The idea of local government erasing debt emerged a couple of years ago in Chicago.

This article was published on Thursday, January 25, 2024 in KFF Health News.

By Yuki Noguchi, NPR News

New York City pledged this week to pay down $2 billion worth of residents' medical debt. In doing so, it has come around to an innovation, started in the Midwest, that's ridding millions of Americans of healthcare debt.

The idea of local government erasing debt emerged a couple of years ago in Cook County, Illinois, home to Chicago. Toni Preckwinkle, president of the county board of commissioners, says two staffers came to her with a bold proposal: The county could spend a portion of its federal pandemic rescue funds to ease a serious burden on its residents.

In 2022, Cook County became the first local government to partner with RIP Medical Debt, a nonprofit group that uses private donor funds to buy up and forgive patient debt.

RIP's model turns debt collection on its head. Normally, debt collectors buy unpaid bills and then try to collect the money owed. RIP identifies unpaid hospital bills owed by people making up to four times the federal poverty level, then buys that debt on secondary markets or directly from hospitals at a small fraction of the original value. Instead of trying to collect, RIP forgives it — so it simply disappears for the patients.

In the Chicago area, as across the country, medical debt is an ongoing problem, causing mental and financial strain that can follow patients for years. An estimated 100 million people in the U.S. carry some form of healthcare debt, KFF Health News and NPR reported in 2022.

Preckwinkle said the RIP model dovetailed nicely with Cook County's healthcare mission. For nearly two centuries, the county has funded its own hospital and health system, Cook County Health, in part to provide care to all residents, regardless of income.

"We have a legacy commitment to delivering quality healthcare to people without regard to their ability to pay," Preckwinkle said.

She said that healthcare mission eats up nearly half of the county's $9.3 billion annual budget. It is now in the process of spending $12 million — a tiny portion of its budget — to retire $1 billion worth of hospital bills for residents.

Since Cook County announced its program, seven other local governments have followed suit, including Ohio cities Akron, Cleveland, and Toledo; New Orleans; Wayne County, Michigan; Washington, D.C.; and now New York City, which announced its commitment Jan. 22.

During his announcement, New York Mayor Eric Adams noted that medical debt disproportionately affects Black and Hispanic people, who are more likely to be uninsured or underinsured. For the city's low-income residents, he said, "taking on medical debt isn't a choice."

"Working-class families often have to choose between paying their medical bills or some of the basic essentials that they need to go through life," he said.

RIP is in talks with 30 other municipalities and states, including Connecticut, New Jersey, and Michigan.

Typically, RIP can retire at least $100 worth of debt for every $1 of government funds, so the local initiatives could end up wiping out several billion dollars in medical debt. The software selects eligible patients who remain anonymous, so it's hard to know what the impact of eliminating that debt might be across a community, or for the families that benefit.

Allison Sesso, CEO of RIP Medical Debt, acknowledged that debt is one of many factors contributing to unequal access to healthcare, and as hospital costs continue to rise, new debts are also piling up perhaps faster than her group can retire it. She said RIP hopes to retire $2.5 billion worth of unpaid medical bills through various government initiatives this year, but that's a drop in the bucket of the $195 billion estimated medical debt held by Americans.

"I'm under no illusions," Sesso said. "I don't think what I'm doing is the solution to getting rid of medical debt, writ large."

An Unusual Move for Local Government

Amber Clapsaddle said having the city of Toledo eliminate a $1,500 medical bill of hers from three years ago has given her hope.

In the past, Clapsaddle said, she looked down on those who didn't pay their bills. "I was like, ‘I'll never do that,' and I judged people really hard," she said.

Then, several years ago, her entire family of five each got sick one after another, requiring numerous surgeries, ultrasounds, and diagnostic tests. She had insurance, but she and her husband, a warehouse worker, couldn't meet the $6,000 deductible. Clapsaddle, a social worker, realized why medical debt is such a prevalent problem: "It just takes one bill, one bad insurance plan, just one extra diagnosis to have it all fall apart."

When Toledo's program with RIP forgave some of her family's debt two months ago, she cried with joy and relief. She said that motivated her to negotiate with doctors' offices and her insurance company to try to prevent herself from getting into debt again. "It's the spark that lights the fire of getting out of medical debt," she said.

