N.C. House bill aims at protecting consumers from being financially ruined by medical debt

N.C. House bill aims at protecting consumers from being financially ruined by medical debt

A North Carolina House bill aimed at protecting consumers from being financially destroyed by medical debt was filed this week. H.B. 1039, Medical Debt De-Weaponization Act, is billed as a pro-family, anti-poverty consumer protection law geared toward setting transparent parameters around the provision of charity care, and limiting the ability of large medical facilities to charge unreasonable interest rates and employ unfair tactics in debt collection.

Rep. Ed Goodwin, R-Chowan; Rep. Howard Hunter, D-Hertford; Rep. Bobby Hanig R-Currituck; and Rep. Billy Richardson, D-Cumberland, are primary co-sponsors of the bill.

The bill is due in part to legislators’ reaction to the October 2021 report by Johns Hopkins Bloomberg School of Public Health and the North Carolina State Health Plan that found most North Carolina hospitals aren’t honoring their commitments to charity care.  The report found that hospitals took in more than $1.8 billion in tax breaks, while “charity care” spending didn’t surpass 60% of the tax exemption’s estimated value across most of the state’s largest health systems. About 25 of 100-plus non-profits outspent tax breaks with charity care.

“We are learning through our investigation of the health care cartel in North Carolina of people who are being punished and whose credit scores are being weaponized resulting from a product they would rather not have consumed, and when they inquired what it cost, they were told it was none of their business,” state Treasurer Dale Folwell told Carolina Journal in a phone interview Wednesday. “You are destroying the upward mobility of individuals and putting themselves in a position that they can never see themselves past their poverty.”

A report released by the Treasurer’s office in January showed that low-income patients were being billed when they were eligible for charity care. The report, compiled by the N.C. State Health Plan and the National Academy of State Health Policy, and peer-reviewed by Rice University researchers, states that in 2019, 12 to almost 30% of bad debt, or $150 million, was charged to poor patients that were eligible for free or discounted charity care, despite lucrative tax breaks the nonprofit hospitals received to offset the care given, valued at more than $1.8 billion in 2020.

According to a press release issued by the treasurer’s office, the legislation is modeled off several other states’ laws seeking to protect families from the devastating impact of medical debt on Americans, with one in five being contacted by a debt collector over an unpaid medical bill.

The legislation would require health-care facilities to develop a Medical Debt Mitigation Policy that would build on an existing framework of financial assistance plans under the federal Affordable Care Act. It would establish a set of steps that must be followed before someone is billed including posting and publicizing the policy, posting prices online using easy-to-understand language, screening patients for eligibility for public-assistance programs, and mandating charity care for patients at 200% of the federal poverty level or below.

It would also require a clear pricing structure to offer a transparent sliding scale of policy discounts for patients between 200% and 400% of the federal poverty level and a predictable maximum amount that could be charged during a 12-month period for those patients. The bill would prohibit interest charges to patients who receive the policy discounts, suspending debt collections during insurance appeals for underinsured patients.

The policy would also shield family members from medical and nursing home debts incurred by a spouse or parent, require detailed receipts of payments, and prohibit credit reporting of unpaid debts within one year after a patient is billed.

Folwell mentioned in his press release that notable Democrats are also warning about the rising cost of healthcare, including former Treasurer Harlan Bowles and state Auditor Beth Wood. He said it doesn’t matter which side of the aisle you are on; healthcare costs are a moral, not a political issue.

The legislation also comes at a time when the rate of inflation is hovering around 8.3%, with talk of stagflation and a recession looming later this year.

“The “I’s” have it – interest rates and inflation,” said Folwell. “This was bad before the I’s had it, and it’s even worse. It’s costing the average citizen in North Carolina $5,000 more this year to live versus last year. When you stack medical billing on top of that this issue, that should tell you why it is such a serious issue.”

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