BILL NUMBER: AB 774 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 22, 2006
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. Existing law also provides for the licensure and
regulation of health facilities by the State Department of Health
Services.
This bill would require each hospital , as a condition of
licensure, to develop a policy specifying how the
hospital will determine financial liability for services rendered to
both maintain written policies
about discount payment and charity care for financially
qualified patients and self-pay patients , as
defined. The bill would require the policy to
these policies to include , among other things, 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
eligibility criteria, as prescribed . The bill would
require each hospital to perform various functions in connection with
the hospital self-pay policy charity care
and discount pay policies , including notifying
providing patients with a written summary
of the policy, these policies 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 discount
payment and charity care policies, eligibility procedures, review
process, and the application for charity care or discounted payment
.
The bill would authorize the director of the office
Director of Health Services to levy
civil administrative penalties for
violations each violation by a hospital of the
above provisions. 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.
This bill would also require the director to ensure that a
hospital that overcharges a patient shall reimburse that patient, as
described, or if the hospital cannot locate the patient, to use those
funds towards providing care to financially qualified persons.
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 all general acute care hospitals
.
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 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 a patient
with inadequate insurance, as defined in subdivision (g).
(2) A patient who has a family income that does not exceed
400 350 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" "A patient with
inadequate insurance" means a person whose
deductibles, copayments, medical, or hospital bills after payment by
third-party payers family income does not exceed 350
percent of the federal poverty level, as defined in subdivision (c),
and annual deductibles that exceed 5 percent of the patient's
annual income or a lower level determined in accordance with a
hospital's charity care policy , if that individual does not
receive a discounted rate from the hospital as a result of his or her
coverage .
127401. Each general acute care hospital licensed pursuant to
subdivision (a) of Section 1250 shall comply with the provisions of
this article as a condition of licensure. The State Department of
Health Services shall be responsible for the enforcement of these
provisions.
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. maintain an understandable written
policy regarding discount payments for financially qualified patients
as well as an understandable written charity care policy. Uninsured
patients or patients with inadequate insurance who are at or below
350 percent of the federal poverty level, as defined in subdivision
(c) of Section 127400, shall be eligible to apply for participation
under each hospital's charity care policy or discount payment policy.
Notwithstanding any other provision of this act, a
hospital may choose to grant eligibility for its discount payment
policy or charity care policies to patients with incomes over 350
percent of the federal poverty level. Both the charity care policy
and the discount payment policy shall state the process used by the
hospital to determine whether a patient is eligible for charity care
or discounted payment. In the event of a dispute, a patient may seek
review from the business manager, chief financial officer, or other
appropriate manager as designated in the charity care policy and the
discount payment policy.
(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.
(b) Each hospital's discount payment policy shall clearly state
eligibility criteria based upon income consistent with the
application of the federal poverty level. The discount payment policy
shall also include an extended payment plan to allow payment of the
discounted price over time. The policy shall provide that the
hospital and the patient may negotiate the terms of the payment plan.
(c) The charity care policy shall clearly state eligibility
criteria for charity care. In determining eligibility under its
charity care policy, a hospital may consider income and monetary
assets of the patient. For purposes of this determination, monetary
assets shall not include retirement or deferred-compensation plans
qualified under the Internal Revenue Code, or nonqualified
deferred-compensation plans. Furthermore, the first ten thousand
dollars ($10,000) of a patient's monetary assets shall not be counted
in determining eligibility, nor shall 50 percent of a patient's
monetary assets over the first ten thousand dollars ($10,000) be
counted in determining eligibility.
(d) Each hospital shall limit expected payment for services it
provides to any patient at or below 350 percent of the federal
poverty level, as defined in subdivision (b) of Section 124700,
eligible under its discount payment policy to the amount of payment
the hospital would receive for providing services from Medicare,
Medi-Cal, Healthy Families, or any other government-sponsored health
program of health benefits in which the hospital participates,
whichever is greater. If the hospital provides a service for which
there is no established payment by Medicare or any other
government-sponsored program of health benefits in which the hospital
participates, the hospital shall establish an appropriate discounted
payment.
(e) Any patient, or patient's legal representative, who requests a
discounted payment, charity care, or other assistance in meeting
their financial obligation to the hospital shall make every
reasonable effort to provide the hospital with documentation of
income.
(1) For the purpose of determining eligibility for discounted
payment, documentation of income shall be limited to recent pay stubs
or income tax returns.
(2) For the purpose of determining eligibility for charity care,
documentation of assets may include information on all monetary
assets, but shall not include statements on retirement or
deferred-compensation plans qualified under the Internal Revenue
Code, or nonqualified deferred-compensation plans. A hospital may
require waivers or releases from the patient or the patient's family,
authorizing the hospital to obtain account information from
financial or commercial institutions, or other entities that hold or
maintain the monetary assets to verify their value. Information
obtained pursuant to this paragraph shall not be used for collections
actiities.
(3) Eligibility for discounted payments or charity care may be
determined at any time the hospital is in receipt of information
specified in paragraph (1) or paragraph (2), respectively.
