BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 774| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 AB 774 Page 2 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. AB 774 Page 3 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, AB 774 Page 4 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 AB 774 Page 5 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 AB 774 Page 6 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 AB 774 Page 7 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, AB 774 Page 8 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 **** END ****