In a groundbreaking move, North Carolina Gov. Roy Cooper yesterday unveiled a plan that could potentially erase $4 billion in medical debt for approximately 2 million low- and middle-income residents of the Tar Heel State by offering hospitals increased federal Medicaid payments as an incentive to forgive old medical debts and implement policies to prevent future debt accumulation.
The plan does need to be approved by the Centers for Medicaid and Medicare Services and hospitals must also sign on to specific conditions if debts are going to be forgiven. Under the proposal:
- Medical Debt Forgiveness: Hospitals must erase medical debt deemed uncollectible for non-Medicaid patients with incomes at or below 350% of the federal poverty level or for debts exceeding 5% of annual income, dating back to January 2014.
- Debt Erasure for Medicaid Patients: All unpaid medical debt for Medicaid-enrolled patients dating back to January 2014 will be wiped out.
- Discounts on Medical Bills: Patients with incomes at or below 300% of the federal poverty level will receive discounts ranging from 50% to 100% on their medical bills.
- Automatic Charity Care Enrollment: Hospitals must streamline the process of enrolling eligible patients into charity care programs, removing the need for patients to apply manually.
- Debt Collection Restrictions: Hospitals must agree not to sell medical debt held by individuals with incomes at or below 300% of the federal poverty level to debt collectors.
“This is less about how can hospitals afford to do this, and — when you really understand the implications of debt — the real question is, how can hospitals not afford to do it?” said Kody Kinsley, director of North Carolina’s Department of Health and Human Services. “It is the right thing for the people they serve, and it will lead to a healthier community. And with these increased (federal) payments, it will allow them to continue to invest in all the things that they know will make a huge difference for their population systems.”
Healthcare providers and hospital networks in North Carolina said they were still reviewing the proposal.
