SCAN, CareOregon Move to Retire Medical Debt a “Wake Up Call” for Health Care Industry

If a health care organization wanted to help financially strapped patients, which path would be best?

Should they ask patients to prove financial need by filling out forms and sharing tax statements, then waiting to hear if they qualify?

Or could they simply find out what medical bills these patients already have, and pay them?

Last week, SCAN and CareOregon chose the second route, granting $345,000 to RIP Medical Debt, a national nonprofit that works to retire debts from those with financial burdens. The 2 health plans, which have announced their intent to combine as HealthRight Group, specifically targeted debt in areas they serve in California, Arizona, Nevada, Oregon, and Texas. According to a joint statement from the plans, the effort affects those with household incomes at or below 400% of the federal poverty level or those with medical debt representing 5% or more of their annual income.

The move helps the patients involved, but it also highlights what’s wrong with health care right now, said Sachin Jain, MD, MBA, the president and CEO of SCAN Group and Health Plan. While SCAN and CareOregon consciously chose to retire debt in the areas they serve, the debt being paid off may or may not involve their own patients.

How the debt was incurred is not the point, Jain said.

“It's intended to be a wakeup call to our industry,” Jain said in an interview with The American Journal of Managed Care. “We’ve somehow landed in this place, where people are actually afraid to access medical care; they forego medical care—necessary medical care—because they're afraid of that they might get a bill that they can't pay.”

His claims are borne out in a recent Gallup poll and in research by Kaiser Family Foundation; a KFF poll in March 2022 found 43% of adults reported that they or a family member had put off medical care due to cost concerns. Such dysfunction in the health care system has both moral and clinical consequences, Jain said, because people who forego preventive care or delay care until symptoms are severe end up costing the health system more money.

“We have a real affordability crisis in America right now,” Jain said. “Even those of us with really good insurance are a bit leery about going to the doctor or the hospital, because of the screwy system of medical billing and the aggressive tactics that a lot of health care organizations are using.”

In discussing why SCAN and CareOregon pursued this initiative, Jain referenced news reports in The New York Times about nonprofit hospitals that went after patients to pay balances that should have been eligible for charity care programs. This kind of nickle-and-diming is not why he went into medicine.

“As an industry, most of us who got started in health care, most of us who work in health care, didn't enter these professions to put people into debt,” he said. “We enter these professions in order to help people. And so that's what we're most excited about.”

When the idea of retiring medical debt was floated by a plan executive as a way to help patients in the service areas of SCAN and CareOregon, Jain said the reaction was uniformly positive. “As soon as it was voiced, it was, ‘yeah, we have to do this.’ This is a problem that's staring us all in the face every single day, both as health care executives, but also as people who understand how challenging it to access the health care system.”

He continued, “Just think about what situations put people in a medical debt. It's not like anyone goes to a health care institution and says, ‘I want these services.’ And then they're like, ‘I don't want to pay for them.’”

Ordinary people find themselves in emergencies and in need of care, Jain said, and then 6 to 8 weeks later, they get a bill for “an astronomical amount that they're simply unable to pay.”

Jain pointed out that today many Americans are enrolled in high deductible health plans (HDHPs) through their employer, with the idea that they should be encouraged to be better health care consumers. But in many cases, he said, people lack the knowledge to be good health care consumers—they don’t understand, for example, that when they see “billed charges” that they can call and get a better rate.

“Instead, they are saddled with bills, and then sometimes they're sent to collection, and then they're sent to secondary degree of collection,” Jain said. And then the next time that person needs care, they might think twice because they don’t want to repeat the cycle.

“Health care is one of the biggest expenditures that people have in their lives,” he said. “It's also one of the most likely reasons for them to become bankrupt. We have to fix this.”

In fact, the link between medical debt and bankruptcy has been documented for a generation. In 2005, authors publishing in Health Affairs—including Harvard law professor and now US Senator Elizabeth Warren—found that about half of bankruptcies were the result of an illness or injury, and specifically out-of-pocket costs. The Affordable Care Act eliminated cost-sharing for many preventive services to remove barriers for patients; however, other costs must initially come out-of-pocket under HDHPs, which can be a deterrent to seeking care if the HDHP is not combined with a health savings account.

An attractive aspect of the SCAN / CareOregon initiative is its simplicity. Whereas financial assistance programs or Medicaid require patients to qualify—often at intervals—this action simply pays off the bills and sends patients a letter. And it comes at a time when the end of the COVID public health emergency is causing many low-income patients to fall off the Medicaid rolls because states are putting back barriers to entry.

Patients of color and those with low incomes are more likely to have medical debit, Jain said, and these actions will not help.

“Medicaid is one of the most important public programs that we have and is a huge source of coverage,” he said. “There are some states that are purposely trying to make it challenging for people to enroll in Medicaid. Our hope is that we take a hard look at that, too, in that this is a big part of how people actually end up in medical debt. They’re not covered, either by public program to which they have access, or there are unnecessary barriers to actually accessing these programs.”