Cooper plan would give hospitals extra Medicaid money to forgive medical debt

NCDHHS Secretary Kody Kinsley and Democrat Gov. Roy Cooper announce that Medicaid expansion will begin on Dec. 1. Source: Gov. Cooper X(formerly Twitter) page. September 25, 2023.

Listen to this story (6 minutes)

  • State Treasurer Dale Folwell said that while he was happy to hear about Cooper’s and NCDHHS' initiative, there is a better way to achieve medical debt relief for North Carolinians.

Gov. Roy Cooper announced Monday that he and the North Carolina Department of Health and Human Services (NCDHHS) are trying to entice hospitals with extra Medicaid funding in exchange for eliminating billions in medical debt and preventing it from occurring in the future.

More than 100 million people in the US, or 41% of adults, have medical debt that they cannot pay.

NCDHHS asked the US Centers for Medicare and Medicaid Services (CMS) to approve a set of conditions hospitals must meet in order to be eligible to receive an enhanced amount of Medicaid funds.

The conditions include relieving $4 billion in existing medical debt for two million low and middle-income North Carolinians and establishing policies to prevent the future accumulation of medical debt.

Hospitals that choose not to meet these conditions would receive the standard amount of these funds.

“Large medical bills from sickness or injury can cripple the finances of North Carolinians, particularly those who are already struggling,” said Cooper, a Democrat. “Freeing people from medical debt can be life-changing for families, as well as boost the overall economic health of North Carolina.”

If CMS approves, hospitals that agree to the requirements will be eligible for enhanced payments under the Healthcare Access and Stabilization Program (HASP). Hospitals that choose not to implement the policies could still receive HASP payments at a lower level.

Under the new agreement, hospitals will be required to implement the following policies: 

  • Relieving all medical debt deemed uncollectible dating back to Jan 1, 2014, for any individuals not enrolled in Medicaid with incomes at least at or below 350% of the federal poverty level (FPL) or for whom total debt exceeds 5% of annual income.    
  • Relieving all unpaid medical debt dating back to Jan. 1, 2014, for individuals who are enrolled in Medicaid.    
  • Providing discounts on medical bills of between 50-100% for patients with incomes at or below 300% FPL, with the amount of the discount varying based on the patient’s income.   
  • Automatically enrolling people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening approach.   
  • Not selling any medical debt for consumers with incomes at or below 300% FPL to debt collectors.   
  • Not reporting a patient’s debt covered by these policies to a credit reporting agency.

North Carolina State Treasurer Dale Folwell said that while he was happy to hear about Cooper’s and NCDHHS’ initiative, there is a better way to achieve medical debt relief for North Carolinians.

“We are glad that the Department of Health and Human Services and the governor have finally recognized my pro-family initiative to help prevent medical debt from decimating the finances of North Carolina families,” Folwell said in a press release. “The best and most simple way that our new allies can be helpful in this fight is to immediately support the Medical Debt De-Weaponization Act that passed the Senate unanimously and is only one vote short from passing the House. We encourage DHHS and the governor to convince the hospital association to drop their opposition to this pro-consumer legislation.”

The legislation has been sitting in the House Rules Committee since May 2023.

“North Carolina hospitals and health systems are committed to the care and well-being of all North Carolinians, and we recognize that medical debt is a concern for many, said Hannah Rodgers, communications manager for the North Carolina Healthcare Association (NCHA) in an email to Carolina Journal. “That is why hospitals focus every day on providing safe, high-quality care to all, regardless of their ability to pay. NCHA and its members need more time to understand what is contained in the preprint submitted to CMS by the North Carolina Department of Health and Human Services (NCDHHS), which has not yet been approved.  We look forward to CMS’ comments.”

Rodgers said NCHA believes the best solutions should involve all stakeholders, including employers, payors, and providers.  She concluded that for over a decade, North Carolina hospitals advocated for Medicaid expansion and agreed to pay the non-federal share of the cost of expansion, which is only possible through HASP.

But, it would be some time before consumers would see their debt erased if the agreement is approved. NCDHHS expects participating hospitals will begin to forgive debt for eligible consumers in 2025 and 2026.

Additional information on Cooper’s and NCDHHS’ initiative is available in the Frequently Asked Questions on the Effort to Relieve Medical Debt in North Carolina.