Jar of IOUs The opinion doeslittle to make an impact on the overall causes of medical debt, butit does provide some relief for consumers who find themselves in avery stressful situation. (Photo: Shutterstock)

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It's not a situation anyone wants to find themselves in: dodgingcalls from debt collectors for a medical bill you just couldn'tpay. Unfortunately, with the unemployment rate increasing and manyAmericans finding themselves without health insurance, theincidence of unpaid medical bills is expected to rise. While hospitals prepare todouble down on their collection efforts, the Department of Healthand Human Services recently approved an arrangement that couldoffer some reprieve to patients and health systems alike.

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Traditionally, if a patient isn't able to pay or work out afinancing arrangement, outstanding medical debts are passed off toa collections agency. In recent years, alternative solutions topaying medical debt have become more common, from crowdfunding tocharitable campaigns aimed at buying up and paying off medicaldebt. One such example of the latter is RIP Medical Debt, anational nonprofit that buys up and forgives medical debts.

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Related: 20 percent of Americans have donated to a medicalbill crowdfunding campaign

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Since 2014, RIP has forgiven more than $2.5 billion in medicaldebt, working with charities and donors to fund its efforts. Oneissue that RIP has faced is that hospitals are unable to pass offthe debt directly without violating anti-kickback rules, but theHHS recently said it will not penalize healthsystems that sell or donate the debt directly to RIP.

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"At a time when the pressure on the healthcare system is soextreme, we will see a significant increase in medical debt becauseof the amount of care needed as a result of COVID-19 as well aspatients' increasing inability to pay," RIP executive directorAllison Sesso told Modern Healthcare. "We really need to be ableto get hospitals to work with us—this could be a real economicstimulus for people who need the burden lifted."

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As part of the advisory opinion, health systems will not be ableto publicize their partnership with RIP. Doing so could beconstrued as a violation of the anti-kickback rules, as it couldincentivize patients to go to a provider where there's a greaterchance their outstanding debt would be forgiven. The advisoryopinion also notes that the donors and charities that RIP workswith will not be allowed to earmark donations for specific patientsor treatment types.

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The opinion does little to make an impact on the overall causesof medical debts–lack of price transparency, surprise medical billsand complex billing schemes–but it does provide some relief forconsumers who find themselves in a very stressful situation.

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"We know that debt itself is a social determinant of health, soif a hospital's goal is to reduce peoples' stress and improve theirhealth outcomes, this is one way to address that," Sesso added.

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Emily Payne

Emily Payne is director, content analytics for ALM's Business & Finance Markets and former managing editor for BenefitsPRO. A Wisconsin native, she has spent the past decade writing and editing for various athletic and fitness publications. She holds an English degree and Business certificate from the University of Wisconsin.