Medical Debt Disarmament Act discussed at NC House Banking Committee

A debate was held in the NC House Banking Committee Tuesday on Medical Debt Disarmament Act, which is described as a law that would protect those who find it difficult to pay off medical debt. HB 1039 is designed towards establishing transparent standards around the provision of charitable care and limiting the ability of large medical facilities to charge unreasonable interest rates and use unfair methods of debt collection.

“I’ve found that very often, a (charitable care) patient is spoken to to take a medical credit card,” said Representative Ed Goodwin, R-Chuan, one of the bill’s main sponsors. “They were told they could use a credit card to help pay their medical bills or gas or groceries or whatever they wanted. Now you’re preying on a destitute charitable cause. Predatory lending is the way I refer to it.”

Rep. Howard Hunter, de Hertford; Rep. Bobby Hannig R-Koretok; Representative Billy Richardson, D-Cumberland, is the bill’s other primary sponsors.

The bill is due in part to lawmakers’ reaction to An October 2021 report by the Johns Hopkins Bloomberg School of Public Health and the North Carolina Health Plan found that most North Carolina hospitals were not honoring their commitments to charitable care. The report found that hospitals received more than $1.8 billion in tax credits, while Spending on “charitable care” did not exceed 60% of the estimated value of the tax credit across most of the state’s largest health systems. About 25 of more than 100 nonprofits spend their tax credits with charitable care.

Perhaps the bill’s biggest champion is State Treasurer Del Fulwell. So much so, that he put himself in medical debt groups to find out what people face when this happens to them. He said, “Last fall, I went to get an MRI with contrast.” I stayed there for 8 minutes, the cost was $6000 and they wanted $1500 at the point of sale. I gave them $500 because I wanted to intentionally put myself into debt collection to see how many phone calls, texts, and messages I would get each day based on this particular medical experience.”

He said he can pay the medical bill today, but he really wants to understand what’s going on with the situation.

Fulwell said this bill is the moral thing to do and has nothing to do with politics, race or gender and that credit scores need to stop using guns against people who were sick at the time, because it likely ruins their upward movement, perhaps for generations.

A report from the Treasurer’s Office in January showed low-income patients were billed when they were eligible for charitable care. the report, I collected it North Carolina Health Plan and the National Academy of Government Health Policywhich was reviewed by Rice University researchers, reported that in 2019, roughly 12 to 30% of bad debt, or $150 million, was charged to poor patients eligible for free or discounted charitable care, despite lucrative tax credits in Nonprofit hospitals acquired to offset care provided, valued at more than $1.8 billion in 2020.

Credit scores not only determine what a person will pay for a cell phone, basic liability insurance on a car, rent or buy a home, Fulwell said, but may also affect getting a job.

“I chair the State Banking Committee,” he said. “I can tell you that there are certain jobs that people cannot get in certain financial institutions because of their credit score. Not because they committed a crime but because they got sick.” He also said that people have liens on their homes due to medical debts.

The legislation would require health care facilities to develop a medical debt relief policy that would build on the existing framework of financial assistance plans under the Federal Affordable Care Act. It would lay out a set of steps to follow before billing someone, including posting and publicizing policy, posting rates online using easy-to-understand language, screening patients for eligibility for public assistance programs, and authorizing charitable care for patients at 200% of the federal poverty level. or less.

It would also require a clear pricing structure to offer a transparent sliding scale of policy deductions to patients between 200% and 400% of the Federal Poverty Level and the expected maximum amount that can be charged over a 12-month period for such patients. The bill prohibits interest charges for patients receiving insurance policy deductions, and halts debt collection during insurance appeals for uninsured patients.

This policy will also protect family members from medical and nursing home debts incurred by a spouse or parent, require itemized receipts for payments, and prohibit credit reporting of unpaid debts within one year after a patient is billed.

Patients who are also proven to be eligible for discounts after bills have been paid can receive a discount.

Representative John Zuka (R-Cumberland) criticized the bill and said it “was not ready for prime time” with a number of things that annoyed him, including indigent people receiving credit cards. “I’d like to see proof of that,” he said. “Care credit cards cannot be used for groceries. They can be used for vets (veterinarians), doctors, etc.”

Nor did he agree that a bad credit score can harm people for generations, as he works in the residential mortgage business and sees credit scores all the time and there are ways for people to fix their credit scores. He also said that medical debt is viewed differently in the credit scoring system by the three credit bureaus, Experian, Equifax and TransUnion. “They don’t count very much and sometimes they don’t count in the score at all,” he said. “When you say your credit score is armed, that’s an interpretation. If you have something that shows up in your credit score that you don’t agree with, you can dispute it.”

Szoka . said Consumer Financial Protection Bureau It looks at medical debt and credit scores and tries to tackle the problem. He also said that it should be Social Services’ responsibility to determine if a person has the ability to pay a medical bill and not a hospital finance clerk.

The bill will be considered for further discussion before it is submitted to the Banking Committee.