BILL ANALYSIS
AB 774
Page 1
Date of Hearing: April 12, 2005
ASSEMBLY COMMITTEE ON HEALTH
Wilma Chan, Chair
AB 774 (Chan) - As Introduced: February 18, 2005
SUBJECT : Hospitals: self-pay policies.
SUMMARY : Requires hospitals to develop a policy specifying how
the hospital will determine the financial liability for services
rendered to both financially qualified patients and self-pay
patients. Specifically, this bill :
1)Requires each hospital to develop a policy specifying how the
hospital will determine the financial liability for services
rendered to both financially qualified patients and self-pay
patients.
2)Requires, for financially qualified patients, each hospital's
policy to specify how it will determine and apply allowances
for services provided to financially qualified patients.
Requires the allowance, at a minimum, to 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.
3)Prohibits an allowance for financially qualified patients from
being required with respect to any service for which there is
no coverage under the Medi-Cal program, Medicare, or workers'
compensation. Permits, at the hospital's discretion, the
allowance for financially qualified patients to be applied by
the hospital to patients who do not meet the standards for
financially qualified patients.
4)Requires each hospital to include in its policy on financially
qualified and self-pay patients a section addressing charity
care patients. Requires the charity care section to specify
the financial criteria and the procedure used by the hospital
to determine whether a patient is eligible for charity care.
Permits the hospital to specify that no persons are eligible
for charity care under any circumstances.
5)Requires the charity care section to include all of the
following:
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a) Financial eligibility criteria;
b) Financial information required of the patient; and,
c) A review process for charity care decisions.
6)Requires each hospital to provide patients with oral and
written notice of the hospital's policy for financially
qualified and self-pay patients at the time of admission and
discharge. Requires the notice to also be provided to patients
who receive emergency or outpatient care and who may be billed
for that care, but who were not admitted. Requires the notice
to be in the language spoken by the patient, as specified.
Requires all written correspondence to the patient required by
this bill to also be language appropriate.
7)Requires notice of the hospital's policy for financially
qualified and self-pay patients to be clearly and
conspicuously posted in locations that are visible to the
public, including, but not limited to, the emergency
department, if any; the billing office; the admissions office;
and any other locations that may be determined by the Office
of Statewide Health Planning and Development (OSHPD), to
ensure that patients are informed of the policy and how to
obtain a copy of the policy and related information.
8)Requires each hospital to submit to OSHPD a copy of the
application for financially qualified patients used by the
hospital, including the charity care section of that
application. Permits OSHPD, in consultation with interested
parties, to also develop a uniform self-pay application to be
used by all hospitals. Requires OSHPD, in developing the
application, to consider whether the application used for the
Medi-Cal and Healthy Families (HF) programs can be used as, or
incorporated in, the uniform self-pay application.
9)Requires each hospital to 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, private health insurance, Medicare, or Medi-Cal,
HF, the California Childrens' Services (CCS), or other
state-funded programs designed to provide health coverage.
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10) Requires the hospital, if it 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,
to provide the patient with a clear and conspicuous notice
that includes all of the following:
a) A statement of charges for services rendered by the
hospital;
b) A request that the patient inform the hospital if the
patient has health insurance coverage, Medicare, HF,
Medi-Cal, or other coverage;
c) A statement that if the consumer does not have health
insurance coverage, that they may be eligible for Medicare,
HF, Medi-Cal, CCS, or charity care;
d) A statement indicating how patients may obtain
applications for Medi-Cal and HF and that the hospital will
provide these applications on request. Requires the
hospital, if at the time care is provided the patient does
not show proof of coverage by a third-party payer specified
in #9) above, to send an application for Medi-Cal and HF to
the patient. Permits the application to accompany the
billing or be sent separately.
e) Information regarding the financially qualified patient
and charity care application, including:
i. The hospital contact for resources for
additional information regarding charity care; and
ii. A statement indicating how patients may
obtain an application for a financially qualified
patient. Requires the statement to provide information
about the family income requirements for financially
qualified patients as provided in this bill.
11) Requires a hospital, its assignee, collection agency, or
billing service, 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, to be
limited to the following debt collection activities:
a) Sending a bill to the patient in accordance with
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existing law;
b) Attempting to negotiate payment of the bill or a payment
plan in accordance with this article;
c) Attempting to collect payment from any responsible
third-party payer, either public or private;
d) Providing any information that may assist the patient in
obtaining coverage through Medi-Cal or HF, or any other
public program for which the patient may be eligible; and
e) 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.
12) Requires a hospital, its assignee, collection agency, or
billing service to use reasonable efforts to negotiate a
payment plan, as defined, unless the patient has requested
that the hospital, its assignee, collection agency, or agent
not contact the patient.