Debt forgiveness is an unusual solution for local governments. More are taking it on, aided by access to federal pandemic rescue funds through the American Rescue Plan Act of 2021, and RIP Medical Debt offered a quick and easy fix to distribute those funds to those most burdened by medical expenses.

Nationally, medical debt is shown to disproportionately affect people of color and people who earn less. It also contributes to a vicious health cycle, discouraging patients from seeking preventive or follow-up care, leading to worse and more expensive outcomes.

Cook County's Preckwinkle said the pandemic only deepened racial and income gaps that affect people's access to healthcare.

"I always talk about the fact that medical debt is the leading cause of bankruptcy in the United States," she said.

Getting Down to the Root Causes of Debt

Medical debt is being created at high rates, Sesso said, and stronger policies — such as protecting consumers and strengthening insurance coverage — are needed to stop it at its source.

Often that boils down to high prices charged by hospitals and providers.

As Adams, the New York City mayor, put it: "You know, not only do you hold your breath when you go into a hospital or a doctor's office and wait for a diagnosis, you continue to hold your breath when you see the bill and what it costs, particularly for low-income New Yorkers."

The idea of forgiving medical debt has broad political support, said Sesso, perhaps because the issue affects people of all political stripes. A recent RIP survey, she said, showed that "84% of people agreed that it is the responsibility of government to ensure healthcare is affordable, and that position is held by people on the left and the right."

The enduring benefit of the recent local government initiatives is that they have helped draw more attention to the problem, raising its profile in useful ways, she said. "I think the issue of medical debt is becoming a priority, local governments are talking about it," and that is leading to other conversations about what else they can do to get more eligible families insured through Medicaid, or through the Affordable Care Act insurance marketplace, for example.

It is also inspiring programs like one recently adopted by Milwaukee County, in which it's urging more hospitals and health systems to use credit reports to screen and automatically enroll eligible patients in financial assistance programs. These programs already exist to help reduce medical expenses for patients making up to three times the poverty level, but often patients are unaware or not told to apply for them.

By automating the process, as many as 50% more patients may receive free or reduced-cost care, so they have a better chance of avoiding incurring medical debt in the first place, said Shawn Rolland, a member of Milwaukee County's board of supervisors.

"Why make it more difficult than necessary to get enrolled?" he said. "Because ultimately this will make it more likely that they'll come back for preventative care."

Some of McAlester's 18,000 residents have been taken to court multiple times.

This article was published on Friday, January 19, 2024 in KFF Health News.

By Mitchell Black and Noam N. Levey

McALESTER, Okla. — It took little more than an hour for Deborah Hackler to dispense with the tall stack of debt collection lawsuits that McAlester Regional Medical Center recently brought to small-claims court in this Oklahoma farm community.

Hackler, a lawyer who sues patients on behalf of the hospital, buzzed through 51 cases, all but a handful uncontested, as is often the case. She bantered with the judge as she secured nearly $40,000 in judgments, plus 10% in fees for herself, according to court records.

It's a payday the hospital and Hackler have shared frequently over the past three decades, records show. The records indicate McAlester Regional Medical Center and an affiliated clinic have filed close to 5,000 debt collection cases since the early 1990s, most often represented by the father-daughter law firm of Hackler & Hackler.

Some of McAlester's 18,000 residents have been taken to court multiple times. A deputy at the county jail and her adult son were each sued recently, court records show. New mothers said they compare stories of their legal run-ins with the medical center.

"There's a lot that's not right," Sherry McKee, a dorm monitor at a tribal boarding school outside McAlester, said on the courthouse steps after the hearing. The hospital has sued her three times, most recently over a $3,375 bill for what she said turned out to be vertigo.

In recent years, major health systems in Virginia, North Carolina, and elsewhere have stopped suing patients following news reports about lawsuits. And several states, such as Maryland and New York, have restricted the legal actions hospitals can take against patients.

But with some 100 million people in the U.S. burdened by health care debt, medical collection cases still clog courtrooms across the country, researchers have found. In places like McAlester, a hospital's debt collection machine can hum away quietly for years, helped along by powerful people in town. An effort to limit hospital lawsuits failed in the Oklahoma Legislature in 2021.

