BILL NUMBER: AB 774 CHAPTERED
BILL TEXT
CHAPTER 755
FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2006
APPROVED BY GOVERNOR SEPTEMBER 29, 2006
PASSED THE SENATE AUGUST 31, 2006
PASSED THE ASSEMBLY AUGUST 31, 2006
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, 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 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.
This bill would also require the director to ensure that a
hospital that overcharges a patient shall reimburse that patient, as
described.
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.
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 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 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, "high medical costs" means
any of the following:
(1) Annual out-of-pocket costs incurred by the individual at the
hospital that exceed 10 percent of the patient's family income in the
prior 12 months.
(2) Annual out-of-pocket expenses that exceed 10 percent of the
patient's 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 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
notice that and shall contain information about availability of the
hospital's discount payment and charity care policies, including
information about eligibility, as well as contact information for a
hospital employee or office from which the person may obtain further
information about these policies. This written notice shall be
provided in addition to the estimate provided pursuant to Section
1339.585. 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 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. Written correspondence to the
patient required by this article shall also be in the language
spoken by the patient, consistent with 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 the patient does not
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, the Healthy
Families Program or other governmental program to the patient. This
application 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 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.
(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 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.
(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 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) 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. 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 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 parties for services resulting from 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 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.