BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 774|
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                                 THIRD READING


          Bill No:  AB 774
          Author:   Chan (D)
          Amended:  8/28/06 in Senate
          Vote:     21

           
           SENATE HEALTH COMMITTEE  :  9-0, 6/22/05
          AYES:  Ortiz, Runner, Aanestad, Alquist, Chesbro, Cox,  
            Figueroa, Kuehl, Romero
          NO VOTE RECORDED:  Maldonado, Vincent

          SENATE APPROPRIATIONS COMMITTEE  :  8-5, 8/17/06
          AYES:  Murray, Alarcon, Alquist, Escutia, Florez, Ortiz,  
            Romero, Torlakson
          NOES:  Aanestad, Ashburn, Battin, Dutton, Poochigian

           ASSEMBLY FLOOR  :  43-34, 6/2/05 - See last page for vote


           SUBJECT  :    Hospitals:  self-pay policies

           SOURCE  :     Health Access California


           DIGEST  :    This bill requires hospitals to develop and  
          implement policies providing discounted payments or charity  
          care for poor uninsured or underinsured individuals.   
          Hospital charges for eligible patients will be limited and  
          require notice, reporting, compliance and collection  
          procedures are specified.  

           Senate Floor Amendments  of 8/28/06 modify provisions of  
          bill to reflect discussions with the administration and  
                                                           CONTINUED





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          hospital industry.

           ANALYSIS  :    

           Existing Law  

          1.  Establishes the Office of Statewide Health Planning and  
            Development (OSHPD), which is charged with enforcement of  
            various provisions of law relating 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 every private, non-profit hospital to submit  
            annually to OSHPD a community benefits plan that details  
            how the hospital identifies and addresses community needs  
            within the hospital's service area.

          4.  Provides that a community benefits plan may include:

             A.  A description of the health care services rendered  
               to uninsured, underinsured, and individuals eligible  
               for public programs.

             B.  A description of other services rendered to the  
               community, such as health promotion, medical research  
               and medical education.

             C.  An accounting of the cost of providing these  
               services.

          This bill:

           1.Requires hospitals, as a condition of licensure, to  
            maintain an understandable, written policy regarding  
            discount payments for financially qualified patients, as  
            well as an understandable, written charity care policy.

           2.Provides that uninsured patients or patients with  
            inadequate insurance who are at or below 350 percent of  
            the federal poverty level are eligible to apply for  
            hospital's charity care or discount payment policies.







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           3.Requires any patient or patient's legal representative  
            who requests a discounted payment, charity care, or other  
            assistance, to make every effort to provide the hospital  
            with documentation of income.

           4.Requires 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 theses policies, and attempting to determine  
            the availability of private or public health insurance  
            coverage for each patient.

           5.Requires hospitals, if they bill a patient who has not  
            provided proof of third party coverage, to provide a  
            notice containing specified information, and to provide  
            applications for Medi-Cal and other public programs at  
            the time of billing or time of care.

           6.Requires hospitals to limit expected payment for  
            services to any patient at or below 350 percent of the  
            poverty level who is eligible for its discount payment  
            policy to the amount it will receive from Medicare,  
            Medi-Cal, or other government programs.

           7.Prohibits a hospital or their assignee from reporting  
            adverse information to a credit reporting agency or  
            commencing civil action for 150 days after initial  
            billing for a patient who lacks coverage or may be a  
            patient with high medical costs.

           8.Prohibits hospitals from using wage garnishments or  
            liens on primary residences as a means of collecting  
            unpaid hospital bills for patients eligible under the  
            hospital's charity care and discount payment policies.

           9.Requires 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 discount payment.

          10.Provides 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,  







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            the requirement in question shall be inoperative with  
            respect to all general acute care hospitals.

          11.Modifies the definition of "financially qualified  
            patients" who are financially qualified patients by  
            virtue of having inadequate insurance by defining it as  
            those who have "high medical costs", defined as those who  
            do not receive a discounted rate from the hospital as a  
            result of their third party coverage and have annual out  
            of pocket costs that exceed 10 percent (as opposed to  
            five percent) of family income.

          12.Allows hospitals to take into consideration a patient's  
            failure to provide specified information in making a  
            determination of eligibility for charity care and  
            discounted payments.

          13.Requires hospitals to provide applications for Medi-Cal  
            and other government programs prior to discharge or at  
            time care is received instead of with the billing or at  
            time of care.

          14.Limits the use of wage garnishments and liens on  
            residences by collection agencies as a means of  
            collecting unpaid hospital bills for patients under a  
            hospital's charity care or discount payment policies.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

                          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








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           SUPPORT  :   (Verified  6/16/05) (Unable to reverify)

