Senate Bill No. 1276

Introduced by Senator Hernandez

February 21, 2014

An act to amend Sections 127