BILL ANALYSIS Ó
SB 1276
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Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1276 (Ed Hernandez) - As Amended: May 22, 2014
SENATE VOTE : 23-10
SUBJECT : Health care: fair billing policies.
SUMMARY : Defines a "reasonable payment plan" for purposes of
hospital and emergency physician charity care programs, as
monthly payments that do not exceed 10% of a patient's income
after deducting essential living expenses, and expands
eligibility for the hospital charity care and discount payment
programs to patients with insurance, when the out-of-pocket
expenses exceed 10% of the patient's income. Specifically, this
bill :
1)Requires, if a hospital and patient cannot agree on a payment
plan, that the hospital use that definition to create a
reasonable payment plan.
2)Revises the notice that hospitals and emergency physicians are
required to provide patients under their charity care programs
to inform patients that they may be eligible for various
public insurance programs by including references to the
California Health Benefit Exchange (Exchange) and other
state-or county-funded health coverage programs.
3)Requires an affiliate, subsidiary, or external collection
agency of a hospital or emergency physician that collects debt
to comply with the hospital's definition and application of a
reasonable payment plan.
4)Requires hospitals and emergency physicians, in addition to
the existing notice requirements under charity care programs,
to also provide patients with a referral to a local consumer
assistance center housed at legal services offices.
5)Specifies that if a patient applies, or has a pending
application, for another health coverage program at the same
time that he or she applies for a hospital charity care or
discount payment program, neither application precludes
eligibility for the other program.
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EXISTING LAW :
1)Requires hospitals and emergency physicians to maintain an
understandable written policy regarding discount payment for
financially qualified patients, as well as an understandable
written charity care policy.
2)Defines "financially qualified patient," for purposes of
discount payment and charity care policies, as a patient who
has a family income that does not exceed 350% of the federal
poverty level and who is either a self-pay patient or a
patient with high medical costs, which is defined as someone
who does not receive a discounted rate from the hospital as a
result of third-party coverage and whose costs exceed 10% of
the patient's family income.
3)Requires a hospital to limit expected payment for services it
provides to a qualified patient under its discount payment
policy to the amount of payment the hospital would expect to
receive for providing services from Medicare, Medi-Cal, the
Healthy Families Program, or another government-sponsored
health program of health benefits, whichever is greater.
4)Requires a hospital's discount payment policy to include an
extended payment plan and to allow payment of the discounted
price over time, and requires the policy to provide that the
hospital and the patient may negotiate the terms of the
payment plan.
5)Requires hospitals to have a written policy defining the
standards and practices for the collection of debt, and to
obtain a written agreement from any agency that collects
hospital debt, that it will adhere to those standards.
6)Prohibits a hospital from sending an unpaid bill to collection
if the patient is attempting to qualify for the hospital's
charity care or discount payment policy, is attempting to
negotiate a payment plan, or is making regular partial
payments, unless the collection agency has agreed to comply
with the same conditions applied to hospitals collection
activities.
7)Establishes and applies similar requirements to the above
discount and charity care policies to emergency physicians.
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FISCAL EFFECT : None
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, with the
passage of the federal Patient Protection and Affordable Care
Act, the number of people without insurance has been
significantly reduced, and hopefully fewer people will need
the protections of the charity care and discounted payment
programs. The author states that in spite of this, many of
the newly insured have very high-deductible plans, and a
single trip to the emergency room, even for someone with
insurance, can lead to bills that exceed 10% of their family
income and can cause significant economic hardship and this
bill will ensure these individuals qualify for an extended
payment program. Finally, the author states, there is no
definition of a reasonable payment plan and there have been
reports, particularly when collection agencies are involved,
of demands for unaffordable payment amounts.
2)BACKGROUND . As the author noted above, many more Californians
now have health insurance, however, many of those people are
responsible for a high share of cost. Data from Covered
California enrollment numbers show that between October 1,
2013 and March 13, 2014, of subsidy eligible enrollees at less
than 400% of the federal poverty level (FPL) indicate that 91%
(809,082) have enrolled in a Silver or Bronze plan, 5%
(61,505) enrolled in a Gold plan, and only 4% (47,746)
enrolled in the Platinum plan. For most Silver, Bronze, and
Gold plans the annual individual out of pocket maximum is
$6,350 and annual family out of pocket maximum is $12,700
unless the individual has co-insurance and income less than
250% of the FPL.
3)SUPPORT . The Western Center on Law and Poverty (WCLP) is the
sponsor of this bill and writes that, even with the current
protections in place for consumers, there will still be cases
where patients incur high costs and need reasonable payment
options for their hospital or emergency room bills. The WCLP
cites the example of a pregnant woman who is married and has a
joint family income with her spouse of $43,257 (275% FPL) and
chooses a Silver Copay plan in the Exchange. For her birth
and delivery, she would pay 20% of whatever the delivery and
inpatient services are billed at, including the hospital and
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physician fees. The WCLP notes that, although her annual out
of pocket maximum payment is $12,700, a complicated birth and
delivery could put her very close to that annual maximum,
nearly 30% of her total annual income, and a payment plan of
10% a month would help her significantly in continuing to pay
off her bill and provide for her family.
