North Carolina's Medical Debt Relief Incentive Program: A Beacon of Hope for Patients
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Across America, 41% of adults struggle with medical bills they cannot pay, a situation that comes with significant financial, emotional and even physical costs, including reduced access to necessary healthcare. On July 26th, 2024 North Carolina Governor Roy Cooper and the NC Department of Health and Human Services took a huge step toward alleviating that burden with the introduction of the Medical Debt Relief Incentive Program, which will eliminate medical debt for millions of Medicaid recipients and middle- and low-income residents across the state.
According to a NCDHHS’ press release issued on July 29, 2024, this landmark legislation uses “the state's Medicaid program to incentivize hospitals to relieve more than a decade of existing medical debt for eligible North Carolinians and prevent accumulation of new debt going forward.”
Following on the heels of that announcement, on August 12, 2024, NCDHHS released a further statement indicating that as of that date, “…all of the state’s 99 eligible hospitals have committed to participate in North Carolina’s medical debt relief incentive program.“
This program provides relief to individuals struggling with financial and other stress related to overwhelming medical bills, and marks a pivotal moment in the state's approach to healthcare and the financial stability of its residents.
Learn
Understanding Medical Debt
According to an investigation by KFF Health News, NPR, and CBS, “More than 100 million people in America — a startling 41% of adults — are saddled with medical bills they cannot pay,” making medical debt, “a defining feature of the nation’s health care system.” This is compounded by the fact that patients don’t have a choice in whether or not to taking on this debt if they are to receive needed care (and in some cases, no choice at all in whether or not they receive that care), nor are they able to predict or limit those expenses, or shop around to determine their most affordable options.
Although the exact totals cannot be accurately determined, since many people fund medical care with credit cards, personal loans, and support from family and friends, the investigators estimated the US’ collective medical debt in 2019 at $195 billion — “larger than the economy of Greece.“
The investigation also notes that, rather than helping improve health in the US, medical debt is actively creating poorer health outcomes by:
Forcing families to cut back on spending for food, transportation, education, housing and other vital needs
Depleting savings necessary to buffer against emergencies and unpredictable expenses (such as a car repair necessary to maintain employment or replacing a pair of broken glasses), or to provide for education or retirement (both of which can result in poorer health outcomes over time)
Pushing families into bankruptcy, resulting in credit rating damage that can impact everything from their ability to gain housing to qualifying for a job, and exacerbating financial stress by increasing the cost of necessary expenses such as car insurance, phone plans, and utility hookups
Resulting in insecure housing or homelessness as those struggling to make ends meet fall behind on their rent or mortgage, or are unable to afford necessary home repairs
Blocking patients from needed medical care
It is this last point that’s the most insidious: “About 1 in 7 people with debt said they’ve been denied access to a hospital, doctor, or other provider because of unpaid bills,” notes KFF. “An even greater share ― about two-thirds ― have put off care they or a family member need because of cost.” Meaning that not only is medical debt indirectly making health outcomes worse as a result of the overwhelming financial and other burdens on the patient, it’s actively and directly preventing those patients from receiving (sometimes life-preserving) care.
Meanwhile, KFF writes, “Hospitals recorded their most profitable year on record in 2019, notching an aggregate profit margin of 7.6%, according to the federal Medicare Payment Advisory Committee.”
The Medical Debt Freedom Bill
This new legislation seeks to address these harms in a variety of ways. In order to qualify for the HASP payments to cover these bills, hospitals must implement several key policies and practices, including (via NCDHHS):
Relieve all “uncollectable” medical debt dating back to Jan. 1, 2014 for:
Non-Medicaid patients with incomes at or below at least 350% of the federal poverty level (FPL) (pdf)
Individuals whose total debt exceeds 5% of their annual income
Relieve all unpaid medical debt dating back to Jan. 1, 2014 for Medicaid enrollees
Going forward, participating health providers must also implement the following policies for uninsured and insured patients with incomes less than or equal to 300% of the FPL:
Provide 50%-100% discounts for patients with incomes at or below 300% FPL, on a sliding scale basis
Presumptively determine and automatically enroll individuals eligible for financial assistance (aka “charity care”)
Not sell medical debt to debt collectors
Cap interest rates on medical debt at 3%.
Not reporting medical debt to credit agencies
Enact other policies protect patients from the harmful effects of medical debt (for example, referrals to social determinant of health programs such as Healthy Opportunities)
Who qualifies for medical debt relief under this plan? Here are the eligibility indicators according to the NCDHHS’ Medical Debt FAQ:
Medicaid enrollees, and non-Medicaid patients meeting the above income guidelines, with…
medical debt that is more than two years old and dating back to January 1, 2014 owed to participating hospitals, and…
who are not already on a payment plan with the participating health provider
Act
If you qualify for debt forgiveness under this bill, there is nothing you need to do.
Your debt will be forgiven automatically.
Unsure if you qualify? Check out the North Carolina Medical Debt Frequently Asked Questions (en Español)
Unsure if your debt falls under a participating health provider? Check out the list of participating hospitals and hospital systems in North Carolina (pdf)
Engage
Learn more about Undue Medical Debt, a “501(c)(3) nonprofit whose purpose is to strengthen communities by erasing financially burdensome medical debt” and who is the NCDHHS’ partner in implementing this legislation.
Join the Medical Debt Relief Alliance, a community of donors who contribute funds to purchase and abolish medical debt.
Visit the Consumer Financial Protection Bureau’s resource page on medical debt to learn more about your rights and the law relating to medical debt, debt collection, credit reporting and more.
Visit US.Gov’s info page on how to get help with medical bills and related healthcare-related expenses.
Resources:
House Bill 400/Senate Bill 289 official summary and status updates
CMS Approves North Carolina’s Medical Debt Relief Incentive Program (NCDHHS)
North Carolina Hospitals Sign On to Relieve Medical Debt (NCDHHS)
2024 Poverty Guidelines: 48 Contiguous States (all states except Alaska and Hawaii) (US DHSS)
100 Million People in America Are Saddled With Health Care Debt (KFF Health News)
Participating Hospitals in the North Carolina Medical Debt Mitigation Program (pdf)
