In an attempt to allay billions in medical debt, the state health department and governor have requested a federal agency put forth conditions hospitals must meet in order to receive enhanced Medicaid funds.
Governor Roy Cooper and the N.C. Department of Health and Human Services are attempting to relieve $4 billion in existing medical debt. This affects roughly two million low- and middle-income North Carolinians, both those with insurance and on Medicaid.
NCDHHS submitted a request to U.S. Centers for Medicare and Medicaid Services to forgive existing debt and establish policies and protections that thwart medical debt accumulation of patients statewide. It would also prevent problematic debt collection practices.
Hospitals that agree would receive enhanced payments from a shared pot of Healthcare Access and Stabilization Program (HASP)’s $6.5 billion for next year. The conditions hospitals — around 100 that are eligible — have to meet for enhanced payments would include:
- Relieving all medical debt deemed uncollectible dating back to January 1, 2014 for any individuals not enrolled in Medicaid with incomes at least at or below 350% of the federal poverty level (FPL) or for whom total debt exceeds 5% of annual income.
- Relieving all unpaid medical debt dating back to January 1, 2014 for individuals who are enrolled in Medicaid.
- Providing discounts on medical bills of between 50-100% for patients with incomes at or below 300% FPL, with the amount of the discount varying based on the patient’s income.
- Automatically enrolling people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening approach.
- Not selling any medical debt for consumers with incomes at or below 300% FPL to debt collectors.
- Not reporting a patient’s debt covered by these policies to a credit reporting agency.
Hospitals that do not agree would receive standard funding amounts, shared from HASP’s $3.2 billion pot.
“Large medical bills from sickness or injury can cripple the finances of North Carolinians, particularly those who are already struggling,” Cooper said in a press release. “Freeing people from medical debt can be life changing for families, as well as boost the overall economic health of North Carolina.”
Hospitals can carry various forms of debt, but medical debt is the largest and hospitals retrieve smaller amounts through collection agencies. Affecting people regardless of insurance, medical debt is an issue for 41% American adults. Research shows a disproportionate impact is felt among Black and Hispanic communities and people in Southern rural areas.
“Medicaid expansion gave 600,000 people access to care,” Health and Human Services Secretary Kody H. Kinsley said in a release. “Relieving medical debt will get individuals and families into care sooner, bring down the cost of care and give them a fresh start on a healthy and productive life.”
NCDHHS has partnered with Undue Medical Debt as the preferred facilitator, which has worked to do away with around $12 billion in debt nationwide. Yet, some hospitals have not wanted to work with the company, including Novant Health.
Port City Daily reached out to the healthcare company, which oversees New Hanover Regional Medical Center, to find out if it supported the governor and NCDHHS’s plan Monday. A spokesperson wrote in an email:
“Novant Health is committed to creating a healthier future for the communities we serve, and that includes empowering patients’ physical, emotional, and financial health. We have industry-leading policies against predatory debt collection practices and are proud to offer one of the best financial assistance policies in North Carolina and the country that is significantly more robust than the state’s proposal. Our longstanding commitment to helping patients manage the cost of care, along with our dedicated financial navigators and consistent promotion of these resources, have helped our patients come to know and trust our policies. We are adamant that any proposed changes do not disrupt or fall short of this commitment.”
The state treasurer, Dale Folwell, issued a statement Monday in support of the governor and health department’s action.
“We are glad that the Department of Health and Human Services and the governor have finally recognized my pro-family initiative to help prevent medical debt from decimating the finances of North Carolina families,” Folwell wrote.
He used the opportunity to advocate for support of the Medical Debt De-Weaponization Act. Introduced in 2022, it has unanimously passed the Senate and is one vote short of passing the House.
The bill would prevent any family members from taking on medical debt of a spouse or other, while also protecting itemization of bills. It would mandate hospitals screen patients for charity care and limit the amounts charged of visiting facilities.
The bill has been held up by a special interest group in Raleigh, the North Carolina Healthcare Association representing 100 hospitals. Folwell has said previously they do not want to follow transparency in billing.
“North Carolina hospitals and health systems are committed to the care and well-being of all North Carolinians, and we recognize that medical debt is a concern for many,” the association noted in a news release Monday about the latest state plan submitted to CMS. It said its member hospitals provide “safe, high-quality care to all, regardless of their ability to pay.”
“We encourage DHHS and the governor to convince the hospital association to drop their opposition to this pro-consumer legislation,” Folwell said.
According to reporting from Axios, North Carolina is one of six states with the most medical debt nationwide. Should CMS sign off on the proposed plan, it wouldn’t take effect until 2025 or 2026.
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