CMS Approves North Carolina’s Medical Debt Relief Incentive Program

NORTH CAROLINA, July 29 - Millions of low- and middle- income North Carolinians are one step closer to medical debt relief. The U.S. Centers for Medicare and Medicaid Services (CMS) approved on Friday, July 26 Governor Roy Cooper and the NC Department of Health and Human Services’ plan to use the state's Medicaid program to incentivize hospitals to relieve more than a decade of existing medical debt for eligible North Carolinians and prevent accumulation of new debt going forward.

NCDHHS will now begin working with hospitals to implement the program, which has the potential to relieve a potential $4 billion in existing medical debt for people and families across the state.

“Unlike most other debts, medical debt is not intentional because people don’t choose to get seriously ill or have an accident,” said North Carolina Governor Roy Cooper. “Medical debts are often beyond people’s ability to pay, ruining their credit, keeping them from getting credit cards, loans and jobs and sometimes driving them into bankruptcy. That’s why we’re working with hospitals and federal partners to help relieve the burden of medical debt for North Carolina families.”

“Many people struggle with the burden of medical debt, which can cause them to hold off on getting the essential health care and services they need,” said NC Health and Human Services Secretary Kody H. Kinsley. “This debt relief program is another step toward improving the health and well-being of North Carolinians while supporting financial sustainability of our hospitals.”

Each hospital in North Carolina can elect whether to participate in the program. Hospitals that choose to meet the eligibility conditions, including medical debt relief, will receive a higher level of Medicaid reimbursement under the Healthcare Access and Stabilization Program (HASP). Hospitals that choose not to implement the policies are eligible for base HASP payments.

Hospitals that opt in must implement the following policies as a condition of eligibility for enhanced HASP payments: 

• Relieve all medical debt deemed uncollectible dating back to Jan. 1, 2014, for any individuals not enrolled in Medicaid with incomes at or below at least 350% of the federal poverty level (FPL) or for whom total debt exceeds 5% of annual income.  
• Relieve all unpaid medical debt dating back to Jan. 1, 2014, for individuals who are enrolled in Medicaid.  
• Provide discounts on medical bills of between 50-100% for patients with incomes at or below 300% FPL, with the amount of the discount varying based on the patient’s income.
• Automatically enroll people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening and income validation approach. 
• Not sell any medical debt for consumers with incomes at or below 300% FPL to debt collectors.  
• Not report a patient’s debt covered by these policies to a credit reporting agency.

Participating hospitals will relieve all outstanding debt owed by current Medicaid enrollees, dating back to Jan. 1, 2014. Other individuals who are not enrolled in Medicaid but have incomes less than or equal to 350% of the FPL, currently $90,370 for a family of three, may also qualify for medical debt relief. Patients of participating hospitals will not need to take any actions to benefit from medical debt relief. The goal of the program is for eligible North Carolinians to begin to see relief for existing medical debt over the next two years.

NCDHHS has partnered with Undue Medical Debt to support participating hospitals and help them identify medical debt that is eligible for relief. Additional information is available in the Frequently Asked Questions on North Carolina medical debt relief.