Since Day One, Governor Katie Hobbs has been working to make healthcare more affordable so Arizonans can thrive. One major impediment to financial security is medical debt. Many hardworking Arizonans struggle under the weight of large medical bills incurred through no fault of their own. On March 4, 2024, Governor Hobbs was proud to announce Affordable Arizona: Tackling Medical Debt for Working Families. This effort is an investment in the health and prosperity of everyday Arizonans. Using up to $30 million in American Rescue Plan Act funds, the State of Arizona will partner with the non-profit organization RIP Medical Debt (“RIPMD”) to purchase and forgive billions in medical debt held by medical providers for up to one million Arizonans. This is the largest medical debt relief effort by any state government in history.

Q: What problem does this program address?

A: Every day, difficult conversations are happening at kitchen tables across our state and country. Families are facing rising costs at every turn, including for healthcare.Medical debts impose psychological and financial burdens and often deter people from seeking the healthcare services they need. In many circumstances, people struggling with medical debt feel the lasting impacts of reduced credit scores, wage garnishment, and property liens. With the additional burden of medical debt due to COVID-19, this debt relief program will help up to one million Arizona residents obtain financial stability, improve their quality of health, and help them thrive.

Q: How do people apply for this program?

A: There is no way to apply for this program. RIPMD performs an analysis of hospital debt portfolios and identifies qualifying accounts. All eligible accounts (typically a significant percentage of accounts) will have the debt canceled and beneficiaries will be notified without those beneficiaries needing to take any action. The State can only cancel medical debts if hospitals and health systems sell or donate their medical debt portfolios as part of this program.

Q: What are the eligibility criteria for the program?

A: To be eligible for medical debt relief, program beneficiaries must be:

• residents of Arizona, and
• have incomes up to 400% of current Federal Poverty Guidelines (FPG), or
• have a medical debt that is 5% or more of their estimated household annual income.

Hospitals that provided services to these individuals also must sell or donate medical debts to RIPMD for purposes of cancellation through this initiative.

Q: How will people be notified?

A: The State and RIPMD will notify program beneficiaries by mail once specific medical debts have been acquired and canceled under this program. They may also send notifications via email.

Q: Where does the funding come from to retire this debt?

A: The State of Arizona has committed up to $30 million in federal American Rescue Plan Act funds to fund this initiative

Q: What is the role of the State’s nonprofit partner, RIP Medical Debt?

A: The State of Arizona is partnering with RIP Medical Debt (see: www.ripmedicaldebt.org), a national, independent 501(c)(3) charitable organization. RIPMD will contact hospitals and health systems and will ask them to sell or donate portfolios of Arizonans’ medical debt, allowing the State to cancel debts for Arizona residents who qualify based on financial hardship and other criteria. The program’s benefits for patients, communities, and the hospitals themselves will be communicated during these interactions (see: https://ripmedicaldebt.org/hospitals/).

The State and RIPMD will also notify each qualifying beneficiary that their specific medical debt (that RIPMD has been able to acquire) has been canceled, and that the debt cancellation does not lead to income tax liabilities for program recipients.

RIPMD will share regular reports with the State regarding program progress and success throughout the three-year program duration.

Q: What hospitals will Arizona partner with for this medical debt relief initiative?

A: Any medical provider holding Arizonans’ medical debt can partner with the State and participate in this initiative. Arizona-based providers will be prioritized.

Q: What is the role of providers in this initiative?

A: Participating hospitals will enter into a Business Associate Agreement and a Non-Disclosure Agreement with RIPMD to protect the confidentiality of patient health information and other aspects of the transactions. The hospitals will send account data files to RIPMD for analysis. Once accounts for qualifying individuals have been identified, hospitals will decide whether to sell and/or donate accounts to RIPMD. Some hospitals may decide to make their participation public, while others may keep it confidential. Either way, patients will be notified of their debt relief.

Q: How will the State get buy-in from providers to participate?

A: Many providers have already expressed interest in collaborating. RIPMD professionals will share presentations and discuss with hospitals and health systems about the program’s benefits to patients, communities, and to the hospitals themselves. Numerous hospital organizations across the United States have already recognized these benefits, have completed transactions with RIPMD and will provide references upon request.

Q: How will this program impact providers’ finances?

A: The program will focus on patient accounts that are anywhere from 18 months to 7+ years old (measured from the date services were provided) and after the billing and collections process have been completed. Importantly, even though collections activities may have stopped on some of this debt, the medical debts remain outstanding and continue to have negative economic and health impacts on Arizona residents. Overall, the impact on hospitals’ finances will be positive if they sell medical debt to RIPMD for cancellation.

Q: What agreements will providers need to sign to participate in this initiative?

A: Agreements will include:

• Business Associates Agreement
• Non-Disclosure Agreement
• Purchase or Donation Agreement (which specifies transaction terms and responsibilities for removing any adverse credit information that applies to the accounts)

Q: What information will providers have to share?

A: Hospitals will need to share patient account data files, following specifications provided by RIPMD. The data includes patient demographic information, insurance status and payer, dates of service, balances still owed, and other information that identifies which individuals qualify for debt cancellation and which do not. All of the data sharing is HIPAA-compliant.

Q: How will purchase prices for portfolios of qualifying medical debt be determined?

A: RIPMD offers a standard pricing model that corresponds to the fair market value of medical debt. Prices vary based on the age of the accounts. Older accounts are priced lower. Overall, qualified medical debt will be purchased for pennies on the dollar of the debt’s face value.