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New York City Launches Ambitious Program to Erase Medical Debt
Edited by: TJVNews.com
In a groundbreaking move, New York City Mayor Eric Adams’ administration is embarking on a sweeping program aimed at wiping out potentially hundreds of millions of dollars in medical debt owed by patients to hospitals and other healthcare providers, as was reported by the Post. The initiative, set to be launched in partnership with the national not-for-profit group Medical Debt Resolution/RIP Medical Debt, is a significant step towards providing financial relief to those burdened by medical bills.
The process involves RIP Medical Debt acquiring the medical debts from hospitals at a fraction of their face value and subsequently paying them off using a combination of private donations and public funding, according to the Post report. As the only entity in the United States that acquires and abolishes medical debt owed by individuals in financial hardship, RIP Medical Debt operates in a manner that is tax-free to program recipients. This approach provides a much-needed lifeline to patients struggling to cope with their medical expenses.
The New York City Health Department, responsible for overseeing 11 municipal hospitals and 70 clinics, stands to benefit from the program as well. The Post report indicated that without this debt relief initiative, medical providers might not receive full or any payments for the debts owed to them, putting further strain on the city’s healthcare system. As the largest provider for indigent patients in the city, the Health+Hospitals agency faces significant financial challenges, making this program all the more critical, the Post report said.
While the specifics of the funding from the city to initiate the program remain undisclosed, it is clear that RIP Medical Debt will act as the intermediary between funders and hospitals to forgive medical debt. As was reported by the Post, only qualified residents experiencing financial hardship and meeting specific criteria will have their debt canceled. To qualify, individuals must earn less than four times the federal poverty level and have debts that exceed 5% of their annual income, the report added.
In recent times, medical debt has been a significant burden on vulnerable populations, with numerous cases of hospitals resorting to aggressive debt-collection actions against patients who are unable to pay. The Post report noted that the program’s financial assistance not only provides relief to those individuals but also benefits hospitals, which may have struggled to collect payments from patients facing financial hardship.
RIP Medical Debt’s previous partnership with Cook County in Illinois, where they acquired $79.2 million in medical debt benefiting nearly 73,000 residents, serves as a successful precedent. The Post report stated that nationally, the organization has already canceled an astonishing $9.8 billion in outstanding hospital bills for over six million American families.
“We only buy debt that has been pre-qualified,” the group says on its website, the Post reported. “We never collect on debt we purchase — only relieve it.”
Typically, patients get a letter that their debt is paid off afterward.
The program’s implementation in New York City has been hailed as a significant step forward by advocates and experts alike. 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, as was reported by the Post.
“We work directly with hospitals, including many that have been reluctant to sell patient accounts” to debt collectors, the group said, according to the Post report. “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.”
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, as was reported by the Post.
Elisabeth Benjamin, vice president of health initiatives at the Community Service Society Society in New York, praised the move and expressed hope that RIP Medical Debt would leverage its substantial platform to advocate for further changes in hospital practices, the Post report said. These changes could include providing financial assistance to struggling patients instead of resorting to aggressive debt collection methods.
“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 the paper said.
The current program also aligns with New York’s efforts to protect its residents from medical debt collection. A law passed during the COVID-19 pandemic bars hospitals from collecting medical debt after three years instead of the previously required seven years, as was noted in the Post report. Furthermore, a bill recently passed by the state legislature prohibits hospitals and medical providers from reporting medical debt to credit agencies. If signed into law by Governor Kathy Hochul, New York would become the second state, after Colorado, to provide such protection to its citizens.
The sweeping program launched by New York City’s administration showcases a commitment to ensuring the well-being of its residents and improving access to healthcare. By partnering with RIP Medical Debt, the city is taking a proactive approach to alleviate the financial burden faced by countless individuals, supporting its healthcare providers, and fostering a more equitable and just system for all.
As the program takes effect and debt is relieved for thousands of New Yorkers, the city sets an example for other municipalities and states to follow in their pursuit of fairer and more compassionate healthcare systems.
