CFPB, HHS, and Treasury Launch Inquiry Into Medical Payment Products

On July 7, 2023, the Bureau of Consumer Financial Protection (CFPB), the U.S. Department of Health and Human Services (HHS), and the U.S. Department of Treasury (Treasury) announced a joint inquiry into high-cost specialty financial products related to healthcare expenses. These specialty medical payment products include medical credit cards and installment loans that the agencies believe may increase health care costs, burden consumers with unnecessary medical debt or subject patients to potentially unfair or abusive acts or practices. The agencies have issued a request for information (RFI) seeking comments and data from the public, health care providers and financial institutions, and other interested parties. Comments to the agencies will be due on September 11, 2023.

The RFI follows a report issued by the CFPB in May 2023 providing an overview of medical credit cards and loans offered to consumers for payment of services and procedures for medical treatment and emergency healthcare (the Report). The Report’s findings included, among others, that the offering of medical credit cards and loans has expanded in scope in recent years, that medical financing companies rely heavily on medical service providers’ promotion of these products to their patients, that many consumers find the terms of such products to be confusing or misleading, and that such products may be more expensive than other potential sources of financial support.

The topics raised in the RFI indicate that the three agencies are beginning a broad inquiry into the high-cost specialty financial products of the types previously explored in the Report. Specifically, they are seeking data and comments on the scope, prevalence, terms, and impacts of these medical payment products, as well as whether these medical payment products allow health care providers to operate outside of typical regulatory safeguards, potentially evading a broad range of patient and consumer protections and healthcare fraud and abuse laws that would otherwise be applicable.

The RFI raises a range of questions for stakeholders, both generally and specific to each federal agency’s purview:

• For all of the agencies, the RFI asks questions related to the prevalence and impact of medical payment products across populations, incentives to healthcare providers to offer these products, and interactions with health insurance, inquiring both on a market-level and with respect to patients’ personal experience with these financial products. The agencies also seek recommendations about what actions they should take to better understand and provide oversight over these offerings.
• The CFPB-specific questions raise both general requests for information regarding the consumer-finance aspects of medical payment products, as well as specific recommendations for addressing practices it finds problematic. These inquiries seek information related to, in part, marketing, underwriting, and the mechanics of debt collecting for medical payment products.
• The HHS-specific questions inquire into how medical payment products might affect access to care and intersect with health insurance coverage and associated regulatory requirements. These questions include how medical payment products interact with Medicare, Medicaid, and Children’s Health Insurance Program (CHIP), as well as existing consumer protections under the Affordable Care Act (ACA) and the No Surprises Act. HHS also seeks to understand whether any financial institution or healthcare provider practices in connection with these products may violate healthcare fraud and abuse laws, including the federal Anti-Kickback Statute (AKS). 
• The Treasury-specific questions inquire into how medical payment products might interact with the tax-exempt status of some non-profit hospitals. In particular, Treasury raised questions about how the use of medical payment products might affect community benefit or disincentivize hospitals from publicizing financial assistance programs.

The announcement of this new joint inquiry and the accompanying RFI represent the first steps of federal financial regulators and federal healthcare regulators working in tandem to exercise jurisdiction in the area of medical payment products. Industry participants should stay vigilant regarding ongoing developments related to the regulation of medical payment products by financial regulators, including new dynamics that may emerge from the CFPB and Treasury partnering with HHS to provide additional oversight and enforcement related to medical payment products.

Financial institutions, health care providers, and other industry participants interested in how this joint inquiry may impact their businesses and product offerings may contact any of the authors of this Advisory or their usual Arnold & Porter contact. The firm’s Financial Services, Tax, and Life Sciences & Healthcare Regulatory teams would be pleased to assist with any questions about the joint inquiry, the Request for Information, or consumer finance, tax-exempt organizations, and healthcare regulation more broadly.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.