RIP Debt turns debt collection on its head, buying up unpaid medical bills : Shots - Health News Nonprofit RIP Medical Debt buys up unpaid hospital bills plaguing low-income patients and frees them from having to pay.

This group's wiped out $6.7 billion in medical debt, and it's just getting started

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More than 4 in 10 American households owe medical debt. A poll by NPR and Kaiser Health News shows the rate is much higher for people who are Black or Latino or who have a low income. But one nonprofit has an innovative solution. It buys, then forgives delinquent debts owed by lower income patients. For our ongoing series on medical debt, NPR's Yuki Noguchi reports on how RIP medical debt boomed during the pandemic, retiring billions in medical debt to date.

YUKI NOGUCHI, BYLINE: Soon after giving birth to a daughter two months premature, Terri Logan got the hospital's bill. Logan, a high school math teacher in Georgia at the time, stopped opening them.

TERRI LOGAN: It was one of those moments that when you see commas...

NOGUCHI: But putting that scary number out of sight did not keep it out of mind.

LOGAN: The weight of all of that medical debt - oh, man, it was tough. Like, every day was tough. Every day, I'm thinking about what I owe, how I'm going to get out of this, especially with, you know, the money coming in just not being enough.

NOGUCHI: Just recently, nearly 13 years and many anxiety attacks later, Logan received yellow envelopes from a nonprofit group saying it purchased, then forgave all those past medical bills worth $1,400.

LOGAN: Wait, what? Who does that (laughter)?

NOGUCHI: RIP Medical Debt does. It frees patients of medical debt thousands of people at a time, using an unusual model developed by two former debt collectors. Allison Sesso is CEO of RIP Medical Debt. She says founders Craig Antico and Jerry Ashton built their executive careers chasing down patients who couldn't afford their bills.

ALLISON SESSO: They would have conversations with people on the phone, and they would understand and have better insights into the real struggles that people were challenged with.

NOGUCHI: So eight years ago, they started buying up debt without the intention of making a profit. RIP now buys unpaid hospital debt at about 1% their original value, then - poof - releases patients of their obligation to pay. It's a blessing bestowed randomly on lower income patients. Sesso says it just depends which hospitals' debts are available for purchase.

SESSO: So nobody can come to us and raise their hand and say, like, I'd like you to relieve my debt.

NOGUCHI: With inflation and job losses stressing more families, RIP recently expanded its pool. It now helps patients making up to four times the federal poverty level.

SESSO: We have helped 3.6 million people, and we've demolished $6.7 billion of debt.

NOGUCHI: A surge in recent donations is fueling RIP's expansion from individual college students to philanthropist MacKenzie Scott, who gave $50 million. It hired staff and developed software to identify targeted debts faster. New regulations also started allowing RIP to buy unpaid accounts directly from the hospitals so it can help more people. Of course, the fact this is a growth business is lamentable, even to RIP. Its existence is a testament to just how many people fall victim to insurance and health care systems too expensive and hard to navigate. Major donors like Jim Branscombe say, unfortunately, RIP is one of the only immediate solutions out there.

JIM BRANSCOMBE: The pandemic has just made it much more difficult for people running up incredible bills that aren't covered.

NOGUCHI: Branscombe is a longtime advocate for the poor in Appalachia, where he grew up, where he says chronic disease makes medical debt so much worse.

BRANSCOMBE: Depression and despair.

NOGUCHI: For Terri Logan, the former math teacher with long-standing bills, that pressure and despair turned into debilitating anxiety and depression. It triggered traumatic memories.

LOGAN: And that pain that shoots up the left side of your body and makes you feel like you're about to have an aneurysm and you're going to pass out is something that kind of happens when I have panic attacks, hyperventilate and things of that nature because I'm super stressed.

NOGUCHI: Alleviating that vicious, destructive cycle is a big reason some hospitals want to work with RIP. Dawn Casavant is chief of philanthropy for Heywood Healthcare System in Massachusetts. It turned over some of its unpaid debts to RIP this year after realizing patients with outstanding bills avoid treatment.

DAWN CASAVANT: We wanted to eliminate at least one stressor of avoidance to get people in the doors to get the care that they need.

NOGUCHI: Plus, she says, there's no point in keeping bad debt on the books.

CASAVANT: It's likely that that debt would not have been collected anyway.

NOGUCHI: One criticism of RIP's approach has been that it isn't preventative. It only swoops in after credit scores are wrecked, putting mortgages and car loans out of reach. Mark Rukavina is a director for Community Catalyst, a consumer advocate.

MARK RUKAVINA: A lot of damage will have been done by the time they come in to relieve that debt. Hospitals shouldn't have to be paid. You know, basically, don't reward bad behavior.

NOGUCHI: Instead, Rukavina argues, more hospitals should use their existing financial assistance programs to help patients. By law, most hospitals must offer what's often called charity care. Depending on the hospital, those programs cut costs for patients earning up to two to three times the federal poverty level. But many eligible patients never find out about charity care or aren't told. So they get billed full freight, then hounded by collections agencies when they don't pay. So in recent months, RIP started trying to change that, too. CEO Allison Sesso says it's working with some hospitals to better prescreen patients eligible for charity care, trying to prevent debt from incurring in the first place.

SESSO: We prefer the hospitals reduce the need for our work at the back end. I would say hospitals are open to feedback, but they also are a little bit blind to just how poorly some of their financial assistance approaches are working out.

NOGUCHI: No one told Terri Logan she might qualify when she gave birth. She assumed help didn't exist for people like her, earning just enough money not to qualify for support like food stamps. So for years, money woes sapped her mojo.

LOGAN: But I am kind of finding it.

NOGUCHI: She says newfound freedom from medical debt has revived her and her dormant dream to sing on stage.

LOGAN: (Singing) Strumming my pain with his fingers.

NOGUCHI: Her first performance is in August. Yuki Noguchi, NPR News.

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