NC wants to offer hospitals federal payouts to forgive medical debt

The North Carolina government, under the leadership of Governor Roy Cooper, has announced a new initiative aimed at alleviating medical debt for low-income patients. This program, administered by the Department of Health and Human Services (DHHS), will offer enhanced Medicaid payments to hospitals that agree to waive medical debt dating back to 2014 for eligible patients, cap interest rates on hospital-held medical debt at 3%, and commit not to report medical debt to credit agencies, among other conditions.

The DHHS program aims to address the growing issue of medical debt in North Carolina, where one out of five residents has medical debt in collections, according to recent data. This issue disproportionately affects Black and Hispanic patients, as well as those living in rural areas. The initiative needs approval from the U.S. Centers for Medicare and Medicaid Services (CMS) and would be funded by new federal dollars coming to North Carolina due to the state’s shift to Medicaid managed care.

The North Carolina Healthcare Association, which represents hospitals, has stated that it needs more time to review the proposal. Several large hospital systems have not yet decided whether they will participate in the initiative. If every hospital in the state participates, approximately 2 million low- and middle-income North Carolinians could have as much as $4 billion in medical debt forgiven.

The DHHS program will partner with Undue Medical Debt (formerly RIP Medical Debt), a national nonprofit that buys old medical debt for pennies on the dollar and then forgives it for people living below the poverty line. The organization has erased more than $12 billion in medical debt across the country but has faced resistance from some hospitals.

Patient advocates and health policy experts have praised the initiative, with hopes that it will serve as a model for other states. However, they also note that more needs to be done to protect people with medical debt, such as addressing escalating hospital prices, protecting people from their spouse’s debt, and restricting hospitals from suing individuals for unpaid debt.

The program is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area.

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