The California Hospital Association supports this bill
stating, hospitals have recognized that an individual's share
of the costs of coverage may be an impediment to obtaining
needed health care services, even with a federal subsidy and
this bill would provide qualified individuals with options for
financial relief, while continuing to provide hospitals with
the needed flexibility to design charity care and discount
payment policies that meet the unique needs of the populations
they serve.
4)OPPOSITION . The California Chapter of the American College of
Emergency Physicians have an oppose unless amended position
because they are concerned that under the reasonable payment
formula a patient who has defaulted on an extended payment
plan (as required by existing law), may end up being required
to pay nothing for the life-saving emergency services they
received under the terms of the new reasonable payment plan as
outlined by this bill.
5)RELATED LEGISLATION .
a) AB 1952 (Pan) requires non-profit hospitals to annually
provide charity care amounting to 5% of the hospital's net
patient revenue. AB 1952 was held in the Assembly
Appropriations Committee.
b) AB 503 (Wieckowski), which is similar to AB 975
(Wieckowski) of 2013, revises California's non-profit
community benefits requirements to include multispecialty
clinics, narrows the activities that constitute community
benefits, creates a definition of charity care, and
requires the Office of Statewide Health Planning and
Development (OSHPD) to develop a standardized methodology
for calculating community benefits. AB 503 is pending in
the Senate Health Committee.
6)PREVIOUS LEGISLATION .
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a) AB 975 (Wieckowski) of 2013 would have revised
California's non-profit community benefits requirements to
include multispecialty clinics, narrowed the activities
that constitute community benefits, created a definition of
charity care, and required OSHPD to develop a standardized
methodology for calculating community benefits and to issue
civil penalties for noncompliance with filing requirements.
AB 975 failed passage on the Assembly Floor.
b) AB 1503 (Lieu), Chapter 445, Statutes of 2010, requires
emergency physicians who provide emergency medical services
in a hospital to provide discounts to uninsured patients,
establishes limits on the expected payment for emergency
medical services, as specified, limited debt-collection
activities, and required hospitals to include a written
description of the hospital discount policy.
c) SB 2942 (Kuehl) of 2008 would have implemented a
standardized format and methodology to be used when
presenting community benefit information, among other
requirements. SB 2942 was held in the Senate
Appropriations Committee.
d) SB 350 (Runner), Chapter 347, Statutes of 2007, requires
the submission of hospital charity care and
discount-payment policies to OSHPD.
e) AB 774 (Chan), Chapter 755, Statutes of 2006,
established Hospital Fair Pricing Policies, which requires
every hospital to offer reduced rates to uninsured and
underinsured patients who may have low or moderate income,
and to provide policies that clearly state the
qualifications for free care and discounted payments.
f) AB 1045 (Frommer), Chapter 532, Statutes of 2005,
revised the Payers' Bill of Rights to require hospitals to
provide information about their financial assistance and
charity care policies, as well as contact information for a
hospital employee or office to obtain additional
information.
g) SB 24 (Ortiz) of 2005 would have established charity
care and reduced payment policies and requirements as a
condition for hospitals to maintain their tax-exempt
status. SB 24 was held on the Senate Appropriations
Suspense file.
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h) AB 232 (Chan) of 2004 was substantially similar AB 774
of 2006, 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. AB 232 died on the Senate Floor.
i) AB 1627 (Frommer), Chapter 582, Statutes of 2003,
established the Payers' Bill of Rights, which generally
requires certain hospitals to provide written or electronic
copies of their chargemaster.
7)SUGGESTED AMENMENTS .
a) In order to clarify that if a patient wishes to
renegotiate the terms of a defaulted extended payment plan,
but no agreement can be reached on the amount of the
payment, the emergency physician will apply the reasonable
payment formula to determine a monthly payment amount, and
if the reasonable payment formula would result in a payment
of less than $10 a month, the extended payment plan should
be $10 per month.
b) In order to provide consistency in determining what
constitutes a reasonable payment formula, this bill should
be amended to clarify that the emergency room physician may
rely on the determination being made by the hospital at
which the emergency care was provided.
REGISTERED SUPPORT / OPPOSITION :
Support
Western Center on Law and Poverty
American Federation of State, County and Municipal Employees,
AFL-CIO
Asian Law Alliance
Bay Area Legal Aid
California Advocates for Nursing Home Reform
California Hospital Association
California Immigrant Policy Center
California Pan-Ethnic Health Network
Congress of California Seniors
Consumers Union
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Health Access California
Maternal and Child Health Access
National Association of Social Workers
National Health Law Program
Project Inform
Opposition
American College of Emergency Physicians, California Chapter
(unless amended)
Analysis Prepared by : Lara Flynn / HEALTH / (916) 319-2097