BILL NUMBER: SB 350 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 1, 2007
AMENDED IN SENATE APRIL 11, 2007
INTRODUCED BY Senator Runner
FEBRUARY 20, 2007
An act to amend Sections 127400, 127405, 127425, and 127430 of the
Health and Safety Code, relating to hospitals.
LEGISLATIVE COUNSEL'S DIGEST
SB 350, as amended, Runner. Hospitals: discount payment and
charity care policies.
Existing law requires each hospital, as a condition of licensure,
to maintain a written policy regarding discount payments for
financially qualified patients as well as a written charity care
policy.
Existing law defines "high medical costs" for the purposes of
determining patient eligibility to include, in part, annual
out-of-pocket expenses that exceed 10% of the family's income in
the prior 12 months .
This bill would specify that the out-of-pocket expenses are for
medical services and health care services,
including medications that exceed 10% of the family's
income in the prior 12 months .
Existing law authorizes eligibility to be determined at any time
that the hospital is in receipt of the required information.
This bill would instead, require that, unless the hospital policy
provides otherwise, the application be submitted within 60 days of
the initial billing and the eligibility determination be made within
120 days of the initial billing.
Existing law requires any extended payment plans offered by a
hospital to be interest free.
This bill would limit that requirement to situations where all the
payments are timely made and would prohibit reporting adverse
information to a consumer credit reporting agency or commencement of
civil action within 30 an unspecified number
of days of the first default, as defined and would
make conforming changes.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 127400 of the Health and Safety Code is amended
to read:
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 for medical services
and health care services, including medications
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.
SEC. 2. Section 127405 of the Health and Safety Code is amended to
read:
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 by
the hospital pursuant to this paragraph from the patient consisting
of tax returns, paystubs, and information on monetary assets of the
patient or the patient's family for the purposes of determining
eligibility, shall not be used for collections activities.
(3) Eligibility for charity care or discounted payments under this
section may be determined by the hospital when it is in receipt of a
timely application and any information provided by the patient as
specified in paragraph (1) or paragraph (2), respectively.
Unless otherwise specified in the hospital policy, an application for
a patient shall be submitted within 60 days of the initial billing
and the hospital shall make a final determination on the application
within 120 days of the initial billing.
SEC. 3. Section 127425 of the Health and Safety Code is amended to
read:
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 if all payments are timely made under the terms of the extended
payment plan. Upon the occurrence of the first default by a patient
under the terms of a hospital's extended payment plan, the hospital,
collection agency, or assignee shall not report adverse information
to a consumer credit reporting agency or commence civil action
against the patient for nonpayment during the 30-day
____ day period from the date of the
first default , in order to allow the patient to cure the
defaults or attempt to renegotiate the terms of the hospital extended
payment plan.
For purposes of this subdivision, "default" shall mean the failure
to meet one or more payments that are required by the patient's
payment plan.
(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 and to pay the
interest on the obligation, except as set forth in subdivision (g),
pursuant to any contract or applicable statute.
SEC. 4. Section 127430 of the Health and Safety Code is amended to
read:
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 is in the form as the notice
set forth in Section 1812.700 of the Civil Code, or 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.