BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1503
A
AUTHOR: Lieu
B
AMENDED: June 16, 2010
HEARING DATE: June 23, 2010
1
CONSULTANT:
5
Hansel/
0
3
SUBJECT
Health facilities: emergency medical care: billing
SUMMARY
Requires physicians who provide emergency medical services
in hospitals to implement a discount payment policy for
financially qualified patients, as defined. Requires
physicians providing emergency medical services to limit
the expected payment for services from financially
qualified patients, as specified. Requires these
physicians to provide notices and information to patients,
and places limits on the collections activities of these
physicians, as specified. Clarifies that amounts paid
under a physician's discounted payment policy do not
constitute a physician's customary charge for purposes of
establishing reimbursement amounts under the Medicare and
Medi-Cal programs.
CHANGES TO EXISTING LAW
Existing law:
Authorizes each county to establish a Maddy Emergency
Medical Services Fund (Maddy Fund), and provides for the
deposit of certain penalties, forfeitures, and fines into
Continued---
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the Fund.
Requires moneys in local Maddy Funds to be used for
reimbursement of physicians and surgeons and hospitals for
uncompensated emergency medical services, as specified.
Limits the patients for whom reimbursement may be claimed
to patients who do not have health insurance coverage for
emergency services and care, cannot afford to pay for those
services, and for whom payment will not be made through any
private coverage or by any program Funded in whole or in
part by the federal government, as specified.
Further requires physicians seeking reimbursement from
Maddy Funds to:
First attempt to bill the patient or a responsible
third party for payment for services;
Make two additional attempts to bill the patient or
third party over a three-month period without success,
unless they receive notification from the third party
that no payment will be made for the services; and,
Discontinue any further collection efforts once
they receive payment from a Maddy Fund.
Requires hospitals to develop and implement written
policies for providing discounted payments or charity care
for financially qualified patients, as specified.
Requires hospitals to limit expected payment for services
to any patient at or below 350 percent of the federal
poverty level, who is eligible under its discount payment
policy, to the higher of 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.
Requires each hospital to perform various functions in
connection with its charity care and discount pay policies,
including providing patients with notice of the policies
and attempting to determine the availability of private or
public health insurance coverage for
each patient.
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Prohibits hospitals or their assignees from engaging in
certain types of collection activities vis-?-vis uninsured
and underinsured patients who qualify, or are attempting to
qualify, for their charity care and discount payment
policies, including reporting adverse information to a
consumer credit reporting agency or commencing civil action
for nonpayment at any time prior to 150 days after initial
billing, or using wage garnishments or placing liens on
primary residences as a means of collecting unpaid hospital
bills.
This bill:
Requires physicians who provide emergency medical services
in a hospital to implement a discount payment policy for
financially qualified patients, defined as patients who are
uninsured or who face high medical costs, as defined, and
who have incomes below 350 percent of the federal poverty
level. Allows financially qualified patients to apply for
a discount payment from the physician.
Requires the physician to limit the expected payment for
services from financially qualified patients to the amount
they would expect to receive as determined by FAIR Health,
a database established to provide fair and independent
research on rates paid to physicians. Provides that until
FAIR Health contains information for care provided in
California, the physician shall limit payment to the higher
of the amount the physician would expect to receive from
Medicare, Medi-Cal, the Healthy Families program, or
another governmental program.
Provides that if the physician seeks reimbursement from a
local Maddy Fund, they must cease any further billing of
collection activity with respect to that patient. Provides
that, if the Maddy Fund does not reimburse the physician,
or if the physician does not seek reimbursement from the
Maddy Fund, the physician may bill a patient consistent
with the provisions of this bill.
Provides that the physician may rely on the hospital's
determination of the patient's eligibility for a discounted
payment under its discount payment policy, but provides
that if the physician makes a separate determination of
eligibility, the information he or she shall use to
document the patient's income shall be limited to recent
pay stubs and tax returns. Allows physicians to accept the
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patient's self-attestation of income.
Requires physicians who provide emergency medical services
to provide notices and information to patients, and places
limits on the collections activities of physicians, similar
to those that apply to hospitals. Specifically, requires
physicians who provide emergency medical services to:
Provide patients with a written notice, at the time
services are provided at the time of billing, describing
the availability of the physician's discount payment
policy and eligibility for discount payments, in English
and other languages, as specified; and
Make reasonable efforts to obtain information from
patients about any private or public health insurance
coverage they may have and include in any billings a
description of public programs patients may be eligible
for, as well as the physician's discount payment policy
and application process.
