BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING
          SB 1276 (Ed Hernandez)
          As Amended June 26, 2014
          Majority vote

           SENATE VOTE  :23-10  
           
           HEALTH              14-4                                        
           
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          |Ayes:|Pan, Ammiano, Bonilla,    |     |                          |
          |     |Bonta, Chesbro, Gomez,    |     |                          |
          |     |Gonzalez,                 |     |                          |
          |     |Roger Hernández,          |     |                          |
          |     |Lowenthal, Nazarian,      |     |                          |
          |     |Waldron, Ridley-Thomas,   |     |                          |
          |     |Rodriguez, Wieckowski     |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Maienschein, Chávez,      |     |                          |
          |     |Mansoor, Wagner           |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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  








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            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.

           EXISTING LAW  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.


           FISCAL EFFECT  :  None

           COMMENTS  :  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.

          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  








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          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. 

          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 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.

          There is no opposition to this bill.


           Analysis Prepared by  :    Lara Flynn / HEALTH / (916) 319-2097 


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