Medical Debt Wiped Clean: Ballad Health Agrees to Deal With Nonprofit

$277,971,455 million worth of medical debt no longer exists in the Appalachian Highlands region.

WISE COUNTY – By the end of the month, 82,000 patients in the Ballad Health system will receive the letter of a lifetime. Starting next week, the healthcare system – with hospitals in Southwest Virginia and parts of Kentucky, North Carolina and Tennessee – will eliminate more than $277 million in medical debt for some former patients.

Now to be clear, it didn’t just go away. Ballad reached a deal with national nonprofit group RIP Medical Debt to make this happen. RIP uses donated funds to buy and then eliminate medical debt across the nation. As of June 17, they had paid off $4.5 billion during their seven year existance. What’s different in this case is how it happened, as it might serve as a model for the future.

Until last year, RIP had to work through collection agencies, the company’s executive director Allison Sesso said. They couldn’t just go up to a hospital system and offer to pay someone’s debt. Federal law wasn’t exactly clear if it was legal and nobody wanted to be the first test case. That meant for a nonprofit like RIP, they couldn’t pay off someone’s debt immediately when it occurred. They had to wait until it was turned over to a collection agency and then offer payment.

In 2020, however, that changed. The US Dept. of Health’s Inspector General announced that hospitals and doctors’ groups could sell or donate debt directly to nonprofits like RIP. Even so, since this was an “advisory opinion” and not a new law, it took a while to sort through the legal aspects. Ballad Health and RIP started work on this deal last year and only recently finished.

Reaching People Before The Problem Grows

It may seem like just a simple change, but being able to negotiate directly with hospitals makes a difference. For one, it’s a lot easier to help pay off a debt that’s just occurred. There’s no phone calls from debt collectors or negative reports on your credit. Even after you pay it off, medical debt stays on your credit report for seven years.

America’s system of financing and reimbursement for healthcare is “a disaster,” said Anthony Keck. He serves as Ballad Health’s population health officer. That means he focuses on individual patient care.

“The way that we get people coverage is a complete mess. There’s states [that] can determine who gets Medicaid and who doesn’t,” Keck said. “And so you have all these coverage gaps. And then the way that we pay for healthcare and actually pay doctors, pay hospitals, pay nursing homes and so on, that’s a big mess too. It doesn’t incentivize folks to keep people healthy. It incentivizes hospitals and doctors and everybody else to just do more.”

An estimated 42.9 million people in the US have unpaid medical debt. Both Keck and a 2019 JAMA Network article estimated 30% of American healthcare costs as spending waste.

“In the U.S. healthcare system, that means about a trillion dollars is being wasted,” Keck said.

It’s a problem Ballad is basically required to address. In 2018, when two regional hospital systems merged to form Ballad Health, a change was needed. In order to sign off, state officials in Tennessee and Virginia required the company to switch from a traditional hospital-based system to a community health improvement organization. That means working to find ways of lowering medical costs for patients in Southwest Virginia and Eastern Tennessee.

Solving The Problem of Medical Debt

Over the last two years, Ballad Health took steps to do that. First, they assisted patients with incomes up to 450% of the federal poverty level and who suffered with higher deductibles and co-pays some insurance companies required.

The measures raised eligibility for full charity from 200% to 225% of the federal poverty limit. They also reduced charges for urgent care services by 17% and increased self-pay discounts to 85% off charges.

The healthcare system also set up the Appalachian Highlands Care Network, providing free care and active case management to uninsured individuals in Ballad Health’s 29-county service area.

“An important thing about increasing access is just not making more services available in more places, but it’s making them more affordable,” Keck said. “Over the past few years, really, we’ve done a few things in terms of affordability.”

Presumptive Eligibility

Ballad Health also implemented presumptive eligibility. That means they eliminated paperwork requirements and automatically enrolled people in charity care programs.

In previous years, Keck noted that many individuals didn’t apply for Ballad Health’s charity care, despite their eligibility. Unfortunately, that tied the healthcare system’s hands.

“At that time, unless you applied for it, we had no way of knowing if you really needed access to charity care,” Keck said.

Keck expressed that some eligible individuals found the application process for charity care cumbersome. Some experienced issues accessing needed information, while others struggled with literacy issues or the stigma sometimes associated with charity.

Some of Ballad Health’s recent strategies aided patients, even if they didn’t request assistance.

“Presumptive eligibility lets us – at a point in the process – actually use publicly available data to qualify them to become eligible for charity,” Keck said. “And so they don’t get sort of caught up in collections and so on.”

A Win-Win Situation

Programs like the debt elimination from RIP, as well as additional patient payment aids, created what Keck called a “win-win” situation for the Ballad Health system.

“What it does is it wipes that slate clean for [82,000 of] our folks,” Keck said. “And then going forward, now that we’ve got all these other programs – we think we’ll have a lot fewer people in that situation”.

Similar to presumptive eligibility, the 82,000 individuals the RIP debt elimination impacted met certain requirements, the main one being that the patient was within 200% of the federal poverty level.

“It felt really good that we spent a year working on some very hard issues to be the first system in the country to do this because we know now that RIP is going to be able to go to other hospital systems around the country and say, ‘Look, we worked out all the kinks with Ballad Health in the Appalachian Highlands. You can do this too, and you can do it easier because they showed us the way,’” Keck said. “For this region to be a national leader in this, I think it feels good.”

Sesso agreed, saying she hopes other operations are as willing to work with RIP as Ballad.

“We encourage other community-minded doctors and hospitals to explore partnering with us,” Sesso said. “We can continue to relieve the debt burden on individuals, and families, so they can have a fresh start.”

Each RIP letter applies to a single instance of debt, meaning patients with multiple Ballad Health accounts may still owe money. Ballad Health encourages those individuals to reach out to the financial support team for further assistance options at (423) 408-7400.

Amie Knowles reports for Dogwood. You can reach her at [email protected]