13) Permits the hospital, its assignee, collection agency, or
billing service, after the time period specified in #11 above
has elapsed, to 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.
14) Prohibits a hospital, its agent, collection agency, or
assignee from using wage garnishment or a lien on a primary
residence as a means of debt collection from a financially
qualified patient.
15) Prohibits anything in this bill from being construed to
diminish or eliminate any protections consumers have under
existing federal and state debt protection laws.
16) Requires the period described in #11 above to be extended
if the patient has a pending appeal, as specified, for
coverage of the services.
17) Requires the hospital, any assignee of the hospital, or
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other owner of the patient debt, including a collection
agency, prior to commencing collection activities against a
patient, to provide the patient with a clear and conspicuous
written notice containing:
a) Information about nonprofit credit counseling services
in the area; and,
b) A plain language summary of the patient's rights
pursuant to this bill, the Rosenthal Fair Debt Collection
Practices Act, and the federal Fair Debt Collection
Practices Act. Requires the summary to include a statement
that the Federal Trade Commission enforces the federal act.
Specifies that the summary is 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 ."
18) Requires the notice in #17 above to accompany any document
indicating that the commencement of collection activities may
occur.
19) Requires each hospital to provide to OSHPD, in a format
determined by OSHPD, a copy of its self-pay policy,
eligibility procedures, review process, and procedure for
determining self-pay pricing. Requires the information to be
provided at least biennially on January 1, or when a
significant change is made. Specifies that if no significant
change has been made by the hospital since the information was
previously provided, notifying OSHPD of the lack of change
meets the requirements. Requires OSHPD to make this
information available to the public.
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20) Permits, after appropriate notice and opportunity for
hearing, OSHPD to levy civil penalties for violations of this
bill as follows:
a) A hospital that violates any provision of this bill,
except for #3 above, is liable for civil penalties of not
more than $500 per day per patient affected for each
violation; and
b) A hospital that bills a patient for amounts in excess of
those provided for in #2 and #3 above to be liable for a
civil penalty of three times the amount billed in error to
the patient.
21) Requires that any money that is received by OSHPD pursuant
to this bill be paid into the General Fund.
22) Permits the Attorney General to authorize an investigation
to determine whether a hospital is in compliance with this
bill. Permits private persons to act in the capacity of the
Attorney General if the Attorney General fails to determine
that a violation of this bill occurred within 90 days of
receiving notice of possible violation of this bill.
23) Permits any person damaged by a violation of this bill, if
OSHPD or the Attorney General fails to make a determination
that a violation of this article occurred within 90 days of
receiving notice of a possible violation of this article, to
bring an action to recover:
a) Actual damages;
b) Civil penalties of not more than $500 per day for
each violation;
c) For a violation of subdivision #3 above, 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; and,
f) Reasonable attorneys' fees and court costs.
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24) Prohibits the rights, remedies, and penalties established
by this bill from superseding the rights, remedies, or
penalties established under other laws.
25) Prohibits anything in this bill from being construed to
prohibit a hospital from uniformly imposing charges from its
established charge schedule or published rates, nor preclude
the recognition of a hospital's established charge schedule or
published rates for the Medi-Cal program and the Medicare
Program reimbursement charges.
26) Prohibits 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 from constituting 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.
27) Requires, to the extent that this bill 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 to be
inoperative with respect to a hospital that is licensed to and
operated by a county or a hospital authority, as specified.
Requires DHS to seek federal guidance regarding modifications
to the requirement in question and requires all other
requirements of this bill to remain in effect.
EXISTING LAW :
1)Establishes OSHPD, which is charged with policy and planning
related to health facilities, including hospitals.
2)Requires hospitals to report financial and utilization data to
OSHPD in accordance with procedures and forms established by
OSHPD.
3)Requires private non-profit hospitals to submit annual
community benefits plans detailing how the hospital identifies
and addresses community needs within the hospital's service
area.
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FISCAL EFFECT : Unknown
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, there is no
current law regarding the prices that uninsured and
underinsured consumers pay for health care or regarding
collection practices for health care debt. This bill would
require hospitals to charge the uninsured and people with high
medical costs, who make below 400% of the federal poverty
level (FPL), costs no more the greater of the prices paid by
Medicare, Medi-Cal or workers' comp. According to the author,
it protects consumers by giving 180 days during which payment
disputes get sorted out before hard collection activity begins
and requires hospitals post and disseminate notices so that
consumers, both insured and uninsured, know what options are
available to them.
2)ASSEMBLY HEALTH COMMITTEE HEARING. On February 6th, 2003, the
Assembly Committee on Health held a hearing examining the
billing practices of the Tenet Healthcare Corporation. At
that hearing, the Committee heard from an uninsured person
about how he had been forced into bankruptcy by the bills for
a short stay in a Tenet hospital. Consumer advocates also
testified about the burden that debt for medical care places
on uninsured persons in California.
