Groton doctor starts campaign to wipe out medical debt

May 7—GROTON — A Noank man has his eye on a federal bill to reform medical debt practices and a proposal from Gov. Ned Lamont to invest $20 million in paying off medical debt, but he decided earlier this year he didn't want to wait on the government for action.

Seeded with $1,000 from his consulting company Health & Technology Vector, Dr. Victor Villagra ― a hospital internist before working at Cigna and then starting his company ― launched a $10,000 crowdfunding campaign to wipe out $1.6 million in unpaid medical debt in Connecticut. That figure is just what one organization has on its books, which covers 1,300 people in the state. As of Thursday, it has raised $4,832.10.

So how does that work?

The campaign is through RIP Medical Debt, a nonprofit that purchases debt on the secondary debt market and directly from hospitals, and then forgives the debt.

Villagra explained that when hospitals and medical entities can't collect debt, they sell it to collection agencies on the secondary debt market. If an agency can't collect, RIP Medical Debt offers to buy it from them, which can be done for pennies on the dollar because the alternative is the agency gets zero dollars.

"Medical debt is not a unique Connecticut problem, it is a national crisis affecting one of every five Americans," the campaign states.

Villagra asked the nonprofit for an anonymous distribution of those or whom it purchased debt, and as of February, that included about 90 people in debt in New London County.

"Who they are and where they are I don't know, but I call them our neighbors," Villagra said. He reached out to his neighbors and colleagues to see if they would donate.

Villagra said when RIP Medical Debt gets contributions, the organization sends letters to beneficiaries to say their medical debt is eliminated, and it goes to credit agencies to clear their names.

Last month, three major credit bureaus jointly announced they won't consider medical debt below $500 on scores.

RIP Medical Debt has a 100% rating from Charity Navigator and a Platinum Seal of Transparency from GuideStar. According to the nonprofit's website, it has relieved more than $8.52 billion in medical debt for more than 5.4 million families "but there's still a long way to go."

Villagra's campaign is currently the only one listed for Connecticut.

In 2020, Mystic Congregational Church joined 121 other churches in raising $200,000 for RIP Medical Debt, thus abolishing $26.2 million in medical debt. The Rev. Christa Swenson said in a news release it's "like Jesus feeding five thousand people with two fish and a few loaves of bread, multiplying the resources we have into the resources that are needed."

But what remains disheartening to Villagra is that the conditions that lead people into medical debt aren't improving.

Researching medical debt in Connecticut

Villagra practiced internal medicine at Geisinger Medical Center in central Pennsylvania in the 1980s and 90s before coming to Connecticut to work for Cigna. He left in 2002 and started Health & Technology Vector, which primarily does work in population health, delivery system redesign, and technology assessment.

Villagra got a professor appointment at UConn Health and then became associate director of its Health Disparities Institute.

Several years ago, he started looking into small claims related to medical debt, acquiring data from small claims courts across the state on hospitals and doctors suing patients.

He and a team at UConn scrubbed the data, finding that from 2011 to late 2016, hospitals and doctors sued more than 85,000 Connecticut residents to recover more than $110 million in medical debt. And this only included cases involving debts under $5,000.

Villagra published some of his findings in June 2019 and then presented to the High Deductible Health Plan Task Force the legislature convened. He revealed that Danbury Hospital was responsible for nearly half of the 13,824 medical debt cases filed in Connecticut in 2016.

Within six days of Hartford Business Journal reporting on "CT's most litigious hospital," Danbury Hospital announced it changed its patient suing policies.

Villagra also went back into the data to look at the distribution of defendants, and while the data itself didn't have information on income, race or ethnicity, he superimposed census data. This showed that the people being sued were disproportionately in majority-minority and low-income areas.

Looking at the 85,000 patients, he also questioned whether they could trust a physician who sued them, and if they're anxious or depressed.

"This is not something people like to talk about. You don't bring up your medical debt at a cocktail party," Villagra said.

Actions proposed at state and federal level

Sen. Chris Murphy, D-Conn., saw Villagra's report and invited the doctor to a series of town meetings on medical debt. Villagra partook in a roundtable discussion at Three Rivers Community College in February 2020 and attended a listening session Murphy held in Meriden in December 2022.

This past November, Murphy and Sen. Chris Van Hollen, D-Md., re-introduced the Strengthening Consumer Protections and Medical Debt Transparency Act, which would set requirements for health care entities to communicate about debt and cap interest rate growth.

The proposal would also direct the U.S. Department of Health and Human Services to create a public database tracking health care entities' debt collection practices: whether they use collection agents, how the debt is assigned to an agent, and how many Extraordinary Collection Actions they have initiated.

"We need to shed light on the hospitals out there who are abusing patients with overly aggressive debt collection practices," Murphy said in a press release at the time.

Murphy said this week he has been working on the issue of medical debt for 20 years, since working to pass a Connecticut law on medical debt in the state Senate in 2003.

"Back then, it was Yale (New Haven Hospital) that was the bad actor," Murphy said. "Since then, Yale has turned into best of breed, with some of the lowest rates of collection, and other hospitals have sort of leaped into the ignominious lead."

The federal bill he introduced is modeled after Connecticut's law, and Murphy said he "spent a lot of time shopping this bill around to Republicans" but couldn't get bipartisan support.

The legislation hasn't gone anywhere, but Murphy thinks in the meantime, HHS or the Consumer Financial Protection Bureau could put pressure on insurance companies and debt collection agencies.

"There are the stories of individuals that have debt that sticks with them and makes it hard for them to maintain good credit or get into housing," Murphy said. "But then there's another story, which is the people who are sick and never go to the hospital, because they're afraid to have an unpaid bill. Many of those people have insurance; they just have a high deductible."

Gov. Ned Lamont's office noted in a press release in February that medical debt causes two-thirds of personal bankruptcies.

That's when Lamont announced a proposal to invest $20 million in federal American Rescue Plan Act dollars "to contract with a nonprofit organization that buys medical debt and eliminates it at a fraction of the original cost," as part of the governor's biennial budget proposal. The Lamont administration estimated this investment could eliminate $2 billion in medical debt.

"Several state and local governments have seen significant success at canceling medical debt for their residents using this model, and I think this is absolutely the right way to use this COVID-recovery funding," Lamont said in the press release.

A November article in the nonprofit news organization Next City noted that the City of Toledo in Ohio and Cook County Board of Commissioners in Illinois are among the government entities that have approved ARPA funds for RIP Medical Debt.

e.moser@theday.com