Harris announces new actions to alleviate medical debt in North Carolina

These actions include issuing advisories to prevent debt collectors from targeting families with illegal medical debt collection tactics and cracking down on certain collectors. The new efforts could have a major impact in North Carolina, where as many as three million people are affected by medical debt. 

Vice President Kamala Harris announced a series of actions on Tuesday aimed at tackling medical debt and addressing illegal practices committed by third-party debt collectors—actions that may help North Carolinians affected by medical debt. 

These actions include attempting to prevent debt collectors from targeting families with illegal medical debt collection tactics, cracking down on certain collectors, and collecting evidence and data on medical debt in the US.

In one of Tuesday’s actions, the Consumer Financial Protection Bureau (CFPB) released an advisory to prevent families from being targeted by illegal medical debt collection tactics.

The advisory clarifies the responsibilities of debt collectors to confirm that debts are “accurate, valid, and substantiated before engaging in collection actions,” and makes clear that debt collectors are violating federal law when they collect inaccurate or legally invalid medical debts.

“These illegal practices include double-dipping to get paid for services already covered by insurance, hounding consumers to pay fake or exaggerated charges, misrepresenting consumers’ rights to contest bills, and collecting on debts without documentation that the amount is actually owed,” according to a press release from the CFPB. “The CFPB’s action aims to protect consumers from careless or predatory practices that can lead to inflated health care costs.”

CFPB Director Rohit Chopra said the advisory was necessary to ensure Americans are protected from unfair collection practices. 

“Medical billing is often riddled with errors, including inflated or duplicative charges, fees for services the patient never received, or charges already paid,” Chopra said. “The CFPB is taking action to ensure that Americans are not unfairly chased by debt collectors over unsubstantiated or invalid medical bills.”

The bureau also released an advisory for consumers, clarifying what they can do when they believe they’ve been improperly billed or had improper or illegal collection actions issued against them.

The CFPB also released a blog post Tuesday highlighting billing issues that can occur when non-profit hospitals fail to provide financial assistance to patients who are eligible. Additionally, the agency has stated that it intends to “crack down” on debt collectors that collect on debt that is not owed by patients.

“As someone who has spent my entire career fighting to protect consumers, I am proud to announce today’s new actions to build on our work to reduce the burden of medical debt by increasing pathways for relief and cracking down on predatory debt collection tactics,” Harris said in a statement Tuesday. 

Tuesday’s actions coincided with a White House event which featured individuals from several different states, including North Carolina, sharing their stories surrounding medical debt. Darcy Guill, from Aiden, NC, underwent emergency hernia surgery last year. A few months later, she received a $4,000 bill from the hospital for the amount her plan didn’t cover. She said she is paying $123 per month on the bill. 

“I didn’t ask to have a hernia,” she told NBC News. “I used to be an elementary school teacher and have not had a lot of money in recent years.”

Guill now volunteers with the nonprofit Down Home North Carolina to help her fellow North Carolinians gain access to Medicaid, which she was able to do late last year when the state expanded the program.

“We have a ton of people with medical debt in the state because our insurance plans didn’t cover our medical bills,” she said. 

In North Carolina, as many as three million adults likely carry medical debt, according to Kaiser Family Foundation polling and credit bureau data, and about 8% of residents have medical debt in collections, according to an Urban Institute analysis.

In addition to the CFPB’s actions, the Department of Defense proposed a new rule Tuesday aimed at providing financial relief for civilians receiving care at military medical treatment facilities. If finalized, the rule would implement certain fee reductions and catastrophic cap waivers; the “catastrophic cap” is the maximum amount a person pays out-of-pocket for covered services in a given year.

The Department of Health and Human Services has also begun collecting evidence and data on medical debt in the US to inform future actions to address the burden of medical debt. 

All of these actions could potentially alleviate the financial burden of medical debt in North Carolina. 

Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, told NBC News that the reason North Carolinians shoulder high amounts of medical debt is because of recent hospital mergers that have stifled competition in the industry. 

“When hospitals merge, prices go up,” he said.

Additionally, North Carolina law allows hospitals to sue patients for medical debts with legal judgments lasting up to two decades. Those judgements can carry up to 8% interest rates and can automatically act as liens against patients’ homes. 

According to a study conducted by Duke University School of Law faculty and North Carolina’s Office of State Treasurer, North Carolina hospitals sued 7,517 patients and their family members from Jan. 2017 to June 2022. Many of these cases ended in default judgments in state district courts, and the interest charges and other added fees accounted for 35% of the $57.3 million in total judgments owed by those patients.

However, after growing pressure, one major health care system in the state recently decided to wipe out all existing judgments against patients. Atrium Health, which serves nearly seven million North Carolina residents, announced last month that it was wiping out 11,500 liens across its six-state footprint. 

In a press release announcing the change, Advocate Health, Atrium’s parent organization, described the action as part of a “multi-year initiative to overhaul the system’s approach to medical debt.”

Forward progress on solving the crisis of medical debt

Nationwide, about 100 million Americans owe over $220 billion in medical debt, according to the CFPB. And over 40 million Americans—1 in 5 adults—owe about $88 billion in medical debt in collections, making medical debt the greatest overall source of debt in collections—more than credit cards, utilities, and auto loans. 

Both Harris and President Biden have repeatedly addressed the negative impacts of medical debt during their time in office, and put forth potential solutions. 

In June, Harris announced the CFPB’s proposed rule to remove medical debt from the consumer credit reports of 15 million Americans. She’s also said she plans to work with states to cancel medical debt for millions more Americans, if elected president in November. 

Barring medical bills from appearing on credit reports would help tens of millions of Americans who have medical debt by eliminating information that can depress their scores, and therefore make it more difficult for them to get a job, rent an apartment, or secure a car loan. 

“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said in her statement Tuesday. “That is why I have worked to cancel hundreds of millions in medical debt to date – part of our administration’s overall plan to forgive $7 billion by 2026.” 

In North Carolina, there’s been even more significant movement. 

In September,  Gov. Roy Cooper announced that nearly 100 hospitals in the state had agreed to participate in the Medical Debt Relief Incentive Program, which he says will incentivize hospitals to eliminate $4 billion in medical debt for two million low- and middle-income North Carolinians over the next two years. 

Participating hospitals will have until July 1 of next year to forgive debts dating back to Jan. 1, 2014.

Starting in 2025, the program will take steps to prevent the accumulation of new debt by curbing certain aggressive debt collection practices, such as adding on high interest rates and fees to unpaid bills, or selling the debt to third-party collection agencies. 

Participating hospitals will also forgive all medical debt for people who aren’t on Medicaid, but have incomes at or below 350% of the federal poverty level — $52,710 annually for an individual, and 109,200 annually for a family of four — or if their total medical debt is more than 5% of their yearly income. Additionally, the policy will automatically enroll eligible patients into financial assistance programs, offer discounts on medical bills based on income, and prevent the sale of medical debt to collectors for those below 300% of the federal poverty level. It’ll also ensure that covered debts aren’t reported to credit agencies.

Harris worked closely with Cooper to both develop the plan and announce it. 

According to Neale Mahoney, a professor of economics at Stanford University who served on the White House National Economic Council in 2022 and 2023 and other experts, the program could serve as a model for something Harris could implement nationwide if elected in November.