Credit Card Debt Management

There has been much discussion lately about the medical industry’s plans to implement a rating system similar to the FICO score used in credit ratings. In fact, the Fair Isaac Corp. - creator of the original FICO score - is part of the team putting the medFICO score together, according to The Dallas Morning News:

Healthcare Analytics, a Waltham, Mass., health technology firm, is developing the score. It is backed by funding from Fair Isaac, of Minneapolis; Dallas-based Tenet Healthcare Corp.; and venture capital firm North Bridge Venture Partners, also based in Waltham. Each kicked in $10 million for the project.

The medFICO score would be based on a patient’s payment history concerning medical bills. The score would only be looked up once a patient has been released from a medical facility, which is proof, advocates say, that the score will not affect medical treatment.

Currently, the Fair Credit Reporting Act allows medical companies to report delinquent debt to credit bureaus, provided no information is disclosed regarding what specific health problem was treated. In practice, medical providers rarely use this right, although they will turn over delinquent debt to a collections agency.

Hospitals and medical care providers can legally check a patient’s credit score - with or without the patient’s permission. However, these scores involve so-called “voluntary debt” like cars, credit cards and houses. Therefore, advocates say the general FICO score is not a good way to discern whether a person will pay “involuntary debt” like medical bills.

Tenet, the nation’s third-largest hospital network, has said the medFICO rating system would help discern whether patients will pay their medical bills or whether they should be “written off” as uncollectible. In turn, this would help hospitals plan cash flow and plan their investments in new technology and development.

It seems the next logical step, as increasing numbers of health service providers are partnering with financial companies to offer lines of credit to patients. According to Steve Mooney, Tenet Healthcare’s senior vice president of patient financial services, said the hospital business has become more akin to the retail industry over the past 30 years. Patient co-pays are increasing and comparison shopping is a more common option. Soon, Mooney was quoted as saying, shopping for health care will be much like shopping for a car.

The medFICO concept has some consumers expressing concern over whether there will now be bias in treating medical patients. There is also a concern over mis-scoring due to identity theft or duplicate names, problems that are no stranger to the credit industry. Whether such issues will indeed be a problem remains to be seen very soon. The medFICO score is expected to debut in some medical facilities as soon as this summer.