BILL NUMBER: AB 774 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 16, 2005
INTRODUCED BY Assembly Member Chan
FEBRUARY 18, 2005
An act to add Article 3 (commencing with Section 127400) to
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code,
relating to hospitals.
LEGISLATIVE COUNSEL'S DIGEST
AB 774, as amended, Chan. Hospitals: self-pay policies.
Existing law provides for the Office of Statewide Health Planning
and Development, which is charged with the administration of health
policy and planning relating to health facilities, including
hospitals.
This bill would require each hospital to develop a policy
specifying how the hospital will determine financial liability for
services rendered to both financially qualified patients and self-pay
patients, as defined. The bill would require the policy to include a
section addressing charity care patients that specifies the
financial criteria and the procedure used by the hospital to
determine whether a patient is eligible for charity care. The bill
would require each hospital to perform various functions in
connection with the hospital self-pay policy, including notifying
patients of the policy, and attempting to determine the availability
of private or public health insurance coverage for each patient. The
bill would also specify billing and collection procedures to be
followed by a hospital, its assignee, collection agency, or billing
service.
This bill would require each hospital to submit to the office a
copy of the hospital's application for financially qualified patients
and a copy of its self-pay policy, eligibility procedures, review
process, and procedure for determining self-pay pricing. The bill
would authorize the office to develop a uniform self-pay application
to be used by all hospitals.
The bill would authorize the director of the office to levy civil
penalties for violations by a hospital of the above provisions.
The Upon referral by the office, complaint by
an individual consumer, or other information concerning violations,
the bill would authorize the Attorney General to authorize an
investigation to determine whether a hospital is in compliance with
the above provisions and would authorize private persons to
act in the capacity of the Attorney General if the Attorney General
fails to determine that a violation occurred within 90 days of
receiving notice of possible violation .
This bill would provide that to the extent that certain of the
bill's requirements result in a specified federal determination
relating to the hospital's established charge schedule, the
requirement in question shall be inoperative with respect to a
hospital that is licensed to and operated by a county or public
hospital authority.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 3 (commencing with Section 127400) is added to
Chapter 2 of Part 2 of Division 107 of the Health and Safety Code, to
read:
Article 3. Self-Pay Policies
127400.
As used in this article, the following terms have the following
meanings:
(a) "Allowance for financially qualified patient" means, with
respect to services rendered to a financially qualified patient, an
allowance that is applied after the hospital's charges are imposed on
the patient, due to the patient's determined financial inability to
pay the charges.
(b) "Federal poverty level" means the poverty guidelines updated
periodically in the Federal Register by the United States Department
of Health and Human Services under authority of subsection (2) of
Section 9902 of Title 42 of the United States Code.
(c) "Financially qualified patient" means both of the following:
(1) A patient who is a self-pay patient, as defined in subdivision
(f) or an underinsured patient as defined in subdivision (g).
(2) A patient who has a family income that does not exceed 400
percent of the federal poverty level.
(d) "Hospital" means any facility that is required to be licensed
under subdivision (a), (b), or (f) of Section 1250, except a facility
operated by the State Department of Mental Health or the Department
of Corrections.
(e) "Office" means the Office of Statewide Health Planning and
Development.
(f) "Self-pay patient" means a patient who does not have
third-party coverage from a health insurer, health care service plan,
Medicare, or Medicaid, and whose injury is not a compensable injury
for purposes of workers' compensation, automobile insurance, or other
insurance as determined and documented by the hospital. Self-pay
patients may include charity care patients.
(g) "Underinsured patient" means a person whose deductibles,
copayments, medical, or hospital bills after payment by third-party
payers exceed 5 percent of the patient's annual income or a lower
level determined in accordance with a hospital's charity care policy.
127405.
(a) Each hospital shall develop a policy specifying how the
hospital will determine the financial liability for services rendered
to both financially qualified patients and self-pay patients.
