Although health care reform Clinton-style may be doomed, MasterCard International is following the developments of the multibillion-dollar industry closely because there's money to be made for its members.
The New York-based card association recently released an intensive study, "Opportunities in the Changing Health Care Industry," addressing the possibilities of an increased role for credit and debit cards in health care payment systems.
"The purpose was to disseminate our own research information and to stimulate business discussions regarding new payment products, and alert everyone to industry trends," said Gary Grosso, MasterCard's vice president of health care marketing.
The study was based on research conducted during the past 18 months, involving 125 interviews with - among others - health care providers, credit card issuers, and acquirers, as well as consumer focus groups. The report includes analysis of industry trends and reform proposals, plus health care statistics.
In total, 750 reports were distributed in early July to card issuers, member banks, acquirers, top Blue Cross/Blue Shield organizations, and the 25 top commercial insurance carriers.
Also, MasterCard is working with congressional leaders to develop a health information system and ensure that the system does not preclude payment by credit or debit cards or other electronic means. The association suggests that members contact representatives to urge the inclusion of MasterCard's amendments to any health care reform package.
Credit cards capture only 3% to 5% of the $200 billion out-of-pocket health care dollars that Americans shell out each year. Charge volume in 1993 increased 27% and is projected to continue at that pace in 1994.
Only 40% to 45% of medical doctors accept credit cards nationwide, while 70% of dentists, who depend less on insurance to cover their costs, will accept plastic. The vast majority of hospitals - 95% - accept credit cards, but usage is low because insurance pays most of the bills.
MasterCard and Visa U.S.A., recognizing the sharp increase of consumer health care costs, have been targeting physicians to expand credit cards' reach into the lucrative business, where office visits average $130.
Through advertising and promotions, MasterCard plans to highlight the benefits of using credit cards at the doctor's office. Chief among those are convenience, payment flexibility, and immediate access to treatment that might otherwise not be affordable.
According to the study, enhanced features might spur credit card use for medical expenses. Fifty percent of consumers interviewed said they would apply for a card that included an annual summary of health care charges or a temporary credit line increase for health care emergencies, and 38% would opt for a second line of credit dedicated to health care.
For the physician, the study said card acceptance helps improve cash flow, reduce collection and bad debt costs, and accommodate patients who might need to pay their bills over time.
Dr. Albert A. Attia, a New York City physician, doesn't accept credit cards. Rose Rafferty, his office manager, said the doctor "looked into it a while back, but he found that he would be giving back a percentage [of his fee] for having the use of the charge card."
Even so, Ms. Rafferty said that up to five patients per week inquire about charging their bills.
"We understand [doctors'] reluctance to pay fees, but the ability to get payment at the time of service outweighs the cost of the transaction," Mr. Grosso said. Generally, it takes doctors 75 days to collect fees, and billing expenses can run higher than transaction fees.
Dr. Gerald S. Bahr, who also practices in 20 Manhattan, has been accepting credit cards for two years. Janice Coleman, the office manager, said that this system makes it easier for patients to pay their bills.
She said the doctor doesn't care about paying a small fee, because card acceptance has decreased the incidence of bad checks and outstanding balances.
"We've done it for the convenience of the patients mostly, but it helps us because we don't have to bill them all the time," she said.
MasterCard and Visa distribute preauthorization forms to doctors, which allow them to bill their patients' credit cards for charges not covered by insurance, or for ongoing treatments like allergy shots or orthodontics. The associations also issue signage alerting consumers to credit card acceptance.
In the study, MasterCard described an automated balance billing feature - an experimental on-line billing service that would enable physicians to charge patients' coinsurance payments at the time of visits, rather than billing them at a later date.
Although Visa's vice president of health care marketing, Les Mann, pointed out that the San Francisco-based association was involved in the health care debate "a couple of years ahead of MasterCard," he said, "I welcome them to the arena because there's great opportunities for member banks."
Visa launched a health care initiative in 1990 to offer consumers an alternative payment mechanism. In conjunction with the American Group Practice Association, Visa commissioned research on the subject in 1992.
Visa also offers physicians "The Visa Usage Kit," a promotional package designed to help doctors integrate credit card acceptance into their billing systems.
Visa, like MasterCard, is keeping an eye on Washington lawmakers, but declined legislative involvement until the debate becomes more focused. "[At that time] we'll be ready to protect the interests of our members," said Lamar Smith, vice president of government relations for Visa. "I don't think there's any danger that credit card payments would be precluded from legislation."
Mr. Smith pointed out that as the health care debate continues, most discussions involve technology already in place for credit cards, such as magnetic stripe technology used in President Clinton's health security card.
Mr. Mann said, "It's surprising to me that [MasterCard] moved in the direction of spending resources in an area already favorably positioned for card use."
Even so, Mr. Grosso said, "In the legislation. we had seen, there was nothing specific that did address electronic payment plans, so we decided to take a proactive approach to ensure that these opportunities would remain for our bank members." Although health care reform is all but dead on Capitol Hill, the card associations plan to continue their drives to expand card acceptance at doctors offices nationwide.
