NYC Launches Program to Wipe Out Millions of Dollars in Patients’ Medical Debt

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Mayor Eric Adams’ administration is launching a sweeping program to wipe out potentially hundreds of millions of dollars in medical debt that New York City patients owe to hospitals and other health-care providers, The Post has learned. 

The city Health Department has entered into an agreement with the national not-for-profit group Medical Debt Resolution/RIP Medical Debt.

RIP Medical Debt acquires the patients’ debt from hospitals at a fraction of face value and pays it off with private donations raised, as well as public funding.

“RIP Medical Debt will act as the third party between funders and hospitals to forgive medical debt,” the Health Department said in a public notice.

“RIP Medical Debt is the only entity operating in the United States that acquires and abolishes medical debt owed by individuals who are in financial hardship and on a basis that is tax-free to program recipients.”

The city, whose Health+Hospitals agency runs 11 municipal hospitals and 70 clinics, stands to benefit as well, since its medical providers might not get back as much if anything on the debt they’re owed without such a move. 

The system handles the largest number of indigent patients in the city.

The Big Apple’s Health Department and City Hall did not immediately answer Post questions about the plan, such as spelling out how much funding the city could be kicking in to start the initiative — thus essentially helping to pay itself back — or how many New Yorkers would be covered and how much debt would be cancelled.

Mount Sinai West hospital.
NYC’s Health+Hospitals agency handles the largest number of indigent patients in the city.

RIP Medical Debt contacts hospitals directly and negotiates the sale or donation of medical debt. 

The debt is cancelled for residents who qualify based on financial hardship and other criteria.

Those who qualify must earn less than four times the federal poverty level and have debt that exceeds 5% of annual income.

The across-the-board current US poverty level for individuals is $14,580 annually and $30,000 for a family of four, for example, so a single person would have to earn less than $58,320 and a family of four below $120,000 to qualify for that requirement. Those levels could vary, including upward in regions such as New York.

Ambulance.
Between 2015 and 2020, more than 54,000 New Yorkers were sued by hospitals, “many of whom should have been eligible for financial assistance.”

“We only buy debt that has been pre-qualified,” the group says on its website. “We never collect on debt we purchase — only relieve it.”

Typically, patients get a letter that their debt is paid off afterward.

The group is currently partnering with Illinois’s Cook County, which includes the city of Chicago, to try to negotiate the purchase of up to $1 billion in medical debt for residents and cancel it. 

Officials there tapped $12 million in federal funds to start the debt-relief program.

The New York state Capitol is seen as Assembly members return after the regular legislative session ended to work on unfinished business in Albany.
The New York state Capitol is seen as Assembly members return after the regular legislative session ended to work on unfinished business in Albany on June 20.

Cook County recently announced that the Medical Debt Relief Initiative has already acquired $79.2 million in medical debt to benefit 72,989 Cook County residents.

Nationally, RIP Medical Debt has cancelled $9.8 billion in outstanding hospital bills for 6,633,189 American families, it says.

RIP Medical Debt was founded in 2014 by two former debt-collection executives.

Hospitals are tax-exempt organizations that are required under state law to provide a level of charity care to the communities they service, which could include patients who are unable to pay bills. 

Pharmacy.
RIP Medical Debt has cancelled $9.8 billion in outstanding hospital bills for 6,633,189 American families.

In New York, Medicaid spending for the needy soared a whopping $5.2 billion, or nearly 23%, to $27.2 billion, in fiscal year 2021-22, with the immense financial burden shared by federal, state and local taxpayers.

RIP Medical Debt points out that participating in its program is beneficial to hospitals’ bottom line, since the patients usually can’t afford to pay back any of the debt, and this way, the group will pay providers at least a portion of what is owed.

“We work directly with hospitals, including many that have been reluctant to sell patient accounts” to debt collectors, the group said. “Healthcare organizations that donate or sell patient accounts to RIP can: Earn revenue from dormant bad debt accounts without subjecting patients to aggressive collections actions.”

Hospitals also can use the opportunity to deliver health equity to low-income and financially strapped patients as part of their “charity care programs and better serve their communities,” the group said. 

The Community Service Society Society in New York has issued stinging reports on New York hospitals that have sued patients who failed to pay their bills. 

Between 2015 and 2020, more than 54,000 New Yorkers were sued by hospitals, “many of whom should have been eligible for financial assistance,” the poverty-fighting group said.

CSSS analyses revealed that hospitals disproportionately sue patients who live in low-income zip codes or zip codes where the residents are mostly people of color.

Elisabeth Benjamin, vice president of health initiatives at the CSSS, praised the move by the city.

“This is amazing for the individuals whose debt is forgiven,” Benjamin told The Post on Sunday.

She added that she hopes RIP Medical Debt uses its enormous platform to push for changes in hospital practices, including by providing financial assistance to struggling patients instead of going after them with debt collection.

A New York law approved during the COVID-19 pandemic in 2020 bars hospitals from collecting medical debt after three years instead of seven years.  

In a related matter, hospitals and other medical providers in New York would be banned from reporting medical debt to credit agencies under a bill passed in June by the state’s legislature. 

Gov. Kathy Hochul, should she sign the measure into law, could make New York the second state, after Colorado, to bar medical debt from being collected by credit reporting agencies or included in a credit report.

Source: New York Post