Protections against ‘weaponization’ of medical debt heard by NC lawmakers
State lawmakers on Wednesday discussed a bipartisan bill filed in the House and Senate that seeks to protect North Carolinians from financial ruin due to medical debt.
State Treasurer Dale Folwell, whose office oversees the State Health Plan, is championing the bill. Folwell, now running in the Republican primary for governor, held a series of public forums around the state promoting the protections he wants, after a prior version of the legislation failed to advance last year. As part of a long-running fight with hospitals, which he describes as a “cartel,” he has taken aim at rising health care costs as well as hospital chains’ profits and management.
Folwell has said unpaid medical bills and bad credit scores have been “weaponized” against people, and Senate Bill 321, or House Bill 321, is dubbed the “Medical Debt De-Weaponization Act.” It would set financial assistance parameters for low-income families, peg medical interest rates at 5% yearly and limit debt-collection tactics accessible to large medical facilities. It also would require large medical facilities to post price information online for services, among other provisions.
A hearing on the bill is planned for Wednesday morning, and Folwell called on lawmakers Tuesday in a news release to pass it, saying “families can’t see themselves past their poverty because of medical debt,” and “that’s not a political issue. That’s a moral issue. Lawmakers have the chance to change the lives of thousands of North Carolinians. With inflation at 40-year highs and rising health care costs, we can’t afford to wait for reform.”
“A lifesaving procedure shouldn’t cost your life savings,” Folwell said. “Families need protection from the weaponization of medical debt, and the first step is transparency. This bill would stop hospitals in the cartel from hiding their prices, and it would prevent hospitals from breaking patients’ kneecaps when they can’t afford to pay.”
Folwell said one in five families is in medical debt collections while the majority of hospitals fail to translate tax exemptions they receive into financial assistance for those in need. Instead, some hospitals billed millions to poor patients and encouraged patients to open credit cards for medical debts, he said.
A similar version of this bill died last year in the House. At the time, hospitals pushed back on Folwell’s claims. “To suggest that hospitals ‘weaponize’ medical debt is nothing but political grandstanding,” a spokesperson for the N.C. Healthcare Association trade group said, according to The Associated Press. “Hospitals do more than any other part of the health care field to assist vulnerable patients.”
The bill’s sponsors include Republican Sens. Joyce Krawiec, Carl Ford and Jim Burgin, Republican Reps. Edward Goodwin, Charles Miller and Tricia Cotham, who recently switched parties, and Democratic Rep. Garland Pierce.
More about the bill
This bill would require large health care facilities, such as hospitals, outpatient clinics, ambulatory surgical centers and more, to develop a written financial assistance policy which would need to include how charges to patients are calculated and how patients can apply for financial assistance.
It would also establish steps a large health care facility must take before seeking payment for any emergency or medically necessary care, largely requiring facilities to help patients use or apply for financial assistance, whether that be via an insurance screening or determining aid under the facility’s financial assistance policy.
Aid under the facility’s financial assistance policy, dubbed a “medical debt mitigation policy,” would range from no cost to discounted costs, based on income. This aid could be used for any charges for health care services not covered by insurance and billed to the patient.
Facilities would need to publicize this policy and provide it to any patient going through collections, including with translations if necessary.
The bill also describes how an application for aid should be handled, with a receipt response required within 30 days and a reply to the petition within one year of the first bill date.
It also requires medical debt collectors to cease collection until notified by the facility of the application outcome. Late fees or interest charges to patients eligible for aid would be barred, and collectors would need to reverse any action taken against a person later found eligible for aid, such as deleting negative credit reports and dismissing lawsuits.
The bill sets limits on actions collectors can take, such as barring them from causing arrest, garnishing wages or tax refunds and foreclosing people’s real estate property. It also requires collectors to wait 180 days after the first medical debt bill has been sent out before taking “extraordinary collection actions” such as selling the debt to another party or affecting credit.
Collectors would also be prohibited from credit reporting of unpaid debts within one year after a patient is billed.
The bill deems parents and guardians jointly liable for any medical debts incurred by minors and shields family members from medical and nursing home debts incurred by a spouse or parent.
Enforcement of this bill would fall under the attorney general’s purview.
