NC Senate limits caps on medical debt interest and limits aggressive collection techniques

Published April 27, 2023

By Lynn Bonner

A bill that would limit aggressive medical debt collection tactics got its first affirmative vote in the legislature Thursday as it moved through a Senate committee with little discussion.

Treasurer Dale Folwell, a Republican running for governor, has been promoting the “Medical Debt De-Weaponization Act” for months at community gatherings statewide. 

The bill would prohibit medical debt collectors from foreclosing on property or garnishing wages. Large health care facilities, including hospitals, ambulatory surgical centers, and  outpatient clinics with annual revenues of at least $20 million, would have to post price information on their websites  make sure patients know of financial assistance policies. The bill caps the interest on medical debt. 

Folwell is a longtime critic of hospitals’ finances, claiming they don’t make public their pricing information as required under a federal rule, don’t provide charity care equal to the cost of their tax breaks, and turn unpaid bills over to debt collectors who use aggressive tactics to get the money.

Treasurer Dale Folwell, a Republican running for governor, has been promoting the “Medical Debt De-Weaponization Act” for months. He was back at the legislature this week. (Photo: Screengrab from legislative hearing.)

Last year, the Urban Institute reported that counties in North Carolina have among the highest shares of adults who can’t pay their medical bills on time. Greene County and Lenoir County were numbers 2 and 3 in the nation with the highest levels of medical debt in August 2021.  Anson County ranked 5th. About 45% percent of adults in Greene and Lenoir had medical debt in collections. 

Most of the counties with the highest medical debt were in states that had not expanded Medicaid. The legislature voted this year to expand Medicaid, but it does not take effect until a state budget is approved. 

A House committee considered a medical debt bill last year that Folwell endorsed, but it did not get a vote. Last year’s bill was much more expansive, and would have provided some patients with free hospital care, NC Newsline reported.  Patients with family incomes up to 600% of the federal poverty level would have received discounted care, under last year’s proposal. 

This year’s bill is set to go through  three more Senate committees before it gets to a vote of the full Senate. 

The NC Healthcare Association, which represents hospital systems, said it opposes the bill because the added regulations are unnecessary, association spokeswoman Cynthia Charles wrote in an email. Federal regulations already protect patients from aggressive collection tactics, she wrote. 

The big factor in consumers getting bills they cannot pay are high insurance deductibles and other forms of cost-sharing, Charles wrote. 

Solutions to the problem of medical debt should include ensuring more people have health insurance and that people with coverage understand how to use it, that hospitals receive adequate payment for services, and that insurance companies are held accountable for making sure policyholders understand their coverage, Charles wrote.