RALEIGH, N.C. (AP) — Federal Medicaid regulators have approved a proposal by North Carolina Gov. Roy Cooper’s administration to offer financial incentives to many of the state’s hospitals to implement policies that will eliminate medical debt for patients and curb future debt.
Cooper’s office announced Monday that the Centers for Medicare & Medicaid Services approved the plan submitted by the state Department of Health and Human Services last weekend.
Cooper and health department leaders say the plan is the first of its kind in the nation to offer new financial incentives to hospitals, wipe out debt for low- and moderate-income patients and help residents avoid debt.The effort was also praised Monday by Vice President Kamala Harris, the presumptive Democratic presidential nominee.
The Cooper administration estimates that the plan could relieve 2 million low- and moderate-income residents in the state from $4 billion in debt, though Cooper said hospitals likely wouldn’t recoup much of the money anyway.
“This debt relief program is another step toward improving the health and well-being of North Carolinians and supporting the financial sustainability of our hospitals,” North Carolina Health and Human Services Secretary Cody Kinsley said in a statement.
The proposal, which DHHS is currently working to implement, focuses on enhancing Medicaid reimbursement payments available to acute care, rural or academic hospitals through what is called the Health Care Access and Stabilization Program.
The state Legislature approved the program last year with a provision that would expand Medicaid coverage to working adults in the state who don’t qualify for traditional Medicaid, something Cooper has long sought.
The roughly 100 hospitals participating in the program can get higher levels of reimbursement if they voluntarily forgive medical debt, dating back to the beginning of 2014, for patients currently on Medicaid, as well as non-enrollees who earn below a certain amount or whose debt exceeds 5 percent of their annual income.
Hospitals will now have to help low- and moderate-income patients (for example, a family of four making less than $93,600 a year) by offering steep discounts on medical care. Hospitals will have to automatically enroll patients in charity care programs and agree not to sell debt to debt collectors or report unpaid bills to credit bureaus. Interest rates on medical debt will also be capped.
When Governor Cooper announced the proposal on July 1, the North Carolina Medical Association, which lobbies for nonprofit and for-profit hospitals, said it and its members needed more time to consider the proposal and would await a response from the federal government.
During a roundtable discussion about the initiative in Winston-Salem last week, Cooper said hospitals have had a “somewhat negative reaction” to the initiative, but added that a number of hospitals have worked with us to give advice on how to write protocols to help them if they decide to adopt the initiative.
State officials have said debt relief for individuals from the program will likely take place in 2025 and 2026. With Cooper’s term ending in January, the future of the program may depend on the winner of November’s gubernatorial election.
Other state and local governments are using money from the federal government’s American Rescue Plan to buy up or forgive residents’ debts for a small amount of money.
The vice president’s news release supporting the North Carolina effort did not specifically mention Cooper, who is seen as Harris’ running mate this fall. Harris highlighted her work with President Joe Biden to forgive more than $650 million in medical debt and eliminate more.
“Last month, I called on states, cities and hospitals across the country to join us in forgiving medical debt,” she said, “and I applaud North Carolina for setting an example for other states to follow.”
