. And 16.3% percent used a payment plan provided by the hospital for at least a portion of the cost. As for the resolution on the part of the patients to satisfy their obligations: Only about 7% of those surveyed said they had not paid their medical bills and/or had no intention of paying those bills.

Fast-forward to today, and there’s a growing recognition and use of payment plans so that individuals and families can get the care that they need. Separate research from the PYMNTS’ study, via collaboration with Experian, “Managing Healthcare Costs: How Patients Use Payment Plans,” show that past experience with unexpected bills have led them to consider using payment plans. We found that 19% of paycheck-to-paycheck consumers with issues paying bills who set up a payment plan and are “very or extremely likely” to switch healthcare providers for a better payments experience.

And, overall, 52% of consumers used the option for their last medical visit. The “Money Mobility Tracker” shows that about a third of individuals use digital channels to make payments, and 79% of consumers want to pay all their medical bills through a single digital platform.