3)HARVARD STUDY . In February 2005, the journal Health Affairs
published a Harvard study conducted to investigate medical
contributors to bankruptcy. As part of the research,
investigators surveyed 1,771 personal bankruptcy filers in
five federal courts and completed in-depth interviews with 931
of them. About half cited medical causes, which researchers
assert indicates that between 1.9 and 2.2 million Americans
(filers plus dependents) experienced medical bankruptcy. The
report found that among those whose illnesses led to
bankruptcy, out-of-pocket costs averaged $11,854 since the
start of illness and that medical debtors were 42% more likely
than other debtors to experience lapses in health insurance
coverage. The researchers concluded by stressing the
importance of health insurance coverage and also noted that
illness often leads to financial catastrophe through loss of
income, as well as high medical bills.
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4)DEPARTMENT OF HEALTH AND HUMAN SERVICES SECRETARY LETTER .
Earlier this year, the Centers for Medicare and Medicaid
Services (CMS), issued guidelines for hospitals regarding
charges. In a February 20, 2004 letter to American Hospital
Association (AHA) President Richard Davidson, U.S. Health and
Human Services (HHS) Secretary Tommy Thompson stated that
"Hospitals' (sic) charging the uninsured the highest rates is
a serious issue that demands all of our attention?This
guidance shows that hospitals can provide discounts to
uninsured and underinsured patients who cannot afford their
hospital bills and to Medicare beneficiaries who cannot afford
their Medicare cost-sharing obligations. Nothing in the
Medicare program rules or regulations prohibit such discounts.
With this guidance as a tool, I strongly encourage you to work
with AHA member hospitals to take action to assist the
uninsured and underinsured and therefore, end the situation
where, as you said in your own words, 'uninsured Americans and
others of limited means are often billed and required to pay
higher charges.'"
5)VOLUNTARY GUIDELINES . In February 2004, the California
Healthcare Association (CHA) issued voluntary guidelines to
protect consumers from hospital overcharging. The document
stated that regulatory reform is needed to enable hospitals to
effectively respond to the individual needs of low-income
uninsured patients and that CHA anticipates that HHS will
provide guidance on how hospitals can appropriately bill the
uninsured. In the meantime, CHA urged its member hospitals to
adopt the voluntary principles and guidelines to better meet
the needs of patients who cannot afford the health care
services they receive. The guidelines encouraged hospitals to
do a number of things with regards to assisting low-income,
uninsured patients, including:
a) Ensuring that its financial assistance policies clearly
state the eligibility criteria (i.e., income, assets) and
the process used to determine whether a patient is eligible
for financial assistance;
b) Limiting expected payments from these patients eligible
for financial assistance to amounts that do not exceed the
payment the hospital would receive from Medicare, other
government sponsored health programs, or as otherwise
deemed appropriate by the hospital;
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c) Having written policies about when and under whose
authority patient debt is advanced for collection, and
using their best efforts to ensure that patient accounts
are processed fairly and consistently;
d) Posting notices regarding the availability of financial
assistance to low-income uninsured patients in visible
locations throughout the hospital, such as
admitting/registration, billing office, emergency
department, and other outpatient settings;
e) Sharing their financial assistance policies with
appropriate community health and health services agencies
and other organizations that assist such patients; and,
f) Attempting to communicate with patients in their primary
language when discussing the hospitals financial assistance
policies; and ensure that staff are knowledgeable about the
existence of the hospital's financial assistance policies.
1)PREVIOUS LEGISLATON . There were a number of bills introduced
last year related to hospital billing. AB 232 (Chan) was
substantially similar to this bill and would have required
each hospital to develop a self-pay policy specifying how the
hospital determines prices to be paid by self-pay patients, as
defined, and limits these prices for patients below specified
income levels. The bill would also have established limits on
billing and collection activities of hospitals and their
agents. AB 232 died on the Senate floor. SB 379 (Ortiz) would
have required every hospital to have a charity care policy and
to provide that policy to patients and would have required
OSHPD to develop a uniform charity care application to be used
by all hospitals. The Governor vetoed the bill, stating that
"the voluntary guidelines must be given time to be implemented
and reviewed" and that it was his expectation that "all
hospitals in the state uphold their important commitment to
the voluntary guidelines and that they are applied evenly,
consistently and without hesitation."
2)SUPPORT . According to the sponsor, Health Access California,
this bill seeks to curb the common practice of hospitals
overcharging the uninsured and underinsured, in many cases
charging three to ten times what insurance companies and
government programs would pay for exactly the same service.
