Lawmakers discuss bill to reform how, when medical debt can be collected

State Rep. Edward Goodwin remembers visiting the emergency room after driving a 16-penny galvanized nail through his foot.

“I walked in there, and the hallway was full of indigent charity cases when I got there,” Goodwin told fellow lawmakers Tuesday. “The only difference between me and them was I had a health care plan and I could pay for it.”

Even with a health care plan, Goodwin said it cost him about $1,500 for an X-ray of his foot and a tetanus shot.

“None of the indigent care people out there could have done that,” said Goodwin, R-Chowan. “The hospitals now are not checking, they’re not asking, ‘Can you pay for this? Do you want us to help you figure out a way to pay for this, we’ve got a system here?’ They just say, ‘Would you like to have this credit card to make this payment?’”

Goodwin told the anecdote to lawmakers on the state House Banking Committee as a way to convince them to pass a bill that would do more to help low-income people who can’t afford their care.

House Bill 1039, which Goodwin is co-sponsoring, would require hospitals to do more to assess whether patients are eligible for free care, and would limit how and when they can turn over a patient to collections. It also would require plain-language disclosure of what the needed care will cost. The bill would also require a one-year waiting period before medical debt can be reported to a credit bureau.

The bill is part of a broader push by some state officials to ensure that state hospitals provide sufficient charity care instead of billing low-income patients.

North Carolina’s nonprofit hospitals bill poor people in the state each year for millions of dollars in medical care that should be written off as charity costs covered by lucrative tax breaks, according to a January report by the Office of the State Treasurer. The billings are more common in North Carolina than other states, and a “lack of transparency obscures” how common they really are and “existing law offers little protection to patients and taxpayers,” the report said.

State Treasurer Dale Folwell, who oversees the State Health Plan for government employees, compared health care costs in the state to an onion on Tuesday. “The more you peel it, the more you cry,” Folwell told lawmakers.

Folwell said that, too often, nonprofit hospitals don’t check to see whether people are eligible for charity care, a service those hospitals are required to provide to keep their tax-exempt status. Instead, Folwell said, hospitals push patients toward medical credit cards with high-interest rates, even patients who can’t afford to pay them off and whose credit scores will be ruined.

“When they don’t pay that bill,” Folwell said, “they are punished and their credit scores are weaponized, putting them in a situation where they cannot see themselves out of poverty, and, I say this from personal experience, permanently, in many cases and generationally, stunting their upward mobility in this world. That’s why I’m asking for your support.”

Cynthia Charles, a spokeswoman for the North Carolina Healthcare Association, said the group hasn’t taken a position on the bill. But she added in a statement that “to suggest that hospitals ‘weaponize’ medical debt is nothing but political grandstanding.” She said IRS rules require low-income patients to submit financial documents to qualify for charity care, and many patients choose not to do that.

“Enforcement is the responsibility of the United States Treasury,” Charles said. “North Carolina’s nonprofit hospitals annually submit audits to state and federal tax regulators who determine that hospitals meet their tax status obligations. Noncompliance can result in a revocation of a hospital’s tax-exempt status, which has never happened in North Carolina.”

In addition to Goodwin, Rep. Bobby Hanig, R-Currituck; Rep. Howard Hunter III, D-Hertford; and Rep. William Richardson, D-Cumberland, are the primary sponsors of the bill.

“Health care is getting more costly all along,” Goodwin said. “Less and less people can afford it, but they still have to have it and they still have to be treated, but the way they’re being treated now and the ways bills are being paid and things that are done do not seem proper to me.”

Rep. Keith Kidwell, R-Beaufort, the chair of the committee, said that he, Goodwin and Rep. John Szoka, R-Cumberland, and Watts would meet to “perfect the bill” before bringing it back before the committee. The measure isn’t likely to advance during the short session, which is expected to end next month.

Szoka said that he’s against the bill in its current form, but  he's not against the motives of the bill sponsors. “They're trying to do something good,” he said. "I just think that at this point, the bill needs a whole lot of work.”

He added: “I don't want to see our hospitals get turned into debt collectors. I want our hospitals to provide medical care. If we can do that, and satisfy the goals of the bill sponsors, I'll be fine with it. But I think it's a little bit too much in one bill."