In Debt But Not Indifferent Chapter 58 and The Access Project’s Medical Debt Resolution Program By Andrew Cohen and Carol Pryor The Access Project 89 South Street, Suite 202 Boston, MA 02111 (617) 654-9911 www.accessproject.org The Access Project • 89 South Street • Suite 202 • Boston, MA • 02111 (617) 654-9911 • www.accessproject.org Page 1 EXECUTIVE SUMMARY In April of 2006, Massachuse�s passed a major health reform law, Chapter 58. It was designed to achieve near universal coverage in the state by providing subsidies to help low and moderate income people ob- tain insurance and by requiring others to purchase coverage either through employment or on the indi- vidual market. Chapter 58 has made insurance coverage available to hundreds of thousands of previously uninsured state residents. Implementa�on of the law required the crea�on of new programs and prod- ucts, as well as an array of changes to the regula�ons governing new and exis�ng programs. Reform occurred in the context of growing na�onal awareness of the prevalence and consequences of unaffordable medical bills. Prior to implementa�on of Chapter 58, 21 percent of state residents under the age of 65 had medical bills they were paying off over �me. Over half were insured, indica�ng that health insurance did not always protect Massachuse�s residents financially when they got sick. A study compar- ing pre-reform (fall 2006) and post-reform (fall 2007) indicators showed that progress had been made, but there were s�ll almost one in five state residents (18%) in the fall of 2007 paying off medical bills over �me.1 In September of 2006, prior to implementa�on of Chapter 58, The Access Project (TAP) created the Medi- cal Debt Resolu�on Program. The program has con�nued in opera�on throughout the period of health re- form implementa�on. Its goals were to help people with medical debt resolve their unaffordable medical bills and to monitor the impact of Chapter 58 on people’s ability to afford and access care. The program helped more than half of the people who called for help resolve over $1 million in medical bills. It also al- lowed TAP to iden�fy issues related to health reform that s�ll le� people vulnerable to unaffordable bills. This report summarizes the findings. FINDINGS Affordability and Access Issues Most Medical Debt Resolu�on clients had low incomes, and for many of them even rela�vely small medi- cal bills were unaffordable and resulted in medical debt. TAP was able to refer many clients for help in enrolling in the state-subsidized Commonwealth Care insurance plans. However, for some, trying to pay off exis�ng medical debt made it difficult to keep up with plan premiums and co-payments. A few higher in- come clients enrolled in the non-subsidized state-approved Commonwealth Choice plans; they also found the premiums difficult to afford. Communication and Coordination Issues Chapter 58 created a number of new programs that operate alongside exis�ng public programs. While these programs are valuable, many clients in the Medical Debt Resolu�on program found it difficult to navigate through the complex system. The result was that people were o�en le� with bills that one of these programs could have covered. Insurance Problems About 40 percent of program clients were insured when they incurred debt. Many incurred debt due to cost-sharing built into their plans, as well as uncovered services. The cumula�ve costs caused many cli- ents, especially those with lower incomes, to choose between maintaining insurance coverage, paying off past debt, or ge�ng needed care. Other clients suffered improper denial of insurance claims. The state’s Office of Pa�ent Protec�on, which provides an independent external review of insurance claims denials, provided relief for a number of clients. However, few were aware of the existence of this agency and of their right to an external review. In Debt But Not Indifferent: Chapter 58 and The Access Project’s Medical Debt Resolu�on Program Safety Net Problems Uncompensated Care Pool: Prior to the implementa�on of Chapter 58, many Medical Debt Resolu- �on Program clients were able to resolve their bills through coverage under the state’s Uncompen- sated Care Pool. However, many were not screened by their providers and only learned about the program through TAP. This was especially true of clients who had health insurance but were s�ll eligible for Pool coverage. An important feature of the Pool was that it covered bills for up to six months prior to the �me people applied for coverage; this was important because many Medical Debt Resolu�on Program clients were unaware of the Pool un�l months a�er they received care. For some insured people eligible for Pool coverage, even six months was insufficient because it took longer than that to resolve claims’ issues with their insurers. Also, although the Pool provided coverage for hospital-related services and services provided