We partner with hospitals and health systems to abolish problematic medical debt.

RIP raises funds donated by individuals, faith-based organizations, foundations, corporations, and others. In December 2020, after a careful vetting process, Mackenzie Scott provided a transformative $50 million gift to RIP! Under the oversight of a volunteer board, RIP uses these funds to analyze and acquire medical debt and then to abolish the outstanding balances for households experiencing financial hardship.

RIP can abolish 8 to 10 times more medical debt (per dollar of donor funds) when healthcare organizations donate (rather than sell) accounts for abolishment.

RIP does not engage in any collections actions. It never contacts patients with collections letters or calls. The only communication that patients receive from RIP is a letter telling them that their debt has been cancelled.

RIP Medical Debt is not a debt buyer – it is a Debt Abolisher. RIP applies some of the same administrative techniques that are used by commercial debt buyers, but that’s where the similarities end.

Unlike commercial debt buyers, RIP Medical Debt:

• Does not engage in collections actions. It never contacts patients with collections calls or letters. The only communication that patients receive from RIP is a letter telling them that their debt has been cancelled.
• Prefers to acquire medical debt through donations rather than purchases. Acquiring accounts by donation dramatically increases the leverage of donor funds and the amount of debt RIP can abolish for patients, families, and communities.
• Does not have a profit motive. As a 501(c)(3) charity, RIP receives tax-deductible philanthropic support from individuals and organizations who support RIP’s mission.
• Is able to abolish patient debt without creating a tax liability for the patient.

Much has been written about the consequences and growth of unpaid medical debt. Medical debt typically results from unplanned, unexpected illnesses and accidents. About one-third of U.S. adults have difficulty covering unexpected expenses including out-of-pocket spending for health care - and medical debt is the leading cause of bankruptcy in the U.S. The burden of medical debt has been growing because the cost of health care in the U.S. has been growing and so has the prevalence of high-deductible health insurance plans.

The coronavirus pandemic has made this problem worse!

Patients with burdensome medical debt often delay the care they need because they fear incurring even more debt.

RIP’s financial hardship criteria for medical debt abolishment are as follows:

• Low Income: The patient’s (or guarantor’s) household income is at or below 200% of the current federal poverty guidelines, or
• Medical Debt Burden: Medical debt represents 5% or more of gross household income, or
• Insolvency: The patient (or guarantor) is insolvent – because total liabilities exceed total assets.

Through a partnership with TransUnion, RIP accesses third-party information about estimated household income, liabilities, and assets and then applies its financial hardship criteria to identify medical debt that qualifies for abolishment.

Most of these medical debts have remained uncollected 1 to 7+ years after the patient received services. Collections actions on the accounts generally have ceased and outstanding balances have been written off as bad debt. These write-offs by providers are only an internal accounting step. Even though these debts have been written off by the healthcare organization, they have not been forgiven and may remain on credit reports until RIP abolishes them.

Healthcare organizations are working with RIP Medical Debt for many mission and business-related reasons. By working with RIP, healthcare organizations:

Mission Reasons

• Address significant social determinants of health and enhance community wellbeing. Many tax-exempt healthcare organizations have identified addressing these issues as mission-critical.
• Help assure that financial assistance is provided for patients experiencing hardship who (for whatever reason) were not identified as eligible for charity care through the routine revenue cycle process or whose finances deteriorated after the opportunity to apply has expired.
• Potentially reclassify certain accounts that were written off to bad debt to charity care, if a specific step is added into process.
• Demonstrate their commitment to mission, particularly if they donate accounts.
• Help RIP abolish 8 to 10 times more debt if they donate rather than sell accounts.

Business Reasons

• Economic impact: bring new resources into their communities from donors who are committed to abolishing medical debt.
• Receive cash flow and revenue based on industry-standard fair market valuation from dormant accounts that have been fully written off (if the organization decides to sell, rather than donate, some or all accounts to RIP).
• Receive cash flow from accounts that some commercial debt buyers don’t want (again, if the organization decides to sell rather than donate).
• Integrate a state-of-the-art step into the revenue cycle process.
• Identify opportunities to refine financial assistance policies and how they are administered.
• Avoid ongoing operational responsibility for (and the financial statement impact from) unpaid, difficult-to-collect, dormant accounts.
• Enhance patients’ ability to afford and pay future medical bills.