Additionally requires physicians, and any collection agency
or assignee they use to collect payments to:
Establish a written policy stating the physician's
standards and practices for collection of debt and obtain
agreement from any collection agency the physician uses
that it will adhere to the policy;
Refrain from reporting adverse information for eligible
patients to a consumer credit agency for 150 days after
the initial billing;
Refrain from imposing wage garnishments or liens on
primary residences as a means of collecting debts for
persons eligible for the discounted payment program, with
exceptions;
Make any extended payment plans offered to eligible
patients interest free, and follow a specified timeline
and procedure for declaring an extended payment plan
inoperative; and,
Provide patients with a summary of their rights under
state and federal debt collection laws prior to
commencing collection activities against patients.
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Specifies that this bill does not diminish or eliminate any
protections consumers have under federal or state debt
collection laws.
Requires physicians to reimburse the patient or patients
any amount paid in excess of the amount permitted under
this bill, with interest.
Clarifies that discounts provided under a discount payment
policy do not preclude recognition of the physician's
established charges for purposes of establishing
reimbursement levels under Medicare, Medi-Cal, workers
compensation, or other federal, state, or local public
programs.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, no direct fiscal impact to the Department of
Health Care Services (DHCS) or the California Department of
Public Health (DPH). Unknown impacts on county Maddy
Funds.
BACKGROUND AND DISCUSSION
The author states that AB 1503 will extend the same pricing
protections that apply to hospitals when they bill
uninsured and underinsured patients to emergency room
physicians, which will provide more general protections to
uninsured patients and underinsured patients who receive
emergency care. The author argues that, as the number of
uninsured and underinsured Californians increase in the
current economic downturn, they are all too often forced to
turn to emergency rooms for urgently needed care. While
hospitals are required to charge low and moderate income
patients a fair price, and face limits on their collection
practices vis-?-vis those patients, the same protections do
not apply to emergency medical services provided by
emergency physicians.
Hospital charity care and discount pricing requirements
In 2006, in response to concerns that hospitals were
overbilling uninsured patients and engaging in overly
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aggressive collection efforts, the Legislature passed and
the Governor signed AB 774 (Chan). Supporters of the bill
claimed that hospitals were not providing enough charity
care, not disclosing their policies for free or reduced
cost care, and not giving patients enough time to arrange
their finances in order to make payments on their bills
before sending the bills to collections. Although the
California Hospital Association had developed guidelines
regarding charity care and discount payment policies in
2004, concerns were raised that many hospitals were not
following the guidelines. Supporters further argued that,
in the absence of a mandate that hospitals develop and
apply charity care and discount payment policies, uninsured
and underinsured patients would be discouraged from seeking
hospital services when they need them.
Under AB 774, hospitals must develop and implement written
policies for providing discounted payments or charity care
for financially qualified patients, limit expected payment
for services to such patients, provide patients with notice
of its policies, and refrain from engaging in certain
"hard" collection practices vis-?-vis uninsured and
underinsured patients, including sending bills of patients
who are attempting to pay their bills or qualify for
charity care or reduced payments to collections, reporting
adverse information to consumer credit agencies or
commencing civil action for the first 150 days in which
bills are pending, and using wage garnishments or placing
liens on primary residences as a means of collecting unpaid
hospital bills.
FAIR Health Database
In the early 1990s, UnitedHealth Group created Ingenix to
create a database to set out-of-network payment rates for
physicians. The database contained the nation's largest
pool of charges for medical services and was relied on by
many insurers to calculate what to pay doctors when
patients seek care outside of an insurer's network.
Beginning in 2000, the American Medical Association, the
State of New York, and other entities filed lawsuits,
claiming the database was flawed and systematically set
physician payments below the amount physicians normally
charge, and leaving patients with a bill from the physician
to make up the difference. Early in 2009, UnitedHealth
settled the lawsuit and agreed to stop using the Ingenix
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database. UnitedHealth also agreed to pay $50 million
towards developing a new, independent system. The new
database, known as FAIR Health, which will be administered
by a nonprofit group and supported by researchers at
Syracuse University and other universities, is expected to
become operational in late 2010. A simplified version of
the database will be available online, allowing physicians
and patients to see the usual and customary charges for
many services. AB 1503 would propose to use, once it
contains information for care provided in California, the
amount the physician would expect to receive, as determined
by FAIR Health as the amount that physicians could charge
financially qualified patients.