at community health centers, it s�ll le� many clients with significant unpaid costs, such as ambulance or laboratory bills. Health Safety Net: The Health Safety Net replaced the Uncompensated Care Pool under Chapter 58; as part of this change, many regula�ons were revised or altered. One change that created par�cular problems for Medical Debt Resolu�on Program clients involved retroac�ve coverage: people eligible for Commonwealth Care or MassHealth could only qualify for ten days of retroac- �ve coverage under the Health Safety Net. Nineteen clients of the Medical Debt Resolu�on Pro- gram ended up with hospital debt because they didn’t know to apply for coverage within ten days of receiving care. Medical Hardship Program: This program helps cover expenses when unpaid medical bills com- prise more than a certain percentage of a family’s income. The Medical Hardship Program as- sumed increased importance because of the changes limi�ng retroac�ve coverage under the Health Safety Net; it helped some people pay for bills too old for coverage under the Health Safety Net. Applica�on for the program must be ini�ated by a hospital or health center. However, some providers seemed unaware of the program. TAP advised two families to apply, and in both cases the client had to inform their providers about their eligibility for the program. Even when ap- proved, some low-income clients had difficulty affording the percentage of income that cons�tut- ed their hardship contribu�on. Hospital Charity Care Hospitals and other providers can create charity care or financial assistance policies that exceed the standards set by the Health Safety Net. TAP found that many hospitals do not include informa- �on on such programs with the policies they are required to file with the state. Many providers were willing to provide discounts, affordable payment plans, or reduced cost care to pa�ents in need. However, it o�en took effort to nego�ate these arrangements because providers gave incon- sistent informa�on about their availability. Medical Bills and Credit Reporting A number of Medical Debt Resolu�on Program clients had medical bills from Massachuse�s pro- viders appear on their credit reports. In a few of these cases, people should have been eligible for coverage through the Uncompensated Care Pool or Health Safety Net at the �me they received services. Poor credit ra�ngs resul�ng from such bills can make it difficult for families to access af- fordable credit. The Access Project Page 3 University Students and the Health Insurance Mandate University students in the state have been mandated to purchase health insurance coverage since 1989, and are categorically ineligible for Commonwealth Care plans. If they do not have insurance from other sources, they must purchase it through their schools. These plans, called Qualifying Student Health Insurance Plans (QSHIP), are exempted from the minimum standards for insurance established under health reform. One-fi�h of the people with private insurance who called the Medical Debt Resolu�on Program were covered by QSHIP plans. These plans o�en contained provisions that le� students at serious financial risk, such as low annual and service caps. RECOMMENDATIONS • Ini�ate a public awareness campaign to inform Massachuse�s residents and health care pro- viders about the safety net resources available to people struggling with high healthcare costs and medical debt. Be�er integrate the Medical Hardship Program into the overall Health Safety Net. • Clarify and publicize informa�on about provider-based charity care and financial assistance programs that are available to help pa�ents with unaffordable medical expenses. • Extend the retroac�ve coverage period under the Health Safety Net for uninsured people who are eligible for state-subsidized plans to at least six months. • Protect the financial security of low-income Massachuse�s residents who are eligible for Com- monwealth Care or the Medical Hardship Program. • Monitor the quality of private insurance coverage. • Increase public awareness about the Office of Pa�ent Protec�on, which can help adjudicate claims that have been denied by insurance companies. • Allow income-eligible college students to qualify for Commonwealth Care insurance products. • Prohibit Massachuse�s health care providers and collec�ons agencies from repor�ng medical debt to credit bureaus. • Conduct ongoing monitoring of the financial burden of health care costs and medical debt on Massachuse�s residents. • Build and support outreach capacity among providers and advocacy groups to help Massachu- se�s residents enroll in public programs and be�er navigate the health system. While the findings in this report are based on the experiences of Medical Debt Resolu�on Pro- gram clients, we believe they suggest pa�erns and provide informa�on that can help policy mak- ers refine and improve implementa�on of the health reform legisla�on.