Health care credit cards causing headaches: Complaints involve hidden costs, deceptive practices, high interest rates

With growing numbers of economically strapped patients, some medical providers have turned to health care credit cards as a new tool to cope with rising unpaid medical debt.

So have many patients. The use of credit cards to pay medical bills has been exploding, with Americans saying "charge it" for about $45 billion last year, and it's expected to be more than $150 billion by 2015.

While credit cards may help some people cope with rising out-of-pocket medical costs, they also are posing new and troubling hazards for sick and stressed consumers -- accounting, for instance, for an estimated half of personal bankruptcies.

"We're getting a lot of calls from consumers. Sometimes it's hidden costs, where you're late with one payment and your zero-interest card is now 29.99 percent, retroactive," said Ben Wogland, spokesman for Minnesota Attorney General Lori Swanson. "Sometimes it's a patient who thinks he's signing up with his dentist for a repayment plan and winds up with a credit card."

One such complaint led to a lawsuit filed by Swanson on Wednesday against a Lakeville chiropractor.

Sanja Vosejpka, a Bosnian immigrant from Lonsdale, said chiropractor Cory D. Couillard told her that her spinal cord was being crushed, that she needed $5,000 worth of treatments to avoid serious complications, and that if her husband loved her, he would agree to pay.

She said she discovered the diagnosis wasn't true and filed a complaint for high-pressure tactics. Vosejpka said that the chiropractor had signed her up for a health-care credit card and put a $2,900 charge on it for care she had refused.

While this case involves alleged fraud, Swanson warned that her office is investigating other complaints about credit cards used for health care.

Couillard, 28, could not be reached for comment Thursday evening.

Many providers now work harder -- and sometimes more creatively -- with clients to help them find ways to pay their medical bills. Some health systems encourage patients to prepay for some procedures, work out payment schedules in advance, or get into credit counseling with patients falling into financial trouble.

"We know anecdotally that unpaid bills for care in hospitals is continuing to rise," said Janice Hennings, spokeswoman for the Minnesota Hospital Association. In 2007, bad debts topped $330 million, about two-thirds of their total charity care.

Although wary of rising unpaid medical bills, many medical clinics are equally wary of attaching their names to credit cards, said Dorothy Walden-Woodworth, president of the Minnesota Medical Group Management Association.

"We've gotten much better at making sure patients know what the costs will be, and that they're expected to pay in a reasonable amount of time," she said. "We will use collection agencies, but I haven't heard of anybody issuing credit cards. For most, it's a complication they don't need."

Faced with a different lawsuit from Swanson last January, Minneapolis-based Allina Hospitals & Clinics agreed to refund $1.1 million to patients charged high interest rates on medical debt, and to reduce from 18 percent to 8 percent the interest rate charged by its MedCredit Financial Services unit. Allina said it was about to reduce its interest rate anyway.

Like many of Couillard's alleged victims, Vosejpka, 25, met him at his kiosk at Burnsville Center, she said Thursday.

He offered a spinal exam with an X-ray for $25 in May 2008, she said, then told her and her husband that her spinal cord was being crushed and that she needed about 90 treatments to avoid organ damage, Vosejpka said.

"Oh my God, is he going to tell me that I am going to die now?" Vosejpka recalled thinking. "That's how my husband and I felt."

When they explained their tight financial situation, she said, Couillard said they could put the cost on a credit card and he would charge only $2,900. They refused, but agreed to let him fill out an application to see whether they were eligible in case they agreed later.

She soon found out she didn't have the spinal problem and filed a complaint with the Minnesota Board of Chiropractic Examiners, which in turn alerted the attorney general's office. Then she discovered she not only had a credit card she hadn't signed up for, but it had a $2,900 charge.

The CareCredit card marketed by the GE Money Co., the one used by Couillard, is offered by more than 200,000 health providers nationwide.

The cards charge no interest if the balance is paid promptly, but carry painful interest rates -- as high as 29.99 percent, Swanson said.

Although fraud lawsuits like Swanson's appear to be rare nationwide, complaints about predatory marketing of CareCredit cards prompted the California legislature to ban the practice. Gov. Arnold Schwarzenegger vetoed it.