What do doctors and dentists have in common with Wall Street lenders? Maybe more than you think.
Doctors worry they could be considered lenders by allowing patients to pay over time.
Doctors worry they could be considered lenders by allowing patients to pay over time. iStockphoto.com
Health professionals worry they could be regulated like bankers under financial overhaul legislation that aims to clamp down on lending abuses.
One provision of a bill pending in Congress would give broad oversight to a new regulatory agency — the Consumer Financial Protection Agency — to make sure banks and other financial institutions don’t extend credit inappropriately.
That's where doctors, dentists and other health care providers start getting a little nervous.
Say you're an orthodontist and you'll let the Smiths pay Johnny's $5,000 braces' tab on the installment plan. Technically, you might be seen as a lender. And that label, some health care provider worry, might make them subject to the new consumer agency’s regulations.
Physicians and dentists see paperwork ahead — and lots of it. Michael Graham, managing director of government affairs for the American Dental Association, says that it's not clear yet how bad things might be because the regulations haven't been written. But, one thing's for sure, complying would cost money.
As currently drafted, the bill would exempt sellers of nonfinancial goods and those not "engaged significantly" in lending. So the measure’s supporters say the bill doesn't apply to health care practitioners.
The American Dental Association, the American Medical Association and other some other groups maintain that because the legislation doesn't define "significantly,” their members could eventually find themselves under CFPA’s watchful eye.
So, a letter from 23 health care trade groups outlines this and other worries, including the fact that committee report language directing that dentists expressly be exempt could create a situation where other health care professionals would be included by default.
The U.S. Chamber of Commerce includes this issue – as it might affect small businesses — on a self-explanatory website, stopthecfpa.com. The groups also have the support of Rep. Nydia Velazquez, chairwoman of the House Committee on Small Business, who sent a letter to Sen. Chris Dodd echoing their concerns.
Dodd, chairman of the Senate Banking Committee, said last week that claims by the Chamber that dentists and orthodontists would fall under the purview of the agency are just wrong. In a statement Dodd explained:
An orthodontist is not a significant financial player. If your orthodontist, or doctor, or dentist lets you pay your bill over a series of months, they’re not covered. If your local grocer or butcher keeps a tab and bills you at the end of the month, they’re not covered.
Nonetheless, Graham and others are working with Dodd to change the overhaul bill to make it clear doctors and dentists are exempt. “We know Sen. Dodd meant it for financial institutions,” Graham said. “God bless him, but we don’t think it’s clear enough.”