          Health Access California (source)
          AARP California
          American Federation of State, County, and Municipal  
          Employees
          Applied Research Center
          Asian and Pacific Islander American Health Forum
          California Acorn
          California Alliance for Retired Americans
          California Church Impact
          California Commission on the Status of Women
          California Federation of Teachers
          California Immigrant Welfare Collaborative
          California Labor Federation
          California National Organization for Women
          California Public Interest Research Group
          Coalition for Community Health
          Coalition for Humane Immigrant Rights of Los Angeles
          Congress of California Seniors
          Consumer's Union
          East Bay Alliance for a Sustainable Economy
          Gray Panthers California 
          Greenlining Institute
          Health Care for All - California 
          Insure the Uninsured Project
          JERICHO
          Latino Coalition for a Healthy California
          Lawyers' Committee for Civil Rights
          Multicultural Area Health Education Center
          Screen Actors Guild
          Santa Cruz Chapter of Healthcare for All
          United Nurses Association of California
          Union of Health Care Professionals
          Valley Seniors

           OPPOSITION  :    (Verified  6/16/05) (Unable to reverify)

          Adventist Health
          Alliance of Catholic Health Care
          Barlow Respiratory Hospital 
          Biggs-Gridley Memorial Hospital
          California Association of Collectors
          California Hospital Association







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          Catholic Healthcare West
          Citrus Valley Health Partners
          Community Hospital of the Monterey Peninsula
          Continental Rehabilitation Hospital of San Diego
          Lodi Memorial Hospital
          Loma Linda University Medical Center
          Mission Hospital
          Mission Hospital Regional Medical Center
          Paradise Valley Hospital
          Saddleback Memorial Medical Center
          Salinas Valley Memorial Healthcare System
          Seneca Healthcare District
          St. Jude Medical Center
          Saint Louise Regional Hospital
          Scripps Health
          University of California

           ARGUMENTS IN SUPPORT  :    According to supporters, hospitals  
          must stabilize any patient who needs emergency care, but  
          hospitals can and do charge uninsured and underinsured  
          patients the highest prices for services they provide.   
          Hospitals report that they spend about one percent of their  
          patient revenue on charity care, but hospitals are not  
          required to disclose the circumstances under which a  
          patient may qualify for free care.  Supporters further  
          argue that sending patients to collections 30 to 60 days  
          after they receive care puts the credit rating of patients  
          at risk if insurers fail to pay within that timeframe.  For  
          uninsured patients, 30 to 60 days does not provide adequate  
          time to arrange their finances in order to make payments on  
          their bills.  Although the major hospital associations and  
          systems have adopted voluntary guidelines for providing  
          charity and reduce price care, nothing requires them to  
          comply with the guidelines.  Supporters further argue that  
          the bill protects self-pay patients from being charged more  
          than insured patients and reduces the chances that hospital  
          costs result in personal bankruptcy and is therefore an  
          important step in improving the equity of California's  
          health care system.  Supporters finally argue that the bill  
          provides necessary protections to ensure that uninsured and  
          underinsured patients are not discouraged from seeking  
          hospital services when they need them.

           ARGUMENTS IN OPPOSITION  :    Opponents argue that although  







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          this bill incorporates many of the provisions of the  
          hospital industry's voluntary guidelines for providing  
          charity and reduced price care, the guidelines provide  
          necessary flexibility for hospitals to tailor their  
          policies to account for the characteristics of their  
          patient populations and resources.  In particular,  
          hospitals need flexibility to determine whether they can  
          offer charity and reduced price care to patients with  
          incomes in excess of 300 percent of the federal poverty  
          level, the level required under CHA's guidelines.   
          Opponents also argue 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.   
          Opponents further argue that the 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.  Opponents further point out that hospitals face  
          numerous unfunded mandates and that this bill will make it  
          increasingly difficult to provide care and operate  
          emergency rooms and trauma centers to serve those who need  
          help.  The University of California argues 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 and contends  
          that they already have an established commitment to provide  
          free care and payment assistance to a disproportionate  
          share of the state's uninsured patients.  The California  
          Association of Collectors opposes provisions of the bill  
          that impose a blanket prohibition on the use of wage  
          garnishments or liens to obtain payment of hospital bills  
          irrespective of the debtor's ability to pay the debt, and  
          states that existing requirements governing the use of wage  
          garnishments and judgment liens provide substantial  
          consumer protections to debtors.  
           
           ASSEMBLY FLOOR  : 
          AYES:  Baca, Bass, Berg, Bermudez, Canciamilla, Chan,  
            Chavez, Chu, Cohn, Coto, De La Torre, Dymally, Evans,  
            Frommer, Goldberg, Hancock, Jerome Horton, Jones,  
            Karnette, Klehs, Koretz, Laird, Leno, Levine, Lieber,  
            Liu, Matthews, Montanez, Mullin, Nava, Negrete McLeod,  
            Oropeza, Pavley, Ridley-Thomas, Ruskin, Saldana, Salinas,  







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            Torrico, Umberg, Vargas, Wolk, Yee, Nunez
          NOES:  Aghazarian, Benoit, Blakeslee, Bogh, Cogdill,  
            Daucher, DeVore, Emmerson, Garcia, Harman, Haynes,  
            Shirley Horton, Houston, Huff, Keene, La Malfa, La Suer,  
            Leslie, Maze, McCarthy, Mountjoy, Nakanishi, Nation,  
            Niello, Parra, Plescia, Richman, Sharon Runner, Spitzer,  
            Strickland, Tran, Villines, Walters, Wyland
          NO VOTE RECORDED:  Arambula, Calderon, Gordon


          CTW:do  8/28/06   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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