Advertisements

RIP Debt turns debt collection on its head, buying up unpaid medical bills : Shots

Advertisements

Terri Logan (right) practices music with her daughter, Amari Johnson (left), at their home in Spartanburg, SC When Logan’s daughter was born prematurely, medical bills started pouring in and lived with her for years. Then, a few months ago, he discovered a non-profit organization had paid off its debts. Juan Diego Reyes for KHN and NPR hides text

switch text

Advertisements

Juan Diego Reyes for KHN and NPR

Advertisements

Terri Logan (right) practices music with her daughter, Amari Johnson (left), at their home in Spartanburg, SC When Logan’s daughter was born prematurely, medical bills started pouring in and lived with her for years. Then, a few months ago, he discovered a non-profit organization had paid off its debts.

Juan Diego Reyes for KHN and NPR

Advertisements

Soon after giving birth to a two-month premature daughter, Terri Logan received a bill from the hospital. He stepped back from the string of numbers separated by commas.

Logan, who was a high school math teacher in Georgia, brushed it off and ignored the next bill. She was a single mother who knew she had no way of paying. “I avoid it like the plague,” he says, but avoidance doesn’t keep the bill out of mind.

Advertisements

“The weight of all that medical debt — oh man, that’s tough,” Logan said. “Every day, I think about my debt, how am I going to get out of this … especially with not enough money coming in.”

Then a few months ago — nearly 13 years after the birth of his daughter and many anxiety attacks later — Logan received several bright yellow envelopes in the mail. They were from a nonprofit group that told him they had purchased and then written off all previous medical bills.

This time, it was a completely different kind of surprise: “Wait, what? Who did that?”

Advertisements

RIP Medical Debt does not. Nonprofits have thrived during the pandemic, freeing patients from medical debt, thousands of people at once. His new approach involves purchasing a bundle of delinquent hospital bills — debt incurred by low-income patients like Logan — and then removing the obligation to pay them back.

It’s a model developed by two former debt collectors, Craig Antico and Jerry Ashton, who built their careers chasing patients who couldn’t afford their bills.

“They will have conversations with people on the phone, and they will understand and have a better insight into the struggles people face,” said Allison Sesso, CEO of RIP. Eventually, they realized they were in a unique position to help people and move from debt collection to philanthropy.

What sparked Ashton’s change of heart was meeting activists from the Occupy Wall Street movement in 2011 who spoke with him about how to help ease America’s debt burden. “As a bill collector who amassed millions of dollars in medical bills in my career, now suddenly I’m reformed: I’m a giver predator,” Ashton said in a video by Freethink, a new media journalism site.

After helping Occupy Wall Street activists buy debt for several years, Antico and Ashton launched RIP Medical Debt in 2014. They started raising money from donors to buy debt on the secondary market — where hospitals sell debt for pennies to profitable companies. when they collect the debt.

RIP buys debt just like any other collection company — except instead of trying to make a profit, they send a notification to consumers saying their debt has been paid. To date, RIP has purchased $6.7 billion of unpaid debt and released 3.6 million people from debt. The group said retirements of $100 in debt cost an average of $1.

See also  Your Poop May Hold the Secret to Long Life

RIP bestows its blessings randomly. Sesso says it just depends on which hospital debt is available to buy. “So no one can come to us, raise their hand, and say, ‘I want you to pay off my debt,'” he said.

However RIP is expanding the pool of those who are eligible for assistance. Sesso said that with inflation and job losses putting pressure on more families, the group is now buying overdue debt for those who make up as much as four times the federal poverty rate, up from twice the poverty rate.

The recent surge in donations — from students to philanthropist MacKenzie Scott, who gave $50 million in late 2020 — fueled RIP’s expansion. The money allowed RIP to hire staff and develop software to comb through databases and identify targeted debt more quickly.

The new regulations allow RIP to buy loans directly from hospitals, rather than just on the secondary market, expanding its access to debt.

Sesso says the group is constantly looking for new debt to buy from hospitals: “Call us! We’d like to talk to any hospitals interested in paying off debt.”