Some healthcare organizations have a comparatively generous Financial Assistance (charity care) Policy. They provide charity care discounts for households up to 400% or 500% of federal poverty guidelines and may also use third-party information from TransUnion or other sources to grant charity on a presumptive basis.

Even in these circumstances, RIP finds many patient accounts that meet its financial hardship criteria.

• RIP typically acquires patient accounts that are 1+ years old and that have been fully processed by the revenue cycle. Collections activities on these dormant accounts typically have stopped. After patient accounts are this old, opportunities for patients to apply for charity care usually have closed. Information from presumptive charity scoring is out-of-date.
• RIP conducts a new, fresh assessment using the most current information available to identify patients experiencing financial hardship today. As a result, RIP frequently identifies people whose finances have deteriorated after the window of opportunity to apply for charity care has closed (often due to job loss or extended illnesses or both). Healthcare organizations generally don’t re-assess charity care eligibility on accounts that are over a year old.
• Some patients qualify for debt abolishment because RIP uses different financial hardship criteria. RIP does not factor the amount of patient assets into its criteria. Two RIP criteria – the Medical Debt Burden (5% or more of gross household income) and Insolvency (patient liabilities exceed assets) frequently are more generous than hospital policies.
• Questions regarding how much Qualified Medical Debt RIP might find are answered easily by conducting the analysis – which is funded entirely by RIP’s donors.

The Advisory Opinion states that the OIG will not impose sanctions under federal anti-kickback or civil monetary penalty laws when RIP works directly with healthcare organizations, hospitals or large, independent physician groups (with more than 50 practitioners) to acquire unpaid Qualified Medical Debt after the provider completes its customary collection efforts. This Advisory Opinion should provide healthcare organizations welcome guidance and an important measure of comfort that they can donate or sell qualifying medical debts to RIP consistent with federal compliance considerations. View Advisory Opinion #20-04

The process through which RIP acquires medical debt from healthcare organizations typically involves the following steps:

1. RIP has or finds donors to fund its work to abolish patient medical debt.
2. RIP and the healthcare organization enter into certain agreements (e.g., a Business Associates Agreement and a mutual Non-Disclosure Agreement) that enable the parties to share data and initiate work.
3. RIP provides the healthcare organization with specifications for a patient account data file.
4. The healthcare organization generates the file and transmits patient account data securely to RIP.
5. RIP identifies and (with the healthcare organization’s assistance) addresses any data gaps, inconsistencies, or related issues.
6. RIP merges the data file with information from TransUnion.
7. The accounts determined to be Qualified Medical Debt based on RIP’s abolishment criteria are identified.
8. The healthcare organization determines that if it will donate or sell accounts to RIP.
9. If a sale of accounts is involved, RIP provides transparent, fair market value pricing estimates for the Qualified Medical Debt to be sold.
10. The healthcare organization informs its collections agencies regarding its plans to donate or sell accounts to RIP, so that contracts and procedures are clear regarding how those accounts can be closed or returned.
11. RIP and the healthcare organization enter into a donation or sale agreement that explicitly obligates RIP to abolish the debt on transferred accounts.
12. As donor funds become available to fund the transaction, the healthcare organization transfers title to the qualified accounts to RIP for the sole purpose of abolishing the debt. In the case of a sale, funds the are wired to the healthcare organization.
13. RIP abolishes the debts for the transferred accounts and sends a letter to each patient (and account guarantor) informing them that their debt(s) have been abolished.
14. Derogatory information is removed from the patient’s (or guarantor’s) credit file (by the agency or entity that placed it there).

RIP has designed the process to be transparent, “minimally invasive,” and user-friendly for the healthcare organization. Staff from RIP’s Debt Operations and Information Systems divisions work with staff from the healthcare organization on data file specifications and transmission.

Once a clean data file has been transmitted to RIP, an analysis can be performed in 5-10 days.

A few hours of staff time at the healthcare organization will be needed to prepare data extracts and transmit files, review results of RIP’s analysis, review agreements, make decisions about the accounts to be donated or sold to RIP, and for financial reporting. Throughout this process, RIP’s staff is careful to minimize the work effort required from the healthcare organization.