Maddy EMS Funds
In 1987, the Legislature concluded that emergency medical
services providers bear higher uncompensated costs for
their services than do providers of other medical services,
and often receive only partial or no payment from
patients. The state enacted a series of bills to
compensate physicians and medical facilities for emergency
medical services provided to patients who do not have
health insurance and cannot pay for their medical care. SB
12 (Maddy), Chapter 1240, Statutes of 1987, allows counties
to establish Maddy Emergency Medical Services Funds, also
known as Maddy Funds.
The Funds receive local penalty assessment funds, which are
used to reimburse physicians and hospitals for patients who
do not make payment for emergency medical services and have
no third-party or government source of payment.
Fifty-eight percent of these funds, after administrative
costs, must be distributed to physicians for emergency
services, 25 percent to hospitals providing
disproportionate levels of trauma and EMS, and 17 percent
to other emergency medical services providers, including,
but not limited to, regional poison centers, as determined
by each county. Approximately 50 counties have established
Maddy Funds.
In 1988, voters passed Proposition 99, which imposes taxes
on the distribution of cigarettes and other tobacco
products. These taxes fund a variety of programs,
including the California Healthcare for Indigents Program
(CHIP) and Rural Health Services (RHS) Program, which fund
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county indigent care. Each county is required to establish
a physician services account within its Maddy Fund to
receive revenues appropriated by the Legislature from
Proposition 99 tobacco tax revenues. Physician services
account funds must be used to reimburse physicians for
services provided to patients who cannot afford to pay for
those services and for whom payment will not be made
through any private coverage or public program. Funds may
be used to reimburse losses on emergency, obstetric, and
pediatric services. Physicians can be reimbursed for up to
50 percent of the losses submitted. However, appropriation
of these funds has been curtailed in recent budget years.
Emergency physicians facing other limits on billing
practices
A recent court case also placed limits on the billing
practices of physicians who provide emergency medical
services. In January, 2009, the California Supreme Court
issued a ruling that emergency physicians are not entitled
to bill insured patients for the difference between their
usual fee and the amount paid by the patient's health plan
(referred to as "balance billing"), when the physicians do
not have contracts with the patient's health plan. The
court ruled in Prospect v. Northridge Medical Group that
billing disputes over emergency medical care must be
resolved solely between the emergency room doctors, who are
entitled to a reasonable payment for their services, and
the health plan, which is obligated to make that payment. A
patient who is a member of the health plan may not be
injected into the dispute.
The impact of federal health care reform on patient billing
The federal Patient Protection and Affordable Care Act
(Public Law 111-148), known as PPACA, makes a number of
changes that will over time substantially increase the
number of persons with comprehensive health coverage and
reduce the number of patients who end up being billed
significant amounts for medical services. Among the
changes are new coverage provisions for medically
uninsurable individuals, small business tax credits for
provision of health insurance, new coverage options for
dependents, expanded Medicaid eligibility, restrictions on
the ability of insurers to limit coverage, and beginning in
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2014, a requirement that insurers accept all applicants
for coverage, a mandate that most individuals maintain
minimum coverage, a requirement that large employers who do
not offer coverage make payments towards their employees'
coverage, and the availability of significant subsidies for
purchase of health coverage through state health exchanges.
Prior legislation
SB 981 (Perata)of 2007-08 would have prohibited
non-contracting hospital emergency room (ER) physicians
from directly billing enrollees of health care service
plans licensed by the Department of Managed Health Care
under the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene), other than allowable copayments and
deductibles, and establishes statutory standards and
requirements for claims payment and dispute resolution
related to non-contracting ER physician claims, including
an Independent Dispute Resolution Process. Vetoed by
Governor Schwarzenegger.
SB 389 (Yee) of 2007-08 would have would prohibited
hospital-based physicians from seeking payment from
individual enrollees and instead required such physicians
to seek reimbursement solely from the enrollee's health
plan. Would have required the Department of Managed Health
Care and the California Department of Insurance to
implement an independent provider dispute resolution
system, as specified. Set in Senate Judiciary Committee;
hearing cancelled at the request of the author.
