A national charity will for the first time buy medical debt, totaling $ 278 million, directly from hospitals, a push to speed up financial aid to patients, many of whom should not have been billed at all under the hospital financial aid policies.
RIP Medical Debt, which uses donations to clear unpaid medical bills, has reached an agreement with nonprofit Ballad Health, a dominant hospital system in Tennessee and Virginia, to buy the debt owed by 82,000 patients to low income. Many likely qualified for free care under Ballad’s policy, but did not get it, Ballad executives involved in the deal said. Patients were running out of apps, they said.
RIP Medical Debt will remove the total amount and is expected to notify households of the debt relief this month. Some invoices are 10 years old.
âThey still owe this money,â said Allison Sesso, executive director of RIP Medical Debt. “It’s a burden on them.” Up to one in five residents in some zip codes have Ballad debt that will be relieved, she said.
The agreement highlights the shortcomings of financial aid programs for nonprofit hospitals, which receive federal, state and local tax breaks in return for giving back to their communities. State attorneys general, lawmakers and patient advocates have criticized hospitals for aid programs they say are difficult to enforce and poorly promoted.
âA lot of times you’ll see ‘You might be eligible for financial aid’ in the fine print, but it’s pretty hard to find,â said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York. âIt’s like playing ‘Where’s Charlie’. “
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Maryland recently added new restrictions on the collection of hospital debts, after a state report said hospitals forgave less than half of their fees for patients eligible for free care under state law in 2018.
The Washington state attorney general has sued hospitals over patient access to financial assistance. Under a 2019 consent decree, nonprofit hospitals reimbursed patients about $ 1.6 million.
Hospitals nationwide are coming under intense scrutiny in their billing and pricing practices, with new rules this year requiring hospitals to publish prices they previously negotiated in secret with insurance companies. The Trump administration’s policy was aimed at increasing transparency for consumers, but many hospitals did not comply. According to Turquoise Health Co., a startup working with the new public pricing data, Ballad hospitals have generally complied with the new transparency regulations.
Hospitals can sell unpaid bills to debt buyers in the secondary debt market, where RIP Medical Debt typically buys wallets for pennies on the dollar. Terms of the agreement with Ballad were not disclosed.
RIP Medical Debt is looking to make more direct deals with hospitals, Ms. Sesso said, allowing the charity to ease its debt faster.
âA lot of times you’ll see, ‘You might be eligible for financial aid’ in the fine print, but it’s pretty hard to find. It’s like playing “Where’s Charlie”.
Hospital officials say some patients who might qualify for financial assistance never apply. Ballad executives said others are not filling out the requests, which provide hospitals with the patient data financial auditors need to write off debt as charity.
Ballad Hospitals have reported about $ 49.6 million in unpaid debts from patients who may be eligible for financial assistance, but have received bills instead, according to its latest Internal Revenue Service documents. Ballad wrote off $ 37.7 million for patients eligible for financial assistance in the same year.
Ballad said his financial advisers are educating patients about financial aid options, which are also posted on its website and on signs in its buildings. Financial advisers also help patients collect taxes and bank statements for its application, which requires two years of tax returns, recent pay stubs, and disclosure of monthly household expenses and assets.
“We are trying to provide relief to these patients,” said Shana Tate, senior vice president of Ensemble Health Partners, an entrepreneur who manages Billing for Ballad.
Federal requirements for nonprofit hospitals to provide financial assistance and educate patients about it are limited. Nonprofits have the freedom to define eligibility as they see fit and can also create their own processes and forms, said Jenifer Bosco, an attorney at the National Consumer Law Center. They are supposed to take steps to alert patients, including making their policies widely available on their websites, Ms Bosco said. State rules regarding financial aid to nonprofit hospitals vary.
Hospitals increasingly rely on third-party data â where patients live; credit rating reports; enrolling in public programs, as an alternative to automatically enrolling patients for financial aid, said Keith Hearle, president of VeritÃ© Healthcare Consulting LLC, which advises nonprofit hospitals. âIt can be a data point,â said Hearle, who is also an advisor to RIP Medical Debt.
Alan Levine, chief executive of Ballad, said the system has made changes to expand its financial support since the 2018 merger that created Ballad. Federal antitrust regulators opposed the deal, but it was reached under Virginia and Tennessee laws, with regulatory oversight of operations, including financial aid.
State regulators demand that Ballad spend more than before the merger on free medical care, discounts for low-income patients, and losses for patients on Medicaid, the safety net insurance that typically doesn’t pay enough to cover the costs. Ballad failed in 2020, with demand falling due to the pandemic and the expansion of Medicaid in Virginia, state records show.
He has been criticized by the public for his use of lawsuits to collect medical debts. Ballad is looking to the courts because he needs income from patients deemed able to pay, said Anthony Keck, the system’s population health manager. This helps offset losses from uninsured or Medicaid patients.
Ballad in 2018 expanded eligibility for free care to patients with incomes at or below 225% of the federal poverty line, or an annual income of $ 28,980 for one person, Mr. Levine said. This is up from the previous line, which was 200% of the federal poverty line, or an annual income of $ 25,760.
Those who earn too much but earn less than 450%, or $ 57,960, may qualify for discounts, he said.
Late last year, Ballad also began screening patients without a full application for financial assistance, its executives said. Ballad first asks patients to apply for financial assistance; it invoices those whose requests have not been fulfilled. A new filtering is applied before Ballad sends the unpaid invoices to the collection agencies.
This will reduce the type of lingering debt that Ballad has agreed to sell to RIP Medical Debt, Mr. Levine said. For others, the agreement with RIP Medical Debt will erase previous invoices. âWe’re wiping the slate clean,â he said.
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