In McAlester, the lawsuits have provided business for some, such as the Adjustment Bureau, a local collection agency run out of a squat concrete building down the street from the courthouse, and for Hackler, a former president of the McAlester Area Chamber of Commerce. But for many patients and their families, the lawsuits can take a devastating toll, sapping wages, emptying retirement accounts, and upending lives.

McKee said she wasn't sure how long it would take to pay off the recent judgment. Her $3,375 debt exceeds her monthly salary, she said.

"This affects a large number of people in a small community," said Janet Roloff, an attorney who has spent years assisting low-income clients with legal issues such as evictions in and around McAlester. "The impact is great."

Settled more than a century ago by fortune seekers who secured land from the Choctaw Nation to mine coal in the nearby hills, McAlester was once a boom town. Vestiges of that era remain, including a mammoth, 140-foot-tall Masonic temple that looms over the city.

Recent times have been tougher for McAlester, now home by one count to 12 marijuana dispensaries and the state's death row. The downtown is pockmarked by empty storefronts, including the OKLA theater, which has been dark for decades. Nearly 1 in 5 residents in McAlester and the surrounding county live below the federal poverty line.

The hospital, operated by a public trust under the city's authority, faces its own struggles. Paint is peeling off the front portico, and weeds poke up through the parking lots. The hospital has operated in the red for years, according to independent audit reports available on the state auditor's website.

"I'm trying to find ways to get the entire community better care and more care," said Shawn Howard, the hospital's chief executive. Howard grew up in McAlester and proudly noted he started his career as a receptionist in the hospital's physical therapy department. "This is my hometown," he said. "I am not trying to keep people out of getting care."

The hospital operates a clinic for low-income patients, whose webpage notes it has "limited appointments" at no cost for patients who are approved for aid. But data from the audits shows the hospital offers very little financial assistance, despite its purported mission to serve the community.

In the 2022 fiscal year, it provided just $114,000 in charity care, out of a total operating budget of more than $100 million, hospital records show. Charity care totaling $2 million or $3 million out of a $100 million budget would be more in line with other U.S. hospitals.

While audits show few McAlester patients get financial aid, many get taken to court.

Renee Montgomery, the city treasurer in an adjoining town and mother of a local police officer, said she dipped into savings she'd reserved for her children and grandchildren after the hospital sued her last year for more than $5,500. She'd gone to the emergency room for chest pain.

Dusty Powell, a truck driver, said he lost his pickup and motorcycle when his wages were garnished after the hospital sued him for almost $9,000. He'd gone to the emergency department for what turned out to be gastritis and didn't have insurance, he said.

"Everyone in this town probably has a story about McAlester Regional," said another former patient who spoke on the condition she not be named, fearful to publicly criticize the hospital in such a small city. "It's not even a secret."

The woman, who works at an Army munitions plant outside town, was sued twice over bills she incurred giving birth. Her sister-in-law has been sued as well.

"It's a good-old-boy system," said the woman, who lowered her voice when the mayor walked into the coffee shop where she was meeting with KFF Health News. Now, she said, she avoids the hospital if her children need care.

Nationwide, most people sued in debt collection cases never challenge them, a response experts say reflects widespread misunderstanding of the legal process and anxiety about coming to court.

At the center of the McAlester hospital's collection efforts for decades has been Hackler & Hackler.

Donald Hackler was city attorney in McAlester for 13 years in the '70s and '80s and a longtime member of the local Lions Club and the Scottish Rite Freemasons.

Daughter Deborah Hackler, who joined the family firm 30 years ago, has been a deacon at the First Presbyterian Church of McAlester and served on the board of the local Girl Scouts chapter, according to the McAlester News-Capital newspaper, which named her "Woman of the Year" in 2007. Since 2001, she also has been a municipal judge in McAlester, hearing traffic cases, including some involving people she has sued on behalf of the hospital, municipal and county court records show.

For years, the Hacklers' debt collection cases were often heard by Judge James Bland, who has retired from the bench and now sits on the hospital board. Bland didn't respond to an inquiry for interview.

Hackler declined to speak with KFF Health News after her recent court appearance. "I'm not going to visit with you about a current client," she said before leaving the courthouse.

Howard, the hospital CEO, said he couldn't discuss the lawsuits either. He said he didn't know the hospital took its patients to court. "I had to call and ask if we sue people," he said.

