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MasterCard Worldwide's announ-cement Monday to extend its agreement to enable OptumHealth Bank to issue payment cards for health accounts managed by UnitedHealth Group's OptumHealth Inc. is a deal that strengthens the card company's foothold in the growing health-payment space, observers say.
Under the agreement, OptumHealth Bank will issue prepaid debit cards for health savings accounts, flexible spending accounts and health-reimbursement accounts for OptumHealth, including accounts used by members of United-Health Group's medical carrier United-Healthcare Services Inc. Participants can use the cards for copayments, prescriptions and other eligible medical expenses.
"Today's payments opportunities lie in encouraging the use of electronic payments for health care," says Jennifer Vanderwall, MasterCard senior business leader for health care solutions.
Because of UnitedHealth's size, this extension is "clearly a very large win for MasterCard and a very important relationship for us," she adds.
MasterCard described the deal as a multiyear contract extension but did not specify its length.
Patients are looking for more payment options for their health care costs as more of those costs become their responsibility. In addition, because it is not always possible to determine patients' exact out-of-pocket costs for certain procedures at the time of their visits, "opportunities exist around payments at the point of service and also post-service payments," Vanderwall says. They can use MasterCard's products to access health accounts in either situation, she adds.
The deal comes at a time when plenty of room exists for growth in the use of cards for health care payments, says Kunal Pandya, a senior analyst at Boston-based Aite Group LLC.
Today, "about 30% of providers in the market don't accept cards because they don't have the system to support that," Pandya says. These providers "want to introduce some kind of payment card" to cut down on the bad debt associated with other payment types, such as checks. Card-acceptance systems can assure health care providers that the funds are available to cover out-of-pocket expenses incurred by patients, Pandya says.
"MasterCard has been working in this space for a long time," he says, noting the contract extension with OptumHealth furthers its work in promoting payment cards in health care.
The Obama administration may change some of the accounts currently covered under MasterCard's deal with OptumHealth, Pandya says. "Medical FSAs may not be around for a very long time," he says, although "if you look at HSAs and HRAs, for now they say that they are here to stay."
Although the current administration may change or eliminate the specific accounts used today, that will not slow the growth of payments in this space, as there would still be demand among patients and providers for card-based payment methods, Pandya stresses.
"If you look at the future of them in the next three or four years, they are going to pick up very soon," he says.
Today, however, the growing unemployment rate will reduce the number of HSA participants, according to Mercator Advisory Group.
"In addition, the tighter economy may cause consumers to reduce their contributions to these accounts as a cost-saving measure," Mercator wrote in its report "The Resilient Nature of Prepaid: A Bright Spot in a Down Economy."
Mercator contends in the report that HSA growth would remain neutral. ATM
