New Orleans reaches first medical debt relief deal
7th March 2024 · 0 Comments
By Katie Jane Fernelius
Contributing Writer
(Veritenews.org) — More than a year after the city of New Orleans announced a plan to erase more than $100 million in medical debt held by residents, Mayor LaToya Cantrell’s administration has secured its first debt relief deal with a health care provider.
But with negotiations between the city and the region’s largest hospital chains yet to yield results, the agreement is limited in scope, covering only a small fraction of the total goal.
The deal with private emergency medical services provider Acadian Ambulance will relieve about $3.4 million in debt, the New Orleans Health Department told Verite News this week. Officials say it will impact about 3,000 residents with longstanding unpaid ambulance bills.
The New Orleans City Council in late 2022 allocated $1.3 million of American Rescue Plan Act (ARPA) funds to buy and forgive $130 million of medical debt by partnering with RIP Medical Debt, a New York-based nonprofit that buys outstanding debt for pennies on the dollar and forgives it. The move followed similar debt-relief initiatives in Cook County, Illinois, and Toledo, Ohio.
Louisianans hold nearly $2 billion in medical debt, according to the Consumer Financial Protection Bureau, with the average household medical debt hovering around $2,000. Medical debt can impact people’s credit scores, and discourage them from seeking necessary medical, dental, and vision services for fear of inability to pay. Today, medical debt remains the leading driver of people filing for bankruptcy in the U.S.
The city initially aimed to forgive $40 million of debt by the end of 2023, $50 million by the end of 2024, and the last $40 million by the end of 2025. But it has faced delays as negotiations with the two major hospital systems – Ochsner and LCMC – have taken longer than first anticipated.
RIP Medical Debt typically buys medical debt through collections agencies that originally purchased the debt from hospitals. In recent years, it has also begun working directly with hospital systems, encouraging them to donate or sell their debt to the nonprofit.
Ochsner Health and LCMC Health are the two largest hospital systems in the city. In previous reporting, Verite confirmed that both hospital systems do not sell their debt to collections agencies but instead hold it themselves, making direct negotiation essential to any large-scale medical debt forgiveness program in the city.
According to the city, those negotiations continue.
“Negotiations with the hospital systems are still in progress and moving forward as planned,” said Isis Casanova, public information officer for the Health department, in an email. “We remain committed to working towards debt relief for those affected by medical expenses.”
Ochsner and LCMC did not respond to requests for comment by publication time.
The effort is coming up against a 2026 spending deadline for the ARPA funds.
“An exact timeline for hospital medical debt elimination to be finalized has not been defined, but there is still time,” Casanova said.
It’s not clear what share of total ambulance debt owed by city residents the Acadian deal will erase. The New Orleans Health Department could not immediately provide an estimate of total ambulance debt among Orleans residents.
Acadian, which did not respond to a request for comment on this story, is one of the two major ambulance services that operate in New Orleans. The other is a public provider, New Orleans EMS, which is operated by the New Orleans Health Department.
Asked whether uncollected ambulance debt owed to the city – which has reached tens of millions of dollars in some years, according to a 2018 report by WDSU – could also be forgiven, Casanova did not answer definitively.
“RIP Medical Debt leads the outreach to and negotiations with healthcare providers who hold medical debt of New Orleans residents,” Casanova said.
This article originally published in the March 7, 2024 print edition of The Louisiana Weekly newspaper.