Howard also said he didn't know Deborah Hackler. "I never heard her name before," he said.

Despite repeated public records requests from KFF Health News since September, the hospital did not provide detailed information about its financial arrangement with Hackler.

McAlester Mayor John Browne, who appoints the hospital's board of trustees, said he, too, didn't know about the lawsuits. "I hadn't heard anything about them suing," he said.

At the century-old courthouse in downtown McAlester, it's not hard to find the lawsuits, though. Every month or two, another batch fills the docket in the small-claims court, now presided over by Judge Brian McLaughlin.

After court recently, McLaughlin, who is not from McAlester, shook his head at the stream of cases and patients who almost never show up to defend themselves, leaving him to issue judgment after judgment in the hospital's favor.

"All I can do is follow the law," said McLaughlin. "It doesn't mean I like it."

Noam N. Levey: nlevey@kff.org, @NoamLevey

HHS and NIH are targeting some failures that led to those problems.

This article was published on Wednesday, January 17, 2024 in KFF Health News.

By Judith Graham

The number of older adults with disabilities — difficulty with walking, seeing, hearing, memory, cognition, or performing daily tasks such as bathing or using the bathroom — will soar in the decades ahead, as baby boomers enter their 70s, 80s, and 90s. 

But the healthcare system isn't ready to address their needs.

That became painfully obvious during the COVID-19 pandemic, when older adults with disabilities had trouble getting treatments and hundreds of thousands died. Now, the Department of Health and Human Services and the National Institutes of Health are targeting some failures that led to those problems.

One initiative strengthens access to medical treatments, equipment, and web-based programs for people with disabilities. The other recognizes that people with disabilities, including older adults, are a separate population with special health concerns that need more research and attention.

Lisa Iezzoni, 69, a professor at Harvard Medical School who has lived with multiple sclerosis since her early 20s and is widely considered the godmother of research on disability, called the developments "an important attempt to make healthcare more equitable for people with disabilities."

"For too long, medical providers have failed to address change in society, changes in technology, and changes in the kind of assistance that people need," she said.

Among Iezzoni's notable findings published in recent years:

Most doctors are biased. In survey results published in 2021, 82% of physicians admitted they believed people with significant disabilities have a worse quality of life than those without impairments. Only 57% said they welcomed disabled patients.

"It's shocking that so many physicians say they don't want to care for these patients," said Eric Campbell, a co-author of the study and professor of medicine at the University of Colorado.

While the findings apply to disabled people of all ages, a larger proportion of older adults live with disabilities than younger age groups. About one-third of people 65 and older — nearly 19 million seniors — have a disability, according to the Institute on Disability at the University of New Hampshire.

Doctors don't understand their responsibilities. In 2022, Iezzoni, Campbell, and colleagues reported that 36% of physicians had little to no knowledge of their responsibilities under the 1990 Americans With Disabilities Act, indicating a concerning lack of training. The ADA requires medical practices to provide equal access to people with disabilities and accommodate disability-related needs.

Among the practical consequences: Few clinics have height-adjustable tables or mechanical lifts that enable people who are frail or use wheelchairs to receive thorough medical examinations. Only a small number have scales to weigh patients in wheelchairs. And most diagnostic imaging equipment can't be used by people with serious mobility limitations.

Iezzoni has experienced these issues directly. She relies on a wheelchair and can't transfer to a fixed-height exam table. She told me she hasn't been weighed in years.

Among the medical consequences: People with disabilities receive less preventive care and suffer from poorer health than other people, as well as more coexisting medical conditions. Physicians too often rely on incomplete information in making recommendations. There are more barriers to treatment and patients are less satisfied with the care they do get.

Egregiously, during the pandemic, when crisis standards of care were developed, people with disabilities and older adults were deemed low priorities. These standards were meant to ration care, when necessary, given shortages of respirators and other potentially lifesaving interventions.

There's no starker example of the deleterious confluence of bias against seniors and people with disabilities. Unfortunately, older adults with disabilities routinely encounter these twinned types of discrimination when seeking medical care.

Such discrimination would be explicitly banned under a rule proposed by HHS in September. For the first time in 50 years, it would update Section 504 of the Rehabilitation Act of 1973, a landmark statute that helped establish civil rights for people with disabilities.