(b) For financially qualified patients, each hospital shall
specify in its policy how the hospital will determine and apply
allowances for services provided to financially qualified patients.
The allowance, at a minimum, shall be equal to the difference between
the charge for the services set forth in the hospital's established
charge schedule and the greater of the payments the hospital would
receive from the Medicare Program, the Medicaid Program, or workers'
compensation.
(c) No allowance for financially qualified patients shall be
required with respect to any service for which there is no coverage
under the Medi-Cal program or Medicare or workers' compensation. At
the hospital's discretion, the allowance for financially qualified
patients may be applied by the hospital to patients who do not meet
the standards for financially qualified patients.
127407.
Each hospital shall include in its policy on financially
qualified and self-pay patients a section addressing charity care
patients. The charity care section of the policy shall specify the
financial criteria and the procedure used by the hospital to
determine whether a patient is eligible for charity care. The
hospital may specify that no persons are eligible for charity care
under any circumstances. The policy shall include all of the
following:
(a) Financial eligibility criteria.
(b) Financial information required of the patient.
(c) A review process for charity care decisions.
127410.
(a) Each hospital shall provide patients with oral and written
notice of the hospital's policy for financially qualified and
self-pay patients at the time of admission and discharge. The notice
shall also be provided to patients who receive emergency or
outpatient care and who may be billed for that care, but who were not
admitted. The notice shall be in the language spoken by the patient.
That language shall be determined in a manner similar to that
required pursuant to Section 12693.30 of the Insurance Code. All
written correspondence to the patient required by this article shall
also be language appropriate.
(b) Notice of the hospital's policy for financially qualified and
self-pay patients shall be clearly and conspicuously posted in
locations that are visible to the public, including, but not limited
to, all of the following:
(1) Emergency department, if any.
(2) Billing office.
(3) Admissions office.
(4) Any other locations that may be determined by the office, to
ensure that patients are informed of the policy and how to obtain a
copy of the policy and related information.
127415.
Each hospital shall submit to the office a copy of the application
for financially qualified patients used by the hospital, including
the charity care section of that application. The office, in
consultation with interested parties, may also develop a uniform
self-pay application to be used by all hospitals. In developing the
application, the office shall consider whether the application used
for the Medi-Cal program and the Healthy Families Program can be used
as, or incorporated in, the uniform self-pay application.
127420.
(a) Each hospital shall make all reasonable efforts to obtain from
the patient or his or her representative information about whether
private or public health insurance or sponsorship may fully or
partially cover the charges for care rendered by the hospital to a
patient, including, but not limited to, any of the following:
(1) Private health insurance.
(2) Medicare.
(3) The Medi-Cal program, the Healthy Families Program, the
California Childrens' Services Program, or other state-funded
programs designed to provide health coverage.
(b) If a hospital bills a patient who has not provided proof of
coverage by a third party at the time the care is provided or upon
discharge, as a part of that billing, the hospital shall provide the
patient with a clear and conspicuous notice that includes all of the
following:
(1) A statement of charges for services rendered by the hospital.
(2) A request that the patient inform the hospital if the patient
has health insurance coverage, Medicare, Healthy Families, Medi-Cal,
or other coverage.
(3) A statement that if the consumer does not have health
insurance coverage, that they the consumer
may be eligible for Medicare, Healthy Families, Medi-Cal,
California Childrens' Services Program, or charity care.
(4) A statement indicating how patients may obtain applications
for the Medi-Cal program and the Healthy Families Program and that
the hospital will provide these applications on request. If, at the
time care is provided, the patient does not show proof of coverage by
a third-party payer specified in subdivision (a), then the hospital
shall send an application for the Medi-Cal program and the Healthy
Families Program to the patient. This application may accompany the
billing or may be sent separately.
(5) Information regarding the financially qualified patient and
charity care application, including the following:
(A) The hospital contact for resources for additional information
regarding charity care.
