BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1285
                                                                  Page  1

          Date of Hearing:   August 16, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                  SB 1285 (Hern�ndez) - As Amended:  August 7, 2012 

          Policy Committee:                             HealthVote:14-5

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill requires a private hospital with an out-of-network 
          emergency utilization rate, as defined, of 50% or more, to 
          adjust its total billed charges for emergency services and care 
          provided to a patient prior to stabilization to an amount no 
          greater than 150% of the amount the hospital could expect to 
          receive from Medicare for the same services and care.  

          This bill exempts public hospitals from its requirements.

           FISCAL EFFECT  

          Potential enforcement costs to the Department of Managed Health 
          Care of up to $175,000 annually if hospitals or health plans 
          contest payment levels and compliance with this bill.

           COMMENTS  

           1)Rationale  . The author indicates that current law governing 
            payment rates for out-of-network emergency hospital care has 
            created unintended incentives that raise the cost of health 
            care and reduce the appropriate coordination of patient care. 
            He contends that certain bad actors pursue these incentives as 
            part of their business practice, refusing to contract with 
            most insurers and demanding excessive payments for 
            out-of-network emergency care. 

            The author believes this bill will improve incentives for 
            hospital emergency care by limiting the amount hospitals can 
            bill out-of-network emergency patients. These new limits are 
            intended only to apply to hospitals that have out-of-network 
            patients for a majority of their local, privately-insured 








                                                                  SB 1285
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            emergency room patients.

           2)Support  . The Service Employees International Union (SEIU) 
            supports this bill as a means to restrict a small number of 
            unscrupulous hospital owners from taking advantage of federal 
            and state laws that require hospitals to stabilize emergency 
            patients and health insurers to pay for out-of-network care by 
            making a business out of cancelling insurance contracts and 
            collecting exorbitant reimbursements for out-of-network 
            emergency room patients.  

            The CalPERS Board of Administration believes this bill would 
            protect both CalPERS health plans and members enrolled in PPO 
            plans from unreasonable medical costs.  

            The California Labor Federation contends that this bill will 
            improve incentives for hospitals to be in-network, reduce 
            costs and improve access to care for thousands of 
            Californians.  

           3)Opposition  . A number of hospital groups and individual 
            hospitals oppose this bill, contending it is burdensome to 
            track compliance with the newly defined out-of-network 
            emergency utilization rate, and indicating that legislative 
            rate-setting is unnecessary as hospitals and health plans are 
            sophisticated business entities.

           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081