The new rule sets specific, enforceable standards for accessible equipment, including exam tables, scales, and diagnostic equipment. And it requires that electronic medical records, medical apps, and websites be made usable for people with various impairments and prohibits treatment policies based on stereotypes about people with disabilities, such as COVID-era crisis standards of care.

"This will make a really big difference to disabled people of all ages, especially older adults," said Alison Barkoff, who heads the HHS Administration for Community Living. She expects the rule to be finalized this year, with provisions related to medical equipment going into effect in 2026. Medical providers will bear extra costs associated with compliance.

Also in September, NIH designated people with disabilities as a population with health disparities that deserves further attention. This makes a new funding stream available and "should spur data collection that allows us to look with greater precision at the barriers and structural issues that have held people with disabilities back," said Bonnielin Swenor, director of the Johns Hopkins University Disability Health Research Center.

One important barrier for older adults: Unlike younger adults with disabilities, many seniors with impairments don't identify themselves as disabled.

"Before my mom died in October 2019, she became blind from macular degeneration and deaf from hereditary hearing loss. But she would never say she was disabled," Iezzoni said.

Similarly, older adults who can't walk after a stroke or because of severe osteoarthritis generally think of themselves as having a medical condition, not a disability.

Meanwhile, seniors haven't been well integrated into the disability rights movement, which has been led by young and middle-aged adults. They typically don't join disability-oriented communities that offer support from people with similar experiences. And they don't ask for accommodations they might be entitled to under the ADA or the 1973 Rehabilitation Act.

Many seniors don't even realize they have rights under these laws, Swenor said. "We need to think more inclusively about people with disabilities and ensure that older adults are fully included at this really important moment of change."

Judith Graham: khn.navigatingaging@gmail.com, @judith_graham

The Rural Emergency Hospital program is the first new federal payment model for hospitals since 1997.

This article was published on Tuesday, January 16, 2024 in KFF Health News.

By Sarah Jane Tribble and Tony Leys

KEOKUK, Iowa — Folks in this Mississippi River town hope a new federal program can revive the optimism engraved long ago in a plaque on the side of their hospital.

"Dedicated to the Future of Health Care in the Tri-State Area," the sign declares. "May 11, 1981."

More recent placards posted at the facility's entryways are ominous, however. "Closed," they say. "No Trespassing."

The Keokuk hospital, which served rural areas of Iowa, Illinois, and Missouri, closed in October 2022. But new owners plan to reopen the hospital with the help of a new federal payment system. The Rural Emergency Hospital program guarantees hospitals extra cash if they provide emergency and outpatient services but end inpatient care.

"We've been without a hospital for over a year — and I don't think anybody in Keokuk or the surrounding areas will be picky in any way, shape, or form," said Kathie Mahoney, mayor of the town of about 9,800 people. She said residents would prefer to have a full-service hospital with inpatient beds, even though those types of beds had been used sparingly in recent years.

The revival of the Keokuk hospital would mark a small victory in the nationwide struggle to save rural hospitals, which continue to close due to staffing shortages, low reimbursement rates, and declining patient numbers. The new federal program, which went into effect in January 2023, is meant to stem the closures. But there have been growing pains, said George Pink, deputy director of the North Carolina Rural Health Research Program, which tracks hospital closures and conversions.

Just 18 of the more than 1,700 eligible rural hospitals nationwide have applied for and won the new designation. Many hospitals are reluctant to give up inpatient services entirely, and some are concerned about how other payment streams could be affected, rural health leaders say. The new designation's unclear definition of "rural" has also caused confusion.

"We are still in an era of rural hospital closures," Pink said. Nine hospitals closed in 2023, and that number could rise in 2024, he said. An influx of federal relief funds during the pandemic kept struggling hospitals afloat, but now that money is largely gone.

The Rural Emergency Hospital program is the first new federal payment model for hospitals since 1997. Dora Hughes, acting chief medical officer of the Centers for Medicare & Medicaid Services, said the new model's criteria are outlined by statute and "hospitals should consider specific circumstances before making the decision to apply."

The federal agency is providing outreach to rural communities and welcomes feedback, Hughes wrote in an email to KFF Health News.

