Gov. Roy Cooper and the N.C. Department of Health and Human Services hope that expanded federal subsidies will convince N.C. hospitals to forgive some medical debts accumulated by their patients.
DHHS has applied to the U.S. Centers for Medicaid & Medicare Services for expanded Healthcare Access and Stabilization Program payments to hospitals that are willing to cooperate. About 2 million North Carolinians could have as much as $4 billion in debt forgiven, if N.C. hospitals participated, DHHS Secretary Kody Kinsley said in Monday’s announcement.
To get the additional subsidies, hospitals must forgive debts owed by a subset of their patients going back to 2014. That includes debts of all Medicaid enrollees, non-enrollees whose income is 350% or less of the federal poverty level, or those whose total debt adds up to more than 5% of their annual income.
North Carolina lawmakers approved expanded Medicaid eligibility, enabling as many as 600,000 to access the federal program for low-income citizens. “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,” Kinsley said .
Additional conditions would require participating hospitals to offer discounts to patients with incomes 300% or below the federal poverty level ($93,600 for a family of four), and to implement a “streamlined screening approach” to determine who’s eligible for charity care.
Finally, hospitals will have to pledge not to unload to debt collectors the obligations of those making 300% or less of the federal poverty level, and that they won’t report the debts of patients covered by these policies to credit-reporting agencies.
The N.C. Healthcare Association says it needs time to review the DHHS proposal, which requires approval from federal officials, according to N.C. Health News. UNC Health and Cone Health haven’t determined if they would participate, the website reported.
Kinsley told N.C. Health News that he consulted hospitals about the program. When the state expanded Medicaid, hospitals agreed to pick up the 10% share of the cost of newly eligible enrollees for the program.
State officials say they anticipate hospitals will start forgiving debt in 2025 and 2026. Hospitals that don’t participate will receive their normal HASP subsidies, not expanded ones.
HASP is supposed to partly fill the gap between what Medicaid pays hospitals for treating patients and what commercial insurers like UnitedHealth Blue Cross pay.
It’s a lot of money: DHHS announced last November that it was starting to distribute $2.6 billion in HASP payments to 102 N.C. hospitals.
DHHS is partnering with a not-for-profit group called Undue Medical Debt as its “preferred facilitator of medical debt relief.” Formerly known as RIP Medical Debt, it buys or accepts donations of debt to wipe them off the books. Its programs have erased more than $12 billion in medical debt nationally, the group says. But Atrium Health, Novant Health and other hospitals say their debt-relief programs are preferable.
Various legislators and State Treasurer Dale Folwell have highlighted the problem of rising medical debt, which is the key catalyst for personal bankruptcies. A version of the “Medical Debt De-Weaponization Act” passed the Senate last year but never advanced in the House.