Health Access contends that this bill creates consumer and
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financial protections so that uninsured and underinsured
families can get the hospital care they need without facing
financial ruin. The 100% Campaign writes that this bill would
make a tremendous difference in ensuring that families
eligible for assistance or insurance receive that coverage
instead of receiving costly bills they cannot afford to pay.
The AARP California strongly supports legislation that
provides protection for consumers against unfair billing, lack
of full disclosure of options, and the use of different
standards for determining patient costs and states that this
bill is an important step in improving the equity of
California's health care system. The American Federation of
State, County, and Municipal Employees (AFSCME), AFL-CIO
contends that this bill would provide hospital patients basic
consumer financial protections and protect self-pay patients
from being charged more than the insured. California Church
Impact writes that hospitals have adopted an unsavory policy
of charging uninsured people vastly higher rates than
insurance companies pay for their patients and that it is
critical that we end the spiral of those who cannot afford
health insurance also becoming the class of people who must
declare bankruptcy for simply trying to obtain health care.
The California Labor Federation writes that going to the
hospital to seek care should not be a financial tragedy and
that this bill takes essential steps to protect consumers so
that an unexpected hospital visit does not result in a trip to
collections, court, and bankruptcy. California Public
Interest Research Group writes that consumers, regardless of
insurance status, deserve fair and equal treatment in hospital
billing and collections practices and that this bill would
ensure that, before automatically billing an uninsured
patient, hospitals attempt to determine whether the patient is
eligible for a public or private assistance or insurance
program. The Latino Coalition for a Healthy California
asserts that Latinos are disproportionately affected by
inflated hospital charges on the uninsured since they are the
largest uninsured group and that this bill takes the important
step to protect uninsured and underinsured patients. The
Services, Immigrants Rights and Education Network writes that
this bill provides necessary protections to ensure that
families seek the health care services they need without
risking adverse financial ramifications, including bankruptcy.
3)OPPOSITION . The Alliance of Catholic Health Care (ACHC)
writes that although this bill incorporates many of the
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provisions of the voluntary guidelines, they believe that
those guidelines allow for tailoring in the way hospitals
establish policies for providing free and/or discounted care
to uninsured patients, to account for the variation in patient
population and resources among hospitals. Additionally, while
some of ACHC's member hospitals have voluntarily committed to
assisting patients at the income level specified in this bill,
they believe that each hospital must be given the discretion
to carefully determine whether they can afford to go beyond
the 300% level required under the voluntary guidelines. The
CHA writes that this bill unfairly places the burden of a
dysfunctional healthcare system on hospitals, which provide
care to anyone who need help and operate emergency rooms and
trauma centers around the clock. CHA contends that this bill
imposes rigid and punitive requirements on hospitals to
provide free care without addressing any of the underlying
factors that created the growing problem of the uninsured in
the first place. Catholic Healthcare West asserts that the
focus on charity care is misplaced, because charity care is
not a sole determinant of a hospital's value to its community
and the amount of charity care that a hospital provides is
largely a function of its geography. Scripps Health states
that hospitals are being faced with numerous unfunded mandates
and are finding it increasingly difficult to continue to
provide care and operate emergency rooms and trauma centers to
those who need help and that the rigid requirements of this
bill will only decrease the amount of funding that goes into
patient care. The University of California (UC) states that
this bill creates a new public benefit for a sizable
population who may have some ability to pay for services
rendered or otherwise afford health insurance coverage. They
contend that they have an established commitment to provide
free care and payment assistance to a disproportionate share
of the state's uninsured patients and that subjecting UC
academic medical centers to additional requirements threatens
their ability to continue to provide that care.
REGISTERED SUPPORT / OPPOSITION :
Support
Health Access California (Sponsor)
100% Campaign: Health Insurance for Every California Child
AARP California
American Federation of State, County, and Municipal Employees,
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AFL-CIO
Asian and Pacific Islander American Health Forum
Asian Pacific American Legal Center
California Church Impact
California Commission on the Status of Women
California Consumer Health Care Council
California Federation of Teachers
California Immigrant Welfare Collaborative
California Labor Federation
California National Organization for Women
California Public Interest Research Group
Coalition for Humane Immigrant Rights of Los Angeles
Coalition for Community Health
Congress of California Seniors
Consumers Union
California Pan Ethnic Health Network
Gray Panthers
Latino Coalition for a Healthy California
Latino Issues Forum
Older Women's League of California
Screen Actors Guild
Service Employees International Union
Services, Immigrant, Rights and Education Network
United Nurses Association of California/Union of Health Care
Professionals
Vote Health
Opposition
Alliance of Catholic Health Care
California Hospital Association
Catholic Healthcare West
Scripps Health
University of California
Analysis Prepared by : Melanie Moreno / HEALTH / (916)
319-2097