Now, rural health leaders and federal lawmakers are working quickly to tweak the new program to attract more applicants, said Carrie Cochran-McClain, chief policy officer of the National Rural Health Association.

Currently, facilities that convert to rural emergency hospitals receive a 5% increase in Medicare payments, plus an average annual payment of about $3.2 million, in exchange for giving up their expensive inpatient beds and focusing solely on emergency and outpatient care. Rural hospitals with no more than 50 beds, like Keokuk's, that closed after the law was signed on Dec. 27, 2020, are eligible to apply for the program and reopen with emergency and outpatient services.

More than 100 rural hospitals nationwide have inquired about converting, said Janice Walters, interim executive director for the Rural Health Redesign Center, which has a federal grant to provide technical assistance to hospitals that want to apply.

But only about a quarter of those inquiries are likely to become a rural emergency hospital, and persuading more troubled hospitals to make the leap would require regulators to make changes, Walters said.

Her advice? "Give them 10 beds to just take care of their community."

In a journal article published last year, general surgeon Sara Schaefer worried about the unintended consequences of getting rid of rural inpatient beds. Schaefer, who spent six months of medical school at a small rural Idaho hospital, said she saw firsthand how difficult it was for the hospital to transfer patients to bigger facilities, which were often too full to take them.

"There has to be a better way," said Schaefer, who is also a research fellow at the Center for Healthcare Outcomes & Policy at the University of Michigan.

The rural health association's Cochran-McClain said lawmakers are considering changes that could allow the hospitals to:

• Keep overnight beds for patients who need moderate levels of care, such as those with pneumonia or in need of physical therapy after surgery.
   
• Allow participation in a federal drug discount program called 340B, which provides hospitals with extra revenue.
   
• Keep inpatient psychiatric or rehabilitation units open.
   
• Clarify eligibility, including which facilities qualify under the definition of "rural" and whether the hospitals that closed before the 2020 date in the law can apply.

Updates to the law could affect communities nationwide. In Fort Scott, Kansas, where the hospital closed in late 2018, Mayor Matthew Wells said the community wants the eligibility date pushed back. U.S. Sen. Jerry Moran (R-Kan.) introduced a bill in December that, if passed, would push eligibility back to 2015.

"This is a matter of life and death to my community," Wells said. "I see a clear path, but the federal regulations in particular make that path nearly impossible."

In Holly Springs, Mississippi, hospital chief executive Kenneth Williams said he doesn't understand the federal definition of "rural." His hospital, Alliance Healthcare Hospital, was one of the first to win the new Rural Emergency Hospital designation in early 2023. He laid off staff and shut down his inpatient beds. Then, CMS officials called to tell him they had made a mistake.

"And I said, 'Wait a minute,'" Williams said. The hospital, which is about an hour south of Memphis, Tennessee, doesn't meet the current criteria of rural, they told him. Williams, an internal medicine doctor, bought the hospital in 1999 and has been trying to keep it running since.

Federal regulators are now asking Williams to convert the facility into another type of Medicare payment model, such as the sole community hospital with inpatient beds that it was before. Williams said that would be difficult: "What kind of transition can I make, especially with reduced services?"

In Keokuk, the hospital fits the current requirements. Insight Health Group, the Michigan company that bought the shuttered facility last March, plans to apply for the new federal designation as soon as it obtains state permits under new Iowa regulations tailored to rural emergency hospitals. It would be the first such hospital in the state.

Like many other rural hospitals struggling to survive, Keokuk's shuttered several key departments years ago, including its birthing and inpatient psychiatric units. In 2021, the last full year it was open, the hospital averaged fewer than three inpatients per night, according to data posted by the Iowa Hospital Association.

More than half of the three-story building would remain mothballed if the facility reopened under the new designation, but the emergency department could serve patients again as soon as late summer, said Atif Bawahab, Insight"s chief strategy officer.

Bruce Mackie has worked 32 years at the hospital, including 10 years as director of plant operations. The new owners kept him on to watch over the building. Beds, high-tech scanners, and lab equipment remain, but most of the clocks have stopped. "It's spooky," he said.

Even if the services are more limited than before, Mackie said, "everybody wants the hospital to reopen. This city needs an ER."

Sarah Jane Tribble: sjtribble@kff.org, @SJTribble

Tony Leys: tleys@kff.org, @tonyleys