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 a written notice
summary of the hospital's policy for financially qualified
and self-pay patients at the time of admission and
discharge. admission. The written summary shall be
consistent with the written estimate provided pursuant to
Section 1339.585, and shall contain information about availability of
the hospital's discount payment and charity care policies, including
eligibility criteria, as well as contact information for a hospital
employee or office from which the person may obtain further
information about these policies. This written summary shall be
provided in addition to the estimate provided pursuant to Section
1339.585. The notice summary
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 were
not admitted. The summary shall be provided in English, and in
languages other than English. The languages to be provided 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 in the language spoken by the patient,
consistent with this section .
(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.
(4) Other outpatient settings.
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, 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.
127425. (a) Each hospital shall have a written
policy about when and under whose authority patient debt is advanced
for collection, whether the collection activity is conducted by the
hospital, an affiliate or subsidiary of the hospital, or by an
external collection agency.
(b) Each hospital shall establish a written policy defining
standards and practices for the collection of debt, and shall obtain
a written agreement from any agency that collects hospital
receivables that it will adhere to the hospital's standards and scope
of practices. In determining the amount of a debt a hospital may
seek to recover from patients who are eligible under the hospital's
charity care policy or discount payment policy, the hospital may
consider only income and monetary assets as limited by Section
127405.
(c) At time of billing, each hospital shall provide a written
summary consistent with Section 124710, which includes the same
information concerning services and charges provided to all other
patients who receive care at the hospital.
(d) When sending a bill to a patient, each hospital shall also
include all of the following:
(1) A statement that indicates that if the patient meets certain
low income requirements, the patient may be eligible for a
government-sponsored program.
(2) A statement that indicates that if the patient lacks insurance
or is under-insured, and meets certain low and moderate income
requirements, the patient may qualify for discounted payment or
charity care.
(3) The name and telephone number of a hospital employee or office
from whom or which the patient may obtain information about the
hospital's discount payment and charity care policies, and how to
apply for that assistance.
(e) For a patient that lacks coverage, or for a patient that
provides information that he or she may be under-insured, as defined
in this article, a hospital, any assignee of the hospital, or other
owner of the patient debt, including a collection agency, shall not
report adverse information to a consumer credit reporting agency or
commence civil action against the patient for nonpayment, prior to
150 days after initial billing. For purposes of this subdivision, a
hospital may sell or assign debt to another entity if that entity
does not report adverse information to a consumer credit agency.
(f) If a patient qualifies for eligibility under the hospital's
charity care of discount payment policy and is attempting in good
faith to settle an outstanding bill with the hospital by negotiating
a reasonable payment plan or by making regular partial payments of a
reasonable amount, the hospital shall not send the unpaid bill to any
collection agency if doing so may negatively impact a patient's
credit.
(g) The hospital or collection agency operating on behalf of the
hospital shall not, in dealing with patients eligible under the
hospital's charity care or discount payment policies, use wage
garnishments or liens on primary residences as a means of collecting
unpaid hospital bills. This requirement does not preclude a hospital
from pursuing reimbursement from third-party liability settlements,
tortfeasors, or other legally responsible parties.
(h) Any extended payment plans offered by a hospital to assist
patients eligible under the hospital's charity care policy, discount
payment policy, or any other policy adopted by the hospital for
assisting low-income patients with no or inadequate insurance in
settling outstanding past due hospital bills, shall be interest free.
(e)
(i) Nothing in this section shall be construed to
diminish or eliminate any protections consumers have under existing
federal and state debt protection laws
collection laws, or any other consumer protections available under
state or federal law .
127426. (a) The period described in Section 127425 shall be
extended if the patient has a pending appeal for coverage of the
services , until a final determination of that appeal is made,
if the patient makes a reasonable effort to communicate with the
hospital about the progress of any pending appeals .
(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 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.
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.
(c) The requirements of this section shall apply to the entity
engaged in the collection activities. If a hospital assigns or sells
the debt to another entity, the obligations shall apply to the
entity, including a collection agency, engaged in the debt collection
activity.
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. a copy of its discount payment
policy, charity care policy, eligibility procedures for those
policies, review process, and the application for cha rity
care or discounted payment programs. The office may determine
whether the information is to be provided electronically or in some
other manner. 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 Director of Health Services 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. levy administrative penalties. When
assessing administrative penalties against a health facility, the
director shall determine the appropriate amount of the penalty for
each violation. In making that determination, the director may
consider the following factors:
(1) The nature, scope, and gravity of the
violation.
(2) The facility's history of violations.
(3) The demonstrated willfulness of the violation.
(4) The behavior of the facility with respect to violations,
including whether the facility mitigated any damage or injury from
the violations.
(3) In lieu of the civil penalty, require the hospital to provide
(b) In lieu of an administrative
penalty, the director may 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. 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.
127442. 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.
127441. The director shall order the hospital to reimburse the
patient or patients that were overcharged the amount of actual
financial damages, including interest. If the hospital is unable to
locate a patient or patients, the hospital shall use the remaining
funds to provide care at no cost to financially qualified persons.
127442. A hospital may appeal an administrative penalty within 30
days, as consistent with section 100171. The facility may also seek
to adjudicate the validity of the violation or the penalty.
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
, 127401, 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
for all general acute care hospitals, including, but
not limited 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.