BILL ANALYSIS Ó SB 1276 Page 1 SENATE THIRD READING SB 1276 (Ed Hernandez) As Amended June 26, 2014 Majority vote SENATE VOTE :23-10 HEALTH 14-4 ----------------------------------------------------------------- |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 SB 1276 Page 2 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 SB 1276 Page 3 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 FN: 0004098 SB 1276 Page 4