Gov. Roy Cooper on Monday announced a new initiative that could reduce or forgive some medical debt for North Carolina families.
If the plan is approved, the state will use federal funds as an incentive for hospitals to forgive outstanding debts for low- and middle-income families while working proactively to ensure patients who are eligible for charity care are receiving it.
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At Monday's news conference, Cooper said his administration will plan to use extra funding from Medicaid to persuade hospitals to forgive $4 billion in old medical debt owed by low- and middle-income families.
The proposal, which North Carolina leaders believe is a first of its kind, doesn’t require a new state law and won’t cost the state any additional funds. But the U.S. Centers for Medicare and Medicaid Services must approve the Healthcare Access and Stabilization Program changes sought last week.
The plan has the potential to help 2 million people in the state get rid of $4 billion in debt, Cooper said.
That is relief that Lisa Franklin would welcome. She had no insurance when she became terminally ill. She’s on Medicaid now, but that doesn’t help with the tens of thousands of dollars in debt she incurred before.
"I wake up everyday to that mail coming and just realizing that there's another bill, there's another bill," she said.
"I'm still dealing with all the credit collectors and, and I am somebody that wants to take care of my financial responsibilities. And that's a huge weight on me."
According to Cooper, hospitals will likely benefit as well, because they rarely collect more than a small fraction of old medical debts from people who often don’t have the money to pay.
“It’s clear that by providing relief for medical debt, we give North Carolinians not just peace of mind, but truly a fresh start,” state Health and Human Services Secretary Kody Kinsley said at a governor’s mansion news conference.
Only people of certain income levels would qualify for the plan. For those using private insurance, eligible people would need to make up to three-and-a-half times the federal poverty level, or about $52,700 per year for an individual or $109,200 per year for a family of four. People on Medicaid would automatically qualify.
The debt that would be covered would have to be debt from a participating hospital. To qualify an acute-care, rural or university-connected hospital would have to agree to voluntarily do away with patients' medical debt. Hospitals would have to opt into the program, and some may choose not to.
The state Department of Health and Human Services said hospitals that choose to participate would be eligible to share funds from a pot of up to $6.5 billion for next year. Those who don't can share from $3.2 billion.
Under the plan, the debt has to be at least two years old, and it would have to have been incurred on or after Jan. 1, 2014.
The earliest the change could take effect would be next year, and that is only if federal officials give it the okay and hospitals agree to participate.
Republican State Treasurer Dale Folwell has questioned the commitment of the state’s largest nonprofit hospital systems to treat patients who are poor at free or reduced rates. Folwell was still backing Monday proposed legislation requiring hospitals to provide more charity care.
Representatives of patient advocacy groups at the news conference praised Cooper's effort. The proposal gives “patients the ability to focus on what’s most important, which is their health, instead of worrying about when the debt collector is going to call again and demand payment,” Dave Almeida with the Leukemia & Lymphoma Society said.
State hospital association director Steve Lawler says his group is reviewing the proposal, which he called well-intentioned.
"There are a lot of practicalities that go along with how do you take this good intention, and convert it into something that's practical, and then sustainable over time," he said.
A group called Undue Medical Debt that’s assisted other governments with buying medical debt and erasing it also would work on North Carolina’s effort, DHHS said.
The Associated Press contributed to this report.