New York City Adopts Rules To Cancel Medical Debt

The municipal rules for purchasing and canceling eligible patients’ debt will take effect Oct. 27.

Following suit of similar programs at the state level, New York City has adopted rules and funding for medical debt relief.

The New York City Department of Health and Mental Hygiene adopted the rules (PDF) for its Program to Cancel Medical Debt, effective Oct. 27.

According to the rules, “to help resolve the problem of medical debt for New Yorkers, city funds will be used to purchase medical debt from hospitals and other medical providers serving New Yorkers.”

Only debt that is no longer in active collections by the provider will be eligible for purchase.

The department allocated $18 million in funding to a nonprofit contractor that will purchase and end approximately $1.8 billion of medical debt over the next three years for New York City residents who meet the rule’s eligibility requirements.

Residents must meet one of the following income criteria:

• The individual’s annual modified adjusted gross household income does not exceed 400% of the federal poverty level as determined by the U.S. Department of Health and Human Services (HHS) at the time eligibility is assessed.
• The individual’s annual modified adjusted gross household income exceeds 400% of the federal poverty level but is under 1000% of the federal poverty level as determined by HHS at the time eligibility is assessed, and such individual’s medical debt equals or exceeds 5% of such individual’s annual modified adjusted gross household income.

Eligible residents do not need to apply to the program to benefit from medical debt cancellation, and not all eligible persons will have their debt canceled.

The contractor will identify medical debt owed by eligible residents and negotiate with hospitals and other medical providers to buy the debt.

Eligible residents will receive written notification of the debt cancellation.

Additional Debt Relief Programs

In New York state, New York Attorney General Letitia James and Northwell Health, which is New York’s largest health care network, recently collaborated on a debt relief program, ACA International previously reported.

“As a result of this first-of-its-kind collaborative agreement between Attorney General James and Northwell, uninsured and under-insured New Yorkers receiving necessary medical care and earning under five times the federal poverty level, $75,300 for an individual or $156,000 for a family of four, will be eligible for free or discounted care,” according to a news release from the attorney general’s office.

The agreement, outlined in best practices (PDF) here, was developed after the Office of the Attorney General (OAG) reviewed Northwell’s financial assistance program and the provider agreed to work with the office to improve and expand its offerings.

Northwell has also agreed to having more staff available to help patients apply for financial assistance and has committed to “significantly reducing medical debt collection.”

Proposed legislation in New York would implement a pilot program allowing nonprofit organizations to purchase medical debt, which other states have pursued as well, ACA previously reported.

At another provider, Monument Health, a program is in place to help patients with a debt in collections who would have qualified for charity care, ACA previously reported.

Several states have announced various medical debt relief programs in recent months, with New Jersey being one of the latest.

New Jersey Gov. Phil Murphy said the state is using over $550,000 in its American Rescue Plan, an economic stimulus bill passed during the COVID-19 pandemic, state funds, and is partnering with Undue Medical Debt to provide millions of dollars of medical debt relief to eligible residents, according to a news release.

Similar medical debt relief efforts are underway in North Carolina, Pennsylvania and Connecticut.

Pennsylvania announced a medical debt relief plan as part of Gov. Josh Shapiro’s budget proposal earlier this year, days after Connecticut’s governor shared similar goals, ACA previously reported.

Pennsylvania would also contract with an organization like Undue Medical Debt.

Connecticut Gov. Ned Lamont said in an interview on “Good Morning America” in February that the state will remove about $1 billion in medical debt using $6.5 million in funds from the American Rescue Plan Act, ACA previously reported.

North Carolina’s plan is to relieve medical debt for qualifying patients using the state’s Medicaid program as an incentive for hospitals to relieve more than a decade of medical debt for eligible residents, ACA previously reported.

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