Surprise medical bills: How to avoid charges on card-on-file


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Patient responsibility statement may give broad access to your card

Senior Reporter
Expert on consumer credit laws and regulations.

Debt fears

After a visit to urgent
care, a credit card user was disputing the bill. Then she learned it had been

“They used the card
number my husband paid the $30 copay with,” she said in an email sent to
“Is this legal?”

According to complaints
from card users, surprise medical charges like this are happening more
often. Urgent care offices, dentists and even hospitals are hitting patients
with unexpected charges, long after their visit.

Whether it’s legal
depends on the “patient statement of financial responsibility” the
office uses, and the circumstances.

“The extent of authorization depends on what they sign,”
Chicago consumer attorney Daniel Edelman said via email. “A general
acknowledgment of financial responsibility and payment by credit or debit card
does not authorize further charges or debits.”

See related: When is a charge on a credit card

How to avoid surprise medical charges on your credit card

Card-on-file statement authorizes

However, many patient statements
of financial responsibility contain “card-on-file” language. This
lets the office store your card number indefinitely
– and use it to cover an unpaid balance.

Practice management companies are recommending that medical offices use
the card-on-file language to boost collections of medical bills.

The clause that hands over the keys to your credit card account is easy
to overlook in the lengthy financial responsibility document, full of legalese.

This sentence appears on the third page of a six-page financial
responsibility statement used by a chain of primary care offices:

“[Y]ou authorize [the company] to securely store your credit card
information, and only charge it should
you have an outstanding balance or any leftover balance from a processed claim
in the future.”

The statement also says that the patient is responsible for keeping the
office updated with current credit card information.

Clip of patient agreement


Medical practice
managers seek financial backstop

Medical practice managers defend the card-on-file as a safeguard from
large unpaid bills. Most providers collect only a small portion of the fee –
the copayment or deductible – at the time of service, putting them at financial

But to patients, it seems like they are being placed on the hook for
amounts they’re not aware of – until the charge hits their card.

“When I went [to an urgent care office], I paid a copay,” another
card user said in an email to “Almost a month later I see
a charge I didn’t authorize from this place for the full amount of the bill.”

Other consumers writing in online forums say their card was unfairly
charged for appointment cancellation or bill collection fees.

See related: 5 reason not to put medical charges on credit cards

Debit cards have greater
protections from unexpected charges

People paying by cash or check are not subject to pre-authorized charges.
And debit cards, which are governed by the Electronic Funds Transfer Act, face
tighter restrictions than credit cards against unexpected charges.

“If a debit card is involved, notice should be given to the financial
institution,” Edelman said. Pre-authorized charges require a signed
statement plus a written notice before amounts are debited from your account.

Tip: Protections against surprise charges are greater on a debit card than a credit card under the Electronic Funds Transfer Act. A pre-authorized charge on a debit card requires a signed authorization – and a written notice must be sent to the cardholder before the transaction goes through.

What do medical providers

The American Dental Association said it encourages offices to
collect the amount the patient is responsible for at the time of the visit.

“Sometimes that is difficult, as dental benefit plans have many
different methods for determining what benefits are due a patient,” the
association said via a representative in an email response to questions.

But if a balance remains, “the practice’s financial policy will
determine if the patient is sent a statement or charged through the patient’s
credit card.”

The Urgent Care Association declined to comment.

See related: CareCredit is expanding – should you consider it to finance medical costs?

Financial responsibility
goes beyond card access

Limiting access to your credit card account doesn’t protect you from
responsibility for the ultimate bill, legal experts said.

“If a medical office has a signed copy of this agreement from the
customer, it’s hard for the customer to deny they agreed to it,” said
Ronald Wilcox, a consumer lawyer in San Jose, California.

But providing blanket access to your card can undercut efforts to collect
insurance, and undermines your position in negotiations to reduce the amount

Charges billed after a visit appear in card networks as a
“card-not-present” transaction, a Mastercard representative said. The
card-not-present status alerts the card issuer that the potential for dispute
(and fraud) is higher for this transaction.

See related: Chargebacks and how to dispute a credit card purchase

“The cardholder should contact their issuer to dispute a charge,”
Mastercard said in an emailed statement
provided by spokeswoman Robyn Cottelli. If the card issuer agrees with your
dispute, they will issue a chargeback to credit your account for the disputed
sum, or a portion of it.

Winning a chargeback dispute will not shield you
from responsibility for the bill in the longer run. But having control of your ability
to make and withhold payment puts you on firmer ground when dealing with
insurers and providers.

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