(B) A statement indicating how patients may obtain an application
for a financially qualified patient. The statement shall provide
information about the family income requirements for financially
qualified patients as provided in this article.
127425.
(a) In order to facilitate payment by public or private
third-party payers, for at least 180 days after discharge or after
the final day service is provided, a hospital, its assignee,
collection agency, or billing service shall be limited to the
following debt collection activities:
(1) Sending a bill to the patient in accordance with existing law.
(2) Attempting to negotiate payment of the bill or a payment plan
in accordance with this article.
(3) Attempting to collect payment from any responsible third-party
payer, either public or private.
(4) Providing any information that may assist the patient in
obtaining coverage through the Medi-Cal program or Healthy Families
Program, or any other public program for which the patient may be
eligible.
(5) Attempting to make a final determination as to whether the
patient may be considered a self-pay patient under the hospital's
self-pay policy or is eligible for charity care under the hospital's
charity care policy.
(6) Assisting a financially qualified patient in obtaining the
allowance for services provided for under this article and in
applying under the hospital's charity care policy, if any.
(7) Providing any notices required by state or federal law.
(b) A hospital, its assignee, collection agency, or billing
service shall use reasonable efforts to negotiate a payment plan. For
purposes of this section, "reasonable efforts to negotiate a payment
plan" means two efforts to contact the patient by telephone and two
efforts to contact the patient by mail. This requirement shall not
apply if the patient has requested that the hospital, its assignee,
collection agency, or agent not contact the patient.
(c) After the time period specified in subdivision (a) has
elapsed, the hospital, its assignee, collection agency, or billing
service may engage in any other debt collection activities otherwise
permitted by law, including, but not limited to, reporting adverse
information to a consumer credit reporting agency or commencing civil
action against the patient for nonpayment.
(d) Notwithstanding subdivision (c), a hospital, its agent,
collection agency, or assignee shall not use wage garnishment or a
lien on a primary residence as a means of debt collection from a
financially qualified patient.
(e) Nothing in this section shall be construed to diminish or
eliminate any protections consumers have under existing federal and
state debt protection laws.
127426.
(a) The period described in Section 127425 shall be extended if
the patient has a pending appeal for coverage of the services.
(b) For purposes of this section, "pending appeal" includes any of
the following:
(1) A grievance against a health care service plan, as described
in Chapter 2.2 (commencing with Section 1340) of Division 2, or
against an insurer, as described in Chapter 1 (commencing with
Section 10110) of Part 2 of Division 2 of the Insurance Code.
(2) An independent medical review, as described in Section 10145.3
or 10169 of the Insurance Code.
(3) A fair hearing for a review of a Medi-Cal claim pursuant to
Section 10950 of the Welfare and Institutions Code.
(4) An appeal regarding Medicare coverage consistent with federal
law and regulations.
127430.
(a) Prior to commencing collection activities against a patient,
the hospital, any assignee of the hospital, or other owner of the
patient debt, including a collection agency, shall provide the
patient with a clear and conspicuous written notice containing both
of the following:
(1) (A) A plain language
summary of the patient's rights pursuant to this article, the
Rosenthal Fair Debt Collection Practices Act (Title 1.6C (commencing
with Section 1788) of Part 4 of Division 3 of the Civil Code), and
the federal Fair Debt Collection Practices Act (Subchapter V
(commencing with Section 1692) of Chapter 41 of Title 15 of the
United States Code). The summary shall include a statement that the
Federal Trade Commission enforces the federal act.
(B) The
The summary shall be sufficient if it appears in
substantially the following form: "State and federal law require debt
collectors to treat you fairly and prohibit debt collectors from
making false statements or threats of violence, using obscene or
profane language, and making improper communications with third
parties, including your employer. Except under unusual circumstances,
debt collectors may not contact you before 8:00 a.m. or after 9:00
p.m. In general, a debt collector may not give information about
your debt to another person, other than your attorney or spouse. A
debt collector may contact another person to confirm your location or
to enforce a judgment. For more information about debt collection
activities, you may contact the Federal Trade Commission by telephone
at 1-877-FTC-HELP (382-4357) or online at www.ftc.gov."
