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Folwell, county commissioners tout reforms for medical debt, hospital bills

Dale Folwell
Cotto
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State Treasurer Dale Folwell touted House Bill 1039, known as the Medical Debt De-Weaponization Act, at a public forum Tuesday in New Bern.

State Treasurer Dale Folwell touted House Bill 1039, known as the Medical Debt De-Weaponization Act, at a public forum Tuesday in New Bern.

The bill would reform hospitals’ pricing and debt collection practices, requiring them to screen patients for charity care, to post prices in plain language online, and provide a sliding scale of discounts for people under 400% the federal poverty level. The 11-page bill would also prohibit medical debt from being reported to credit bureaus for up to a year after a patient is billed and protect family members from taking on the medical debt of a spouse or parent.

The Medical Debt De-Weaponization Act, sponsored by State Representative Edward Goodwin, is one of many efforts across the U.S. to reform how hospitals do business.

A fifth of North Carolina residents have medical debt, according to an Urban Institute study, and the U.S. Census Bureau estimates 2 million North Carolina residents carry medical debt. The weight of the debt disproportionately falls on low-income families and communities of color. Uninsured and underinsured patients

Folwell said the overwhelming amount of debt is, in part, due to a lack of transparent pricing and consumer protections.

“Right now the hospitals don’t want to tell anybody what it’s going to cost,” he said. “All I want is three things: Tell people what healthcare costs, offer a level of Charity Care that is equal to the billions of dollars they receive in tax credits, and stop punishing people and weaponizing their credit score.”

The bill would require hospitals to adopt Medical Debt Mitigation Policies (MDMPs) that include eligibility criteria for financial assistance, the method for applying, billing and collections policy, and measures to publicize financial assistance programs. The bill also contains a “plain language” provision.

Financial assistance programs, known as charity care, apply to necessary care for uninsured and underinsured individuals.

North Carolina law does not require hospitals to provide a certain level of charity care, but facilities that provide charity care can be exempt from certain taxes. Hospitals in 2020 received 1.2 billion in tax exemptions and provided 60% of that to charity care measures. According to a report from the North Carolina State Health Plan, $150 million was charged to individuals who qualify for charity care.

Under this bill, each hospital's MDMP must provide patients with a household income below 200% of the federal poverty line to receive free care and discounts for households between 200% and 400%, for necessary medical care that is not covered by insurance. Any amount above $10,000 would be free for those receiving charity care, under this law.

“You’re already paying for it,” Greene County Commissions Derek Burress said about charity care. “The nonprofit hospitals get tax breaks in exchange for helping these needy individuals. … This bill is going to hold these health care facilities accountable.”

The Medical Debt De-weaponization Act proposes restrictions on debt collectors and the reporting of debt to credit bureaus. The bill would prohibit the reporting of unpaid debts within one year after a patient is billed and prevent wage garnishment and home foreclosure as a result of medical debt.

“They’re really taking someone and ruining their life,” Representative Edward Goodwin, who is a lead sponsor of the bill, said about the reporting of medical debt to credit bureaus and the practice of hospitals offering credit cards to pay for high medical bills.

The forum held at Tryon Palace was one of many for Folwell, who is touring the state to raise awareness of the bill. The Medical Debt De-weaponization Act was filed on May 24 and awaits a vote in committee.

Ryan is an Arkansas native and podcast junkie. He was first introduced to public radio during an internship with his hometown NPR station, KUAF. Ryan is a graduate of Tufts University in Somerville, Mass., where he studied political science and led the Tufts Daily, the nation’s smallest independent daily college newspaper. In his spare time, Ryan likes to embroider, attend musicals, and spend time with his fiancée and two cats.