SB 697 (Yee), Chapter 606, Statutes of 2008, prohibits a
health care provider who is furnished documentation of a
patient's enrollment in the Healthy Families program or
Access for Infants and Mothers program from seeking
reimbursement or attempting to obtain payment for any
covered services provided to that person other than from
the participating health plan covering that person.
AB 774 (Chan), Chapter 755, Statutes of 2006, requires
hospitals to develop and implement written policies for
providing discounted payments or charity care for
financially qualified patients. Requires hospitals to
limit expected payment for services to such patients and
provide patients with notice of their policies. Prohibits
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hospitals and their collection agents from engaging in
certain collection practices vis-?-vis uninsured and
underinsured patients who qualify under their charity care
and discounted payments policies.
SB 12 (Maddy), Chapter 1240, Statutes of 1987, allows
counties to establish Emergency Medical Services Funds,
also known as Maddy Funds, and directs a portion of penalty
assessments on certain criminal and traffic violations, and
a portion of the fees from people attending traffic
violator schools, to the Funds.
Arguments in support
Health Access California, the sponsor of AB 1503, states
that physicians who bill Maddy Funds for emergency care
provided to uninsured patients are required to bill
patients three times before they can be paid from the Maddy
Funds. The result is that low-income patients are
frequently charged "sticker" prices by emergency physicians
that are often three or four times what is paid by Medicare
or private insurers, which is wrong. Health Access states
that it has found that physicians are often quicker to bill
uninsured patients than hospitals, are quicker to commence
aggressive collections, and are just as likely as hospitals
to charge sticker prices to uninsured patients. Health
Access cites a recent national study that found that
physicians collect more from uninsured patients than they
do from insurers for their insured patients, and provide a
minimal amount of uncompensated care.
The Western Center on Law and Poverty states that uninsured
patients who must seek emergency medical care frequently
receive multiple bills-from the emergency room doctor,
specialists who they may have seen, and diagnostic
providers. This practice affects over six million
Californians who do not have the benefit of group
contracted rates and are, as a result, the only consumers
who are charged sticker prices for their care.
Arguments in opposition
Taking an oppose unless amended position, the California
Chapter of the American College of Emergency Physicians
(CAL/ACEP) states that California's emergency physicians
currently have charity care policies and inform policies of
those patients when they send bills. Even though the
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average bill for an emergency physician's services is $350,
emergency physicians routinely discount charges and/or
develop payment plans for patients who cannot afford to
pay, and do not place liens on homes or garnish wages.
CAL/ACEP argues that AB 1503 is extremely complex, and is
potentially very costly and burdensome for small physician
groups. Many of the requirements of the bill could result
in physicians spending more on billing costs than they
actually collect from the patient. This would create an
incentive for emergency physicians to avoid billing the
patient entirely and instead to bill county Maddy EMS Funds
directly, putting a further strain on an already under
funded system. CAL/ACEP seeks amendments to allow
physicians to determine the eligibility criteria and level
of discounts under their discount payment policies,
simplify the billing and collection requirements, and
provide that failure to adopt a discount payment policy
shall not constitute a violation of the terms of the
physician's license.
Also taking an oppose unless amended position, the
California Medical Association (CMA) states that setting
the reimbursement level for uninsured patients will further
create disincentives for physicians to provide emergency
on-call services. CMA notes that the combination of this
bill and the pending reduction in state funds for the
county Maddy Funds will lead to a serious shortage of
specialty services in emergency rooms. CMA further argues
that AB 1503 will erode the ability of physicians to
collect fees from patients who otherwise may be able to pay
all or part of the average $350 bill.
PRIOR ACTIONS
Assembly Health: 17-0
Assembly Appropriations: 16-0
Assembly Floor: 74-0
COMMENTS
1. Author's amendments. Staff understand the author
intends to offer in committee amendments to address
concerns raised by CAL/ACEP concerning the limits on how
much physicians can bill financially qualified patients and
the patient notification requirements contained in the
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bill.
POSITIONS
Support: Health Access (sponsor)
American Federation of State, County and
Municipal Employees
Asian Pacific Islander American Health Forum
California Acorn
California Association of Community Organizations
for Reform Now
California Congress of Seniors
California Federation of Teachers
California Immigrant Policy Center
California Pan- Ethnic Health Network
Consumers Union
Having Our Say
Jericho
Service Employees International Union
Western Center on Law & Poverty
Oppose: California Chapter of the American College of
Emergency Physicians (unless
Amended)
California Medical Association (unless amended)
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