(2) Information about nonprofit credit counseling services in the
area.
(b) The notice required by subdivision (a) shall also accompany
any document indicating that the commencement of collection
activities may occur.
127435.
Each hospital shall provide to the office in a format determined
by the office a copy of its self-pay policy, eligibility procedures,
review process, and procedure for determining self-pay pricing. The
information shall be provided at least biennially on January 1, or
when a significant change is made. If no significant change has been
made by the hospital since the information was previously provided,
notifying the office of the lack of change shall meet the
requirements of this section. The office shall make this information
available to the public.
127440.
(a) For violations of this article, the director of the office
may, after appropriate notice and opportunity for hearing, levy civil
penalties as follows:
(1) A hospital that violates any provision of this article, except
for subdivision (c) of Section 127405, shall be liable for civil
penalties of not more than five hundred dollars ($500) per day per
patient affected for each violation.
(2) A hospital that bills a patient for amounts in excess of those
provided for in Section 127405 shall be liable for a civil penalty
of three times the amount billed in error to the patient.
(3) In lieu of the civil penalty, require the hospital to provide
care at no cost to financially qualified persons in a value
comparable to three times the value of the care provided in violation
of Section 127405.
(4) Require the hospital to provide notice to the public in a
newspaper of general distribution of its policies pursuant to this
article, of any violations of this act, and of the penalties
assessed.
(b) Any money that is received by the office pursuant to this
section shall be paid into the General Fund.
127441.
The Upon referral by the office, complaint
by an individual consumer or other information concerning violations
of this article, the Attorney General may authorize an
investigation to determine whether a hospital is in compliance with
this article. If the Attorney General fails to determine
that a violation of this article occurred within 90 days of receiving
notice of possible violation of this article, then private persons
may act in the capacity of the Attorney General.
127442.
If the Office or the Attorney General fails to make a
determination that a violation of this article occurred within 90
days of receiving notice of a possible violation of this article, any
person damaged by a violation of this article may bring an action
The Attorney General may seek to recover all of
the following:
(a) Actual damages.
(b) Civil penalties of not more than five hundred dollars ($500)
per day for each violation.
(c) For a violation of subdivision (c) of Section 127405, three
times the amount billed to the patient.
(d) For intentional or willful violations of this article,
exemplary damages, in an amount the court deems proper.
(e) Equitable relief as the court deems proper.
(f) Reasonable attorneys' fees and court costs.
127443.
The rights, remedies, and penalties established by this article
are cumulative, and shall not supersede the rights, remedies, or
penalties established under other laws.
127444.
Nothing in this article shall be construed to prohibit a hospital
from uniformly imposing charges from its established charge schedule
or published rates, nor shall this article preclude the recognition
of a hospital's established charge schedule or published rates for
the Medi-Cal program and the Medicare Program reimbursement charges.
127445.
Notwithstanding any other provision of law, the amounts paid by
patients for services resulting from the self-pay allowances or
charity care arrangements that are applied under a hospital's
self-pay and charity care policies shall not constitute a hospital's
uniform, published, prevailing, or customary charges, its usual fees
to the general public, or its charges to non-Medi-Cal purchasers
under comparable circumstances, for purposes of any payment limit
under federal Medicaid law, Medi-Cal law, or any other federal or
state-financed health care program.
127446.
To the extent that any requirement of Section 127400 or 127405
results in a federal determination that a hospital's established
charge schedule or published rates are not the hospital's customary
or prevailing charges for services, the requirement in question shall
be inoperative with respect to a hospital that is licensed to and
operated by a county or a hospital authority established pursuant to
Section 101850. The State Department of Health Services shall seek
federal guidance regarding modifications to the requirement in
question. All other requirements of this article shall remain in
effect.