Sesso emphasized that RIP’s business growth is not something to celebrate. This means millions of people have fallen victim to US insurance and a health care system that is too expensive and too complex for most people to navigate. As NPR and KHN report, more than half of U.S. adults say they’ve been in debt in the past five years because of medical or dental bills, according to a KFF poll. A quarter of adults with health care debt owe more than $5,000. And about 1 in 5 with any amount of debt say they don’t expect to pay it off.

RIP is the only way for patients to get relief from the debt immediately, said Jim Branscome, a lead donor. Policy changes are slow. Many factors contribute to medical debt, he said, and many are difficult to address: rising hospital and drug prices, high self-cost, less generous insurance coverage, and widening racial inequalities in medical debt. The pandemic, adds Branscome, is making all of that worse.

“The pandemic has made it harder for people to pay the tremendous medical bills that are not covered,” Branscome said. He is a longtime advocate for the poor in Appalachia, where he grew up and where he says chronic illness makes medical debt much worse. It undermined the point of care in the first place, he said: “There’s pressure and hopelessness.”

For Terri Logan, a former math teacher, her enormous medical bills added to a number of other stresses in her life, which later turned into debilitating anxiety and depression. Now a single mother of two, she describes the tensions of living with debt hanging over her head. He had panic attacks, including “pain that radiates down the left side of your body and makes you feel like you’re going to have an aneurysm and you’re going to pass out,” he recalls.

Some hospitals say they want to reduce the destructive cycle for their patients. The Heywood Healthcare System in Massachusetts donated $800,000 of medical debt to RIP in January, essentially giving up control of the debt, in part because patients with outstanding bills avoided treatment.

“We want to eliminate at least one cause of avoidance stress to get people the care they need,” said Dawn Casavant, head of philanthropy at Heywood. Plus, he said, “the debt will likely go uncollected.”

See also  The MCHC Blood Test Explained

The medical debt that followed Logan for years darkened his spirits. “I don’t know; I just lost my mojo,” he said. “But I kind of found it,” he added. Juan Diego Reyes for KHN and NPR hides text

switch text

Juan Diego Reyes for KHN and NPR

The medical debt that followed Logan for years darkened his spirits. “I don’t know; I just lost my mojo,” he said. “But I kind of found it,” he added.

Juan Diego Reyes for KHN and NPR

Are you in debt for medical bills that you can't pay?

One criticism of the RIP approach is that it is not preventive; the group came in after years of financial stress and crushing credit scores that had hurt patients’ chances of renting an apartment or getting a car loan. (Three major credit rating agencies recently announced changes to the way they report medical debt, reducing their loss to credit scores to some extent. However, consumers often take out second mortgages or credit cards to pay for medical services.)

“A lot of damage will be done by the time they come to relieve that debt,” said Mark Rukavina, program director for Community Catalyst, a consumer advocacy group.

Rukavina said state laws should force hospitals to make better use of their financial aid programs to help patients. “Hospitals don’t have to be paid for,” he said. “Basically: Don’t reward bad behavior.”

Most hospitals in the country are for-profit and in exchange for that tax status, are required to offer community benefit programs, including what is often called “charity care.” Depending on the hospital, the program cuts costs for patients earning two to three times the federal poverty rate. But many eligible patients never find out about charity care – or are not informed. They are billed for the full shipping cost and then hounded by collection agencies when they don’t pay.

Recently, RIP has also started trying to change that.

RIP CEO Sesso said the group advised hospitals on how to improve their internal financial systems so they better screen patients who qualify for charity care — in effect, preventing people from incurring debt in the first place. In the end, it was a much better result, he said.

“We would prefer hospitals reduce the need for our work on the back end,” he said. “I’d say hospitals are open to feedback, but they’re also a little blind to how poorly some of their financial aid approaches are working.”

Terri Logan said there was no mention of charitable care or financial aid programs to her when she gave birth. Logan also doesn’t realize that help is available to people like him, people with jobs and health insurance but who earn enough money to not qualify for support like food stamps.

Debt overshadowed him, darkening his spirit. “I don’t know; I just lost my mojo,” he said. “But I kind of found it,” he added. Logan’s newfound freedom from medical debt revives a long-buried dream of singing on stage.

His first appearance is scheduled for this summer.

How to get rid of medical debt — or avoid it in the first place

Medical debt turns their life upside down.  This is what was taken from them

Advertisements

Leave a Reply

Your email address will not be published.