The Centers for Medicare and Medicaid Services (CMS) has given the green light to an innovative plan in North Carolina aimed at reducing the medical debt of millions of residents.
This plan, designed by Governor Roy Cooper together with the North Carolina Department of Health and Human Services (NCDHHS), proposes to use the state Medicaid program to incentivize hospitals to alleviate the medical debt accumulated for more than a decade and prevent the accumulation of new debt in the future.
A Strategy to Alleviate Medical Debt in North Carolina
The plan aims to eliminate up to $4 billion in medical debt, benefiting low- and middle-income families. The initiative will be implemented through the state Medicaid program and seeks to offer a significant financial respite to affected citizens.
“Large medical bills from sickness or injury can cripple the finances of North Carolinians, particularly those who are already struggling,” said North Carolina’s Governor Roy Cooper. “Freeing people from medical debt can be life changing for families, as well as boost the overall economic health of North Carolina.”
“North Carolinians are carrying the emotional and financial burden of debt, and often delay necessary care because of past bills,” said Health and Human Services Secretary Kody H. Kinsley. “Medicaid Expansion gave 600,000 people access to care. 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.”
Governor Cooper’s office has communicated that NCDHHS will begin collaborating with hospitals to implement the program immediately.
Incentives for Hospitals and Medical Providers
Hospitals in North Carolina will have the option to participate in this program. Those who meet eligibility conditions, including medical debt forgiveness, will receive increased Medicaid reimbursement under the Health Care Access and Stabilization Program (HASP). Hospitals that choose not to implement these policies will continue to be eligible for basic HASP payments.
In order to access the enhanced HASP payments, participating hospitals must implement several policies:
- Old Debt Forgiveness: Relief of all medical debt considered uncollectible since January 1, 2014 for anyone not enrolled in Medicaid with income at or below 350% of the federal poverty level (FPL) or for those whose total debt exceeds 5% of annual income.
- Debt Relief for Medicaid Enrollees: Relieving all unpaid medical debt dating back to January 1, 2014 for people who are enrolled in Medicaid.
- Discounts on Medical Bills: Offering discounts on medical bills of between 50 and 100% for patients with incomes equal to or less than 300% of the FPL, with the amount of the discount varying according to the patient’s income.
- Automatic Enrollment in Financial Assistance: Implement a policy to automatically enroll people in financial assistance, known as charity care, using a simplified income assessment and validation approach.
- Prohibition of Debt Sale: Not to sell any medical debt of consumers with income equal to or less than 300% of the FPL to debt collectors.
- Prohibition of Reporting to Credit Bureaus: Not reporting to credit reporting bureaus about a patient’s debt covered by these policies.
Participating hospitals will relieve all outstanding debts of current Medicaid enrollees, dating back to January 1, 2014. In addition, people not enrolled in Medicaid but with income less than or equal to 350% of the FPL, currently $90,370 for a family of three, may also qualify for medical debt relief.
