BILL NUMBER: AB 774 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 7, 2006
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 maintain written policies about discount payment and
charity care for financially qualified patients, as defined. The bill
would require these policies to include, among other things, a
section addressing eligibility criteria, as prescribed. The bill
would require each hospital to perform various functions in
connection with the hospital charity care and discount pay policies,
including providing patients with a written summary of 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 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 Health Services to levy
administrative penalties for each violation by a hospital of 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 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 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 a patient who is
both of the following:
(1) A patient who is a self-pay patient, as defined in subdivision
(f) or a patient with inadequate insurance, as defined in
subdivision (g).
(2) A patient who has a family income that does not exceed 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) "A patient with inadequate insurance" means a person whose
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) (1) Each hospital shall
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.
(2) Rural hospitals, as defined in Section 124840, may establish
eligibility levels for financial assistance and charity care at less
than 350 percent of the federal poverty level as appropriate to
maintain their financial and operational integrity.
(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.
127410. (a) Each hospital shall provide patients with a written
summary of the hospital's policy for financially qualified
and self-pay patients at the time of admission. The written
summary shall be consistent with the written estimate
summary 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 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 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 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) Other outpatient settings.
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.
(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.
(A) A statement that indicates that if the patient lacks, or has
inadequate, insurance, and meets certain low-and moderate-income
requirements, the patient may qualify for discounted payment or
charity care.
(B) 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.
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 127410
, 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)
(d) For a patient that lacks coverage, or for a patient
that provides information that he or she may be
under-insured a patient with inadequate
insurance , 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)
(e) 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)
(f) 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)
(g) 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.
(i)
(h) Nothing in this section shall be construed to
diminish or eliminate any protections consumers have under existing
federal and state debt 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 a copy of its
discount payment policy, charity care policy, eligibility procedures
for those policies, review process, and the application for charity
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
Health Services may, after appropriate notice and opportunity for
hearing, 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.
(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.
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 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.