The federal government has signed off on a plan floated by the governor of North Carolina that would offer incentives to hospitals in the Tar Heel State in exchange for forgiving unpaid medical debts for low- and middle-income residents. Now, North Carolina Gov. Roy Cooper, who was on the shortlist of potential running mates for Vice President Kamala Harris, has to convince hospitals to buy into the plan.
The objective of the plan is to erase $4 billion in unpaid medical debts owed by 2 million low- and middle-income residents of North Carolina. In exchange for forgiving those debts, hospitals would receive increased payments from Medicaid. 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.
“I applaud North Carolina for setting an example that other states can follow by advancing a plan that has the potential to relieve $4 billion in medical debt for two million individuals and families,” Vice President Harris said in a statement. “This critical step also strengthens financial assistance for emergency medical procedures moving forward.”
The North Carolina Healthcare Association said that any type of medical debt reform “must include employers, payors, and providers,” and that the group “remains committed to working alongside our partners to advocate for sustainable solutions that engage all, help support the state’s healthcare safety net, and do no harm.”
