BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Kevin Murray, Chairman
774 (Chan)
Hearing Date: 8/17/2006 Amended: 8/7/2006
Consultant: John Miller Policy Vote: Health 5 - 4
_________________________________________________________________
____
BILL SUMMARY: AB 774 requires hospitals to develop and implement
policies providing discounted payments or charity care for poor
uninsured or underinsured individuals. Hospital charges for
eligible patients would be limited and required notice,
reporting, compliance and collection procedures are specified.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2006-07 2007-08 2008-09 Fund
OSHPD $ 106 $ 375 $ 375 Special*
DHS enforcement $ 200 $ 400 $ 400 GF
*Health Data Fund
_________________________________________________________________
____
STAFF COMMENTS: SUSPENSE FILE
This bill is intended to regulate the charges and collection
procedures hospitals levy on uninsured or underinsured patients.
Nearly one fifth of Californians, 7 million people, now lack
health insurance. Costs generated by these uninsured patients
may be partially reimbursed from public sources, but hospitals
do seek recovery of their costs and are at risk for
un-reimbursed services. Hospital charges are not now regulated,
and charges and policies for services to uninsured patients vary
substantially, as do the relative financial losses among
hospitals. Among uninsured patients, the costs of unanticipated
medical care can be financially catastrophic, and medical costs
cause one half of all bankruptcies in this state. California
hospitals have recently established voluntary charity care
principals and guidelines which have been accepted by a large
majority of hospitals. This issue is actively litigated.
This bill requires hospitals to develop and report policies for
serving uninsured and underinsured individuals. The bill defines
eligible patients generally as self-pay patients earning less
than 350% of federal poverty level, requires that a hospital's
discounted charges be related to amounts paid any public program
such as Medicare or Healthy Families, requires specified notice
to patients of the availability of discounted care programs or
eligibility for public care, limits collection practices and the
use of liens on patient's property, requires filing of a
hospital's charity/discount policies, and authorizes the
Department of Health Services to enforce administrative
penalties for failure to comply with a plan.
Direct state costs will result from administrative processing
through the Office of Statewide Health Planning (special fund)
and enforcement by the Department of Health Services (GF). There
may be some indirect cost pressure to the extent that AB 774
AB 774 (Chan)
Page 2
reduces recoveries or increases financial losses to hospitals.
It is almost impossible to gauge this indirect cost, which
represents the difference between what is now collected from
uninsured individuals and what would be collected under 774,
because the cost is most likely to be spread among all payers in
the state's health system. The California Hospital Association
estimates annual losses to uncompensated care to be $6.5
billion.
Proposed amendment creates a minor limitation of hospital debt
collections.