North Carolina’s New Medical Bill De-Weaponization Act

North Carolina's healthcare landscape is set to change significantly with the passage of the Medical Bill De-Weaponization Act, a groundbreaking law aimed at alleviating the burden of medical debt on patients. 

Out of every state, North Carolina has the fourth-highest percentage of people with medical debt. This legislation addresses concerns about the aggressive pursuit of medical debt, lawsuits, and practices that disproportionately affect vulnerable populations. For providers who have signed on, the law needs immediate attention and action to ensure compliance ahead of looming deadlines.

What is the Medical Bill De-Weaponization Act?

The Medical Bill De-Weaponization Act is a part of North Carolina’s broader effort to address the overwhelming medical debt crisis impacting the state’s residents. According to KFF Health, 13.4% of adults in the state live with medical debt. In some counties, 30% of residents have medical debt in collections. This law ensures that hospitals and healthcare providers prioritize patient care over aggressive debt collection, particularly for uninsured and low-income patients.

North Carolina's program to address medical debt is expected to cancel the debt for more than 2 million people, significantly easing financial pressures on many of the state's population. Once compliance deadlines hit, hospitals could cancel up to $4 billion in medical debt. 

The legislation requires hospitals to implement specific actions to alleviate the harm caused by medical debt, focusing on transparency, patient rights, and limitations on aggressive debt collection methods. It sets new standards for how and when providers can pursue medical debt collection in the future.

Note that not every hospital in the state is subject to the new law. Only participating hospitals must comply. As an incentive for compliance, these hospitals will receive larger Healthcare Access and Stabilization Program (HASP) subsidies from the state. So far, the participating hospitals are some of North Carolina’s largest, accounting for the majority of medical debt in the state.

Key Provisions Providers Should Know

The Medical Debt De-Weaponization Act is a lengthy bill. Here are the highlights for providers, including specific deadlines for compliance. 

Debt Forgiveness

Hospitals in North Carolina are required to forgive all unpaid medical debt for patients enrolled in Medicaid, dating back to January 1, 2014, including debts that are part of a payment plan. This mandate takes effect on July 1, 2025. 

Additionally, hospitals must forgive medical debt considered uncollectible for low-income patients—those with incomes at or below 350% of the federal poverty level (FPL), which is $52,710 for an individual and $109,200 for a family of four, or those whose debt exceeds 5% of their annual income. By March 1, 2025, hospitals must partner with organizations like Undue Medical Debt to meet these requirements, though the debt relief process can extend beyond that date.

Restrictions on Payment Plans

Payment plans may not last longer than 36 months for individuals with incomes at or below 300% of the FPL. Monthly payments cannot exceed 5% of the patient’s household income. A payment plan under these conditions can only run longer than 36 months if the total collected amount doesn’t exceed what would have been collected under these terms. This goes into effect January 1, 2025.

Improved Access to Financial Assistance

Hospitals and healthcare providers must improve their financial assistance programs, ensuring that patients are aware of their options. This is particularly important for uninsured and underinsured patients, many of whom face large bills without understanding the assistance available to them. 

Hospitals are now required to simplify the application process and clearly communicate financial aid options. Specific provisions include:

• Automatic medical financial assistance: Beginning January 1, 2025, hospitals must automatically qualify certain patients for financial assistance, including those who are homeless, mentally incapacitated without a representative, or enrolled in public benefit programs such as Medicaid, SNAP, or WIC. 

• Free care and discounts: As of the same date, hospitals must also provide free care to patients with incomes at or below 200% of the FPL. ($30,120 for an individual or $62,400 for a family of four) and offer discounts ranging from 50% to 75% for those earning up to 300% of the FPL ($45,945 for an individual or $93,600 for a family of four). The discount amount depends on total income. 

• Presumptive eligibility: By January 1, 2026 (one year later), hospitals must also implement a system of presumptive eligibility, automatically screening patients for financial assistance without requiring an application.

Limits on Collection Agencies

The law places restrictions on healthcare providers' use of third-party collection agencies. Providers cannot sell medical debt to a collection agency without waiting at least 120 days and exhausting other attempts to get the patient enrolled in coverage. They cannot sell the debt at all if the patient’s income is at or below 300% of the FPL. 

If debt is able to be sold, providers must ensure that any collection agency they partner with adheres to the same standards outlined in the act, meaning that these agencies must follow the rules on interest rates, financial assistance, and ethical collection practices. Failure to do so will result in penalties for both the provider and the agency.

Where to Start: Compliance Requirements for Providers

For healthcare providers who have agreed to participate, compliance with the Medical Bill De-Weaponization Act is non-negotiable, and meeting the outlined requirements is essential to avoid legal and financial penalties. Below are three key actions providers should take first:

1. Review and Update Billing Practices

Providers must review their current billing practices to ensure they align with the new regulations. This includes revising how bills are sent to patients, ensuring financial assistance options are highlighted, and confirming that interest rates and fees are compliant with the new rules. 

2. Enhance Financial Assistance Programs

The law mandates that providers make financial assistance programs more accessible and user-friendly for patients. Providers will need to simplify application processes, reduce barriers to entry, and clearly communicate these programs to patients upfront. Improving financial assistance accessibility will be key to preventing the escalation of unpaid bills. 

It’s also a good time to review your medical financial assistance policy, sometimes known as a charity care policy. Many hospital policies do not allow Medicaid-eligible patients to qualify for other types of financial assistance. This must change in order to remain compliant.

3. Audit Existing Technologies

Providers should begin by assessing their current software systems to ensure they are capable of automatically qualifying patients for financial assistance, as mandated by the law. This includes ensuring that the technology is able to identify patients who are homeless, mentally incapacitated, or enrolled in public assistance programs like Medicaid or SNAP, and automatically qualify them for financial assistance without requiring additional documentation or manual input.

Screening and enrollment software must also be upgraded or configured to support presumptive eligibility screening, which takes effect by January 1, 2026. This requires implementing systems that can accurately assess a patient's financial situation based on data from public benefits programs, patient records, and other available sources, whether or not patients can complete an official application.

Using MAPS for Compliance

The deadline for compliance with the Medical Bill De-Weaponization Act is fast approaching, and providers need to act swiftly. Office Ally’s MAPS all-in-one screening and enrollment platform is an excellent tool for meeting new requirements. MAPS offers several key features that directly support compliance with the new legislation. 

Self-Assessment Tools for Financial Assistance Eligibility

Many patients are unaware of their eligibility for financial assistance programs. MAPS allows patients to self-assess their eligibility by inputting basic financial information. Patients can also receive a link to self-screen via QR code signage in care areas, flyers, emails, and the provider’s website. 

Even if they do not qualify for certain assistance programs, they may still qualify for debt forgiveness. MAPS securely tracks and stores this patient data, including their FPL, household income, and other financial indicators. The system can collect this information and compare it to existing medical debt, auto-generating a list of patients who require debt forgiveness under the new law. 

Clear Communication of Rights & Options

Under the new law, providers are required to inform patients about their rights regarding financial assistance, and protections against undue medical debt uncovered during the screening process. MAPS offers a patient-facing component that provides this information in a clear and accessible manner, giving patients real-time notifications about their eligibility for assistance programs, financial rights, and the status of their accounts.

With both patient-facing and back-end tools, MAPS ensures that patients are informed of their financial assistance options promptly and consistently. Patient-to-provider communication options include:

• Emails from the MAPS patient portal
• Text messages from the MAPS patient portal
• Auto-generated printed letters
• Calls from representatives who receive patient accounts in their work queues

Assistance with Legal Compliance

MAPS was built to support financial assistance enrollment through a screening approach. It helps ensure compliance with debt forgiveness, discounts, automatic, and presumptive care, all specified under the Medical De-Weaponization Act. 

As North Carolina’s medical debt regulations evolve, MAPS will automatically update to reflect these changes. This ensures that healthcare providers are in line with the most current legal standards without manually adjusting processes.

Documentation for Audits & Reporting

Providers must follow uniform documentation procedures to offer debt forgiveness or reduction. By automating the gathering and processing of required documents, such as proof of income or assets, MAPS ensures manual steps are accounted for.

The Medical Bill De-Weaponization Act mandates that healthcare providers report the financial assistance they offer annually. The law also requires providers to maintain detailed records of financial assistance eligibility and any attempts to collect debt. MAPS tracks all patient interactions, eligibility determinations, and enrollment attempts to ensure providers can quickly generate reports for audits. This digital trail allows providers to generate the necessary reports quickly and accurately. This reduces the administrative burden and ensures that the provider remains in compliance with state requirements.

Useful Automation

North Carolina’s new law increases the complexity of compliance for healthcare providers. By automating patient eligibility reviews, communications, debt collection limitations and reporting, MAPS reduces the manual work required from staff. This frees up human resources to focus on patient care rather than administrative tasks, all while ensuring legal compliance.

Learn More About MAPS

The Medical Bill De-Weaponization Act marks a significant shift in how healthcare providers in North Carolina handle medical debt. Compliance with this law demonstrates a commitment to patient care over aggressive debt collection.

By updating technology, enhancing financial assistance programs, and ensuring ethical partnerships with collection agencies, healthcare providers can not only avoid penalties but also strengthen their relationships with the patients and communities they serve. Compliance is not just a legal necessity—it is an opportunity to lead in compassionate, patient-centered care.

‍Discover how MAPS can help you meet compliance requirements while improving patient care. Click here to learn more.