Federal government approves NC plan for medical debt relief

Dave Almeida of the Leukemia and Lymphoma Society, NC DHHS Secretary Kody Kinsley and Gov. Roy Cooper at a press conference on medical debt forgiveness. (Photo: Lynn Bonner)

The federal government has approved the Cooper administration’s plan for medical debt forgiveness, the governor’s office announced Monday.

Approval from Centers for Medicare & Medicaid Services, or CMS, is a step toward achieving the potential erasure of $4 billion in hospital debt for two million people, Gov. Roy Cooper and state Department of Health and Human Services Secretary Kody Kinsley said earlier this month.

When Cooper and Kinsley introduced the plan in early July, they said the state had applied for CMS approval. Under the plan, federal payments to hospitals from the Health Access and Stabilization Program would increase in exchange for the hospitals erasing old debt and helping patients avoid new debt.

The Cooper administration must now convince hospital systems to agree to the plan.

In a statement Monday, the NC Healthcare Association said hospitals “ focus every day on providing safe, high-quality care to all, regardless of their ability to pay.

“But we believe that the best solutions to address medical debt reform must include employers, payors and providers. As hospitals and health systems individually weigh their ability to participate in Governor Cooper’s medical debt initiative, for a higher HASP payment, NCHA 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.”

The association represents both nonprofit and for-profit hospitals.

North Carolina has one of the highest percentages of adults who report having medical debt , according to the Peterson Center on Healthcare and KFF.

Vice President Kamala Harris, who is poised to become the Democratic Party’s presidential nominee, applauded the plan in a statement.

Harris said she and President Joe Biden have already forgiven more than $650 million in medical debt as part of their effort to forgive $7 billion by 2026, with support from the American Rescue Plan.

“In addition to this, soon we will make it so medical debt can no longer be included in your credit score, impacting millions of Americans. Last month, I issued a call to states, cities, and hospitals across our nation to join us in forgiving medical debt,” the statement said.

“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. This critical step also strengthens financial assistance for emergency medical procedures moving forward.”

Numerous media outlets have reported that Cooper is on a list of potential Harris running mates.

A number of states, cities and counties around the country have initiated programs to purchase their residents’ medical debt, Stateline has reported. At least some of those governments are working with the nonprofit Undue Medical Debt , formerly known as RIP Medical Debt. NC DHHS is working with Undue Medical Debt.

Hospitals must agree to certain conditions to qualify for the increased payments, according to a news release.

• Wipe out medical debt deemed uncollectible for people not on Medicaid but who have incomes at or below 350% of the federal poverty level dating back to January 2014, or who have debt that’s more than 5% of their annual income.
• Erase all unpaid medical debt dating back to January 2014 for people enrolled in Medicaid.
• Provide discounts on medical bills of between 50% and 100% for patients with incomes at or below 300% of the federal poverty level. Three hundred percent of the federal poverty level is an annual income of $93,600 for a family of four.
• Automatically enroll people into charity care by determining eligibility using streamlined screening.
• Agree not to sell medical debt held by people with incomes at or below 300% of the federal poverty level to debt collectors.
• Not report a patient’s debt covered by these policies to a credit reporting agency.

“Unlike most other debts, medical debt is not intentional because people don’t choose to get seriously ill or have an accident,” Cooper said in a statement.

“Medical debts are often beyond people’s ability to pay, ruining their credit, keeping them from getting credit cards, loans and jobs and sometimes driving them into bankruptcy. That’s why we’re working with hospitals and federal partners to help relieve the burden of medical debt for North Carolina families,” he said.

This article was updated at 4:55 pm with a statement from the NC Healthcare Association.