The dentist set to work, tapping and probing, then put down his tools and delivered the news. His patient, Patricia Gannon of Dunedin, needed a partial denture. The cost: more than $5,700.
Gannon, 78, was staggered. She said she could not afford it. And her insurance would pay only a small portion. But she was barely out of the chair, her mouth still sore, when her dentist's office held out a solution: a special line of credit to help cover her bill. Before she knew it, Gannon recalled, the office manager was taking down her financial details.
But what seemed like the perfect answer — seemed, in fact, like just what the doctor ordered — has turned into a quagmire. Her new loan ensured that the dentist, Dr. Dan A. Knellinger, would be paid in full up front. But for Gannon, the price was steep: an annual interest rate of about 23 percent, with a 33 percent penalty rate kicking in if she missed a payment.
She said that Knellinger's office subsequently suggested another form of financing, a medical credit card, to pay for more work. Now, her minimum monthly dental bill, roughly $214 all told, is eating up a third of her Social Security check. If she is late, she faces a penalty of about $50.
"I am worried that I will be paying for this until I die," says Gannon. Knellinger, who works out of Palm Harbor, did not respond to requests for comment.
In dentists' and doctors' offices, hearing aid centers and pain clinics, U.S. health care is forging a lucrative alliance with U.S. finance. A growing number of health care professionals are urging patients to pay for treatment not covered by their insurance plans with credit cards and lines of credit that can be arranged quickly in the provider's office.
The cards and loans, which were first marketed about a decade ago for cosmetic surgery and other elective procedures, are now proliferating among older Americans, who often face large out-of-pocket expenses for basic care that is not covered by Medicare or private insurance.
The American Medical Association and the American Dental Association have no formal policy on the cards, but some practitioners refuse to use them, saying they threaten to exploit the traditional relationship between provider and patient. Doctors, dentists and others have a financial incentive to recommend the financing because it encourages patients to opt for procedures and products that they might otherwise forgo because they are not covered by insurance. It also ensures that providers get paid up front — a fact that financial services companies promote in marketing material to providers.
One of the financing companies, iCare Financial of Atlanta, which offers financing plans through providers' offices, asks providers on its website: "How much money are you losing everyday by not offering iCare to your patients?" During the last three years, the company's enrollment has grown 320 percent.
A review by the New York Times of dozens of customer contracts for a variety of medical cards and lines of credit, as well as of hundreds of court filings in connection with civil lawsuits brought by state authorities and others, shows how perilous such financial arrangements can be for patients — and how advantageous they can be for health care providers.
Many of these cards initially charge no interest for a promotional period, typically six to 18 months, an attractive feature for people worried about whether they can afford care. But if the debt is not paid in full when that time is up, costly rates — usually 25 to 30 percent — kick in, the review by the New York Times found. If payments are late, patients face additional fees and, in most cases, their rates increase automatically. The higher rates are often retroactive, meaning that they are applied to patients' original balances, rather than to the amount they still owe.
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For patients, the financial consequences can be dire.
Gannon said she was happy with her dental care, despite the cost, and there was no suggestion that Knellinger had done anything wrong. But attorneys general in a several states have filed lawsuits claiming that other dentists and professionals have misled patients about the financial terms of the cards, employed high-pressure sales tactics, overcharged for treatments and billed for unauthorized work.
Cameron P. Kmet, a chiropractor in Anchorage, Alaska, said he had stopped offering medical cards. "One missed payment can really ruin a patient's life," he said.
Kmet now runs a company that administers payment plans directly between providers and patients, with annual interest rates around 8 percent.
Regarding medical credit cards, Kmet said he had urged providers to ask themselves "whether this is something that you would recommend to a family member or friend." The answer, he said, is usually no.
While medical credit cards resemble other credit cards, there is a critical difference: They are usually marketed by caregivers to patients, often at vulnerable times, such as when those patients are in pain or when their providers have recommended care they cannot readily afford.
In addition to companies like General Electric, large banks like Wells Fargo and Citibank, as well as several specialized financial services companies, offer credit through practitioners' offices.
The growth of this form of consumer credit is difficult to quantify because data on medical credit cards specifically, as opposed to credit cards generally, is unavailable. But credit cards of all types are playing a growing role in financing medical care. In 2010, people in the United States charged about $45 billion of out-of-pocket expenses on credit cards, according to the consulting firm McKinsey & Co.
"When the economy got worse, our business got better," said Katie Kessing, an iCare spokeswoman. In 2010, a little more than a thousand dentists offered the iCare finance plan — a program that requires patients to pay 30 percent down as well as a fee of 15 percent of the total procedure cost. The number of participating providers has since risen to 4,200.
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Russell A. Salton, the chief executive of Access One MedCard, a credit card company in Charlotte, N.C., said demand for specialized cards — the MedCard has an annual interest rate of 9.25 percent — is driven by providers interested in removing an "obstacle to providing valuable care." The company says the number of hospitals offering its credit cards has grown about 25 percent a year in recent years.
State authorities and care advocates in Florida, California, Illinois, Michigan and elsewhere say that older people — many of them grappling with dwindling savings and mounting debt — are running into trouble with medical credit cards and loans.
"The cards prey on seniors' trust," said Lisa Landau, who heads the health care unit at the New York Attorney General's Office.
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The industry's growth is being driven by people seeking dental care and devices like hearing aids, which are not covered by Medicare. Dental care is a large and expensive gulf, according to Tricia Neuman, the director of Medicare policy research at the Kaiser Family Foundation. The new federal health care law, she said, will not change that.
"Lack of dental coverage remains a huge concern and expense," Neuman said.
Working with care providers, financial services companies have rushed to fill the void. To make medical cards attractive, some companies offer them without checking patients' credit histories. The cards can be arranged in minutes, with no up-front charges. Such features are attractive selling points.
Lawyers and others who assist patients say such features make it easy for people who are already on a weak financial footing to take on new debt.
"Ultimately, this credit facilitates a bad financial decision that will haunt a patient because it adds to indebtedness," said Ellen Cheek, who runs a legal help line for older people through Bay Area Legal Services in Tampa.