The non-profit RIP Medical Debt was given the green light to work directly with providers to eliminate medical debt for low-income patients. Alex Kacik for Modern Healthcare reported,

HHS’ Office of Inspector General recently said it will not penalize health systems and large physician groups that donate or sell unpaid bills to the national not-for-profit RIP Medical Debt instead of following the traditional debt collection agency referral process. The OIG ruled that the arrangement would not violate federal anti-kickback laws that prohibit providers from unlawfully drawing patients to their organization.

RIP Medical Debt raises money from individual fundraisers and philanthropists to purchase and forgive old medical debt owed by low-income individuals. Typically, RIP Medical Debt will purchase portfolios of old medical debt off of the secondary debt market. They then leverage their purchasing power to eliminate medical debt for pennies on the dollar. On average, every dollar raised and sent to RIP will wipe out $100 in old debt. But with this guidance from the Office of the Inspector General for Health and Human Services, RIP can now work directly with providers to alleviate debt, cutting out the middleman,

Working directly with the provider will allow RIP to ease patients’ financial burdens sooner, said Sesso, noting that only around 40% of hospitals sell their debt to collection agencies. It will also increase RIP’s reach; it has forgiven more than $2.5 billion in medical debt since 2014.

“We know that debt itself is a social determinant of health, so if a hospital’s goal is to reduce peoples’ stress and improve their health outcomes, this is one way to address that,” said Sesso, adding that this could also address health disparities, particularly among people of color who are disproportionally impacted.

HHS OIG ruled that providers will not be able to publicize their partnership with RIP, which would alleviate anti-kickback concerns that patients would be drawn to a particular provider if they could have their debt forgiven. Also, RIP would only step in after the accounts are deemed “uncollectable,” which “does not carry the same risks as agreeing to subsidize an ongoing payment obligation or waiving a payment obligation in advance,” regulators said.

John Locke readers may recall last year, and into the beginning of this year, I coordinated a RIP Medical Debt fundraiser for the patients of North and South Carolina. Through the help of hundreds of donations, the fundraiser raised over $31,000, which will be leveraged to wipe out over $2.5 million in old medical debt.

As an example of how this process works, the chart below is one of the debt fulfillment reports I received after my fundraiser. RIP Medical Debt identifies individuals in the state who owe a certain amount of money, pay for their debt, and it is completely forgiven without any penalty to the individual. These are real individuals from North Carolina who had their medical debt wiped out by the kind donations from the community.

Hundreds of these campaigns are happening around the country right now. Especially in this time of great need for our country, private market solutions will be crucial to dealing with problems that impact so many people, such as medical debt. The IG’s guidance allowing RIP to work directly with providers will allow them to increase their foothold and help more individuals who have trouble paying for medical bills.