BILL NUMBER: AB 774	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 28, 2006
	AMENDED IN SENATE  AUGUST 22, 2006
	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: fair pricing 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   notice that contains information about the
hospital's discount payment and charity care policies, including
information about eligibility  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.   Hospital Fair Pricing 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,  
high medical costs,  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"  
high medical costs"  means a person whose family income does not
exceed 350 percent of the federal poverty level, as defined in
subdivision (c), if that individual does not receive a discounted
rate from the hospital as a result of his or her third-party
coverage. For these purposes,  "inadequate insurance"
  "high medical costs"  means any of the following:

   (1)  Costs   Annual out-of-pocket costs 
incurred by the individual at the hospital that exceed  5
  10  percent of the patient's  annual
income.   family income in the prior 12 months. 
   (2) Annual out-of-pocket expenses that exceed  5 
 10  percent of the patient's  annual 
 family  income, if the patient provides documentation of
the patient's medical expenses  paid by the patient or the
patient's family  in the prior 12 months.
   (3) A lower level determined by the hospital in accordance with
the hospital's charity care policy.
   (h) "Patient's family" means the following:
   (1) For persons 18 years of age and older, spouse, domestic
partner and dependent children under 21 years of age, whether living
at home or not.
   (2) For persons under 18 years of age, parent, caretaker relatives
and other children under 21 years of age of the parent or caretaker
relative.
   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
  high medical costs  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  and health benefits coverage. If the person requests
charity care or a discounted payment and fails to provide information
that is reasonable and necessary for the hospital to make a
determination, the hospital may consider that failure in making its
determination  .
   (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 regarding the assets of the
patient or the patient's family shall not be used for collections
activities.
   (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
patients at the time of admission. The written summary shall be
consistent with the summary provided pursuant to Section 1339.585,
  written notice that  and shall contain
information about availability of the hospital's discount payment and
charity care policies, including  information about 
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   notice shall be provided in
addition to the estimate provided pursuant to Section 1339.585. The
 summary   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  summary
  notice  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  
Written  correspondence to the patient required by this article
shall also be in the language spoken by the patient, consistent with
 this section.   Section 12693.30 of the
Insurance Code and applicable state and federal law. 
   (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. If  , at the
time care is provided,  the patient does not  show
proof of   indicate  coverage by a third-party
payer specified in subdivision (a),  or requests a discounted
price or charity care  then the hospital shall provide an
application for the Medi-Cal program  and   ,
 the Healthy Families Program  or other governmental program
 to the patient. This application  may accompany the
billing, or may be provided at the time of   shall be
provided prior to discharge if the patient has been admitted or to
patients receiving emergency or outpatient  care.
   (5) Information regarding the financially qualified patient and
charity care application, including the following:
   (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. The policy shall not conflict with other applicable
laws and shall not be construed to create a joint venture between the
hospital and the external entity, or otherwise to allow hospital
governance of an external entity that collects hospital receivables.
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 127410, which includes the same
information concerning services and charges provided to all other
patients who receive care at the hospital.
   (d) For a patient that lacks coverage, or for a patient that
provides information that he or she may be a patient with 
inadequate insurance,   high medical costs,  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 at
any time 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. 
   (e) If a patient is attempting to qualify 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 or other assignee,
unless that entity has agreed to comply with this article.
   (f)  (1)    The hospital  , collecting
agency,  or other assignee  which is an affiliate or
subsidiary  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

   (2) A collection agency or other assignee that is not a subsidiary
or affiliate of the hospital shall not, in dealing with any patient
under the hospital's charity care or discount payment policies, use
as a means of collecting unpaid hospital bills, any of the following:
 
   (A) A wage garnishment, except by order of the court upon noticed
motion, supported by a declaration file by the movant identifying the
basis for which it believes that the patient has the ability to make
payments on the judgment under the wage garnishment, which the court
shall consider in light of the size of the judgment and additional
information provided by the patient prior to, or at, the hearing
concerning the patient's ability to pay, including information about
probable future medical expenses based on the current condition of
the patient and other obligations of the patient.  
   (B) Notice or conduct a sale of the patient's primary residence
during the life of the patient or his or her spouse, or during the
period a child of the patient is a minor, or a child of the patient
who has attained the age of majority is unable to take care of
himself or herself and resides in the dwelling as his or her primary
residence. In the event a person protected by this paragraph owns
more than one dwelling, the primary residence shall be the dwelling
that is the patient's current homestead, as defined in Section
704.710 of the Code of Civil Procedure or was the patient's homestead
at the time of the death of a person other than the patient is
asserting the protections of this paragraph. 
    (3)     This  requirement does not
preclude a hospital  , collection agency, or other assignee 
from pursuing reimbursement and any enforcement remedy or
remedies  from third-party liability settlements, tortfeasors,
or other legally responsible parties.
   (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   insurance or high medical costs  in
settling outstanding past due hospital bills, shall be interest free.

   (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. This subdivision does not limit
or alter the obligation of the patient to make payments from the
first date due on the obligation owing to the hospital pursuant to
any contract or applicable statute, in the event that the patient
fails to make payments for 90 days, or to renegotiate the payment
plan.
   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  contracting  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   A  
statement that  nonprofit credit counseling services  may be
available  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.
 
   127440.  The hospital shall reimburse the patient or patients any
amount actually paid in excess of the amount due under this article,
including interest. 
   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.   published rates for purposes of
applying any payment limit, interim payment amount, or other payment
calculation based upon a hospital's rates or charges under the
Medi-Cal program, the Medicare Program, workers' compensation, or
other federal, state, or local public program of health benefits.

   127445.  Notwithstanding any other provision of law, the amounts
paid by  patients   parties  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   reduced or
waived charges under a hospital's discounted payment or charity care
policy 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,  and shall not be used to calculate a hospital's
median non-Medicare or Medi-Cal charges,  for purposes of any
payment limit under  federal Medicaid law, Medi-Cal law,
  the federal Medicare Program, the Medi-Cal program,
 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.