How many hospitals will join Cooper’s medical debt initiative?

By Michelle Crouch

UPDATE: As of the afternoon of Friday, August 9, Atrium Health, Duke Health and HCA/Mission Health had opted into Gov. Cooper’s debt relief program, according to spokespeople at those health systems. That means all of the state’s largest hospital systems are on board.

At least 37 of the state’s 99 hospitals have so far signed up for a new state program that promises them extra federal money if they agree to wipe out low-income patients’ old medical debt and to take steps to help those patients avoid debt in the future, state health officials said. 

All of the hospitals in the Novant Health, Cone Health, UNC Health and ECU Health systems are participating, state officials said. In addition, Erlanger Western Carolina Hospital in the far western town of Murphy and Hugh Chatham Health in Elkin have signed on. 

With a deadline of 5 p.m. August 9, the big question is: Will the state’s other large hospital systems — Atrium Health, Duke Health and HCA Healthcare/Mission Health — get on board?

None of the systems responded to Ledger/NC Health News requests for comment on Thursday. Atrium has previously said that many parts of its financial assistance policy already meet the program’s requirements. 

The medical debt program, believed to be the first of its kind nationwide, would give higher federal payments to hospitals that agree to forgive medical debt deemed uncollectible dating back to 2014 for low- and middle-income patients. 

Hospitals would also have to abide by other conditions, such as offering 50 percent-100 percent discounts to low-income patients who don’t qualify for Medicaid, capping interest rates on hospital-held medical debt at 3 percent and agreeing not to report medical debt to credit agencies.

The program would be paid for by new federal dollars coming to North Carolina because the state shifted to Medicaid managed care. The money would come from an initiative called the Healthcare Access and Stabilization Program, or HASP.

Hospitals likely gauging financial impact

Democratic Gov. Roy Cooper and N.C. Health and Human Services Secretary Kody Kinsley visited Charlotte on Wednesday to promote the program and, presumably, to increase public pressure on hospitals that are still on the fence. 

“This makes sense for hospitals, their patients and their communities,” Cooper said. “Statistics show that hospitals only collect about 5 percent of their medical debt. … Under this program they will most likely — and their fiscal analysts are looking at this, you can bet your boots they are — they’ll earn more by forgiving medical debt than they would otherwise.”

For hospitals, the issue likely isn’t that straightforward, said Mark Hall, a professor of law and public health who studies health care finance at Wake Forest University.  

The program could require some hospitals to overhaul their financial assistance policies and offer free care to large numbers of patients who don’t qualify for Medicaid, such as people with temporary worker’s permits, he said. Hospitals also need to weigh the cost of implementation.

“They may be taking a wait-and-see approach, to see how it goes the first year,” Hall said.

Hall noted that many hospitals are still figuring out the impact of Medicaid expansion on their bottom lines. Others may want to know exactly what their payment might be from the program. While larger health care systems stand to get millions in extra dollars for participating, smaller systems and rural hospitals would receive proportionally smaller payments.

Hall said he believes hospitals are focused most on the impact of the financial assistance changes, rather than the requirement to forgive old medical debt, since the debt forgiveness is “framed in a way that looks to me like the hospital wouldn’t be giving up that much money,” he said. “It’s mostly not collectable, and even if they sell it, they get only a few cents on the dollar.”

(Some hospitals, including Atrium and Novant, have previously refused to work with Undue Medical Debt, formerly RIP Medical Debt, the organization the state is partnering with to handle the debt forgiveness.)

If not enough hospitals participate, Hall said the state may need to look at changing its approach.

“Could signing up for this program be something considered during the Certificate of Need process?” he said. “They are offering carrots. Maybe after the first year, (the state) might have to consider whether they need a bit of a stick to help them along.” 

A spokeswoman for the North Carolina Healthcare Association, which represents hospitals, said the group was waiting to comment until after the Friday deadline. 

1 in 5 N.C. residents has medical debt in collections

The medical debt program aims to tackle a growing problem in North Carolina, where one in five residents has medical debt in collections. Cooper said about 2 million North Carolinians owe about $4 billion in medical debt, and “much of that is hospital debt.” 

Addressing medical debt is a bipartisan issue, with Republican state Treasurer Dale Folwell railing at hospitals during a monthly phone call with reporters. 

“These… multibillion dollar corporations who disguise themselves as nonprofits have made these billions of dollars on the backs of sick people,” he said. “Then they send people medical bills.”

But Folwell didn’t agree with Cooper’s approach. 

“[Hospitals] will not match the level of charity care with billions of dollars of tax benefit they’re getting, and now they expect the government to bail them out,” he said. 

A few advocacy groups, including executive directors of Black-led nonprofits, faith leaders and medical students at Duke and UNC, have launched letter-writing campaigns to hospital CEOs encouraging them to participate.

Although Novant has opted in to the program and has a strong Charlotte presence, no one from the system appeared to be present at Wednesday’s event. When asked about the decision, a Novant spokeswoman sent a statement that said: 

Novant Health’s industry-leading financial assistance policies are an example of our longstanding efforts to ensure all have access to the vital care they need and deserve, regardless of their ability to pay. We have notified the state of our plans to fully participate in the Healthcare Access Stabilization Program and remain committed to helping our patients thrive.

Mecklenburg County Commissioner Susan Rodriguez-McDowell, a frequent hospital critic who attended the Wednesday event, said she was thrilled to hear that Novant had signed on. 

“And of course, it really brought up in my mind the question of: ‘Where’s Atrium?’” she said. “That was my number one question as I walked away.”