Bad Credit

Medical Debt Disarmament Act Discussed in NC House Banking Committee

A discussion took place in the NC House Banking Committee on Tuesday on the Medical Debt Disarmament Act, which is billed as a law that would protect those struggling to pay their medical debt. HB 1039 seeks to establish transparent parameters around the provision of charitable care and to limit the ability of large medical institutions to charge unreasonable interest rates and employ unfair tactics in debt collection.

“I’ve found that many times a (charitable care) patient is convinced to take a medical credit card,” said Rep. Ed Goodwin, R-Chowan, one of the bill’s lead co-sponsors. . “They’re told they can use the credit card to pay for their medical bills, gas, groceries, or whatever they want. Now you’re tackling a needy charity case. Predatory lending is the way which I refer to this.

Rep. Howard Hunter, D-Hertford; Rep. Bobby Hanig R-Currituck; and Rep. Billy Richardson, D-Cumberland, are the bill’s other main co-sponsors.

The bill is due in part to the reaction of lawmakers to the October 2021 report from the Johns Hopkins Bloomberg School of Public Health and the North Carolina State Health Plan that found most North Carolina hospitals are not meeting their charitable care commitments. The report found that hospitals received more than $1.8 billion in tax relief, while “charitable care” expenditures did not exceed 60% of the estimated value of the tax exemption in most of the largest state health systems. About 25 of more than 100 nonprofits spent more than the tax breaks on charitable care.

Perhaps the bill’s biggest champion is state treasurer Dale Folwell. So much so that he got into medical debt collection to see what people face when this happens to them. “Last fall, I went for a contrast MRI, he says. “I was there for 8 minutes, and it was $6,000 and they wanted $1,500 at the point of sale. I gave them $500 because I voluntarily wanted to go into debt collection to see how many phone calls, texts, and letters I would receive each day based on this particular medical experience.

He said he could pay the medical bill today, but he really wants to figure out what’s going on with the situation.

Folwell said this bill is the moral thing to do and has nothing to do with politics, race or gender and that credit scores must stop being weaponized against people who were sick at home. era, as it may eventually destroy their upward mobility, perhaps for generations.

A report released by the Treasurer’s Office in January showed low-income patients were charged when they were eligible for charity care. The report, compiled by the North Carolina State Health Plan and the National Academy of State Health Policyand reviewed by researchers at Rice University, indicates that in 2019, 12 to nearly 30% of bad debts, or $150 million, were attributed to poor patients eligible for free or reduced-cost charitable care , despite the lucrative tax breaks given to nonprofit hospitals. received to compensate for care provided, valued at more than $1.8 billion in 2020.

Folwell said not only do credit scores determine what a person will pay for a cell phone, basic liability insurance on a car, renting or buying a home, but it can also affect the getting a job.

“I chair the state banking commission,” he said. “I can tell you that there are certain jobs people can’t get at certain financial institutions because of their credit score. Not because they committed a crime, but because they got sick. He also said people had liens on their homes due to medical debts.

The legislation would require health care facilities to develop a medical debt mitigation policy that would build on an existing framework of financial relief plans under the federal Affordable Care Act. It would establish a set of steps that must be followed before someone is charged, including posting and advertising the policy, posting prices online using easy-to-understand language, screening for patients for eligibility for public assistance programs and the obligation of charitable care for patients at 200% of the federal poverty level or less.

It would also require a clear pricing structure to provide a transparent sliding scale of policy discounts for patients between 200% and 400% of the federal poverty level and a predictable maximum amount that could be billed over a 12-month period for such patients. The bill would prohibit interest charges for patients who receive policy rebates, suspending debt collection on insurance calls for underinsured patients.

The policy would also protect family members from medical and nursing home debts incurred by a spouse or parent, require itemized receipts for payments, and prohibit filing for creditworthiness of unpaid debts within one year of being billed. a patient.

Patients who also prove eligible for discounts after being billed could receive a discount.

Rep. John Szoka, R-Cumberland, slammed the bill and said it’s ‘not ready for prime time’ with a number of things that bothered him, including people indigents receiving credit cards. “I would love to see proof of that,” he said. “Care Credit cards cannot be used for groceries. They can be used for veterinarians (veterinarians), doctors, etc. “.

He also disagreed that bad credit can hurt people generationally because he works in residential mortgages and sees credit scores all the time and there is ways for people to fix their credit ratings. He also said medical debt is reviewed differently in the credit scoring system by the three credit bureaus, Experian, Equifax and TransUnion. “They don’t count as much and sometimes they don’t count at all,” he said. “When you say the credit score is weaponized, that’s an interpretation. If something shows up on your credit score that you don’t agree with, you can dispute it.

Szoka said that the Consumer Financial Protection Bureau reviews medical debt and credit scores and tries to resolve the issue. He also said it should be up to social services to determine if a person has the ability to pay a medical bill, not a hospital finance clerk.

The draft law will be the subject of an in-depth examination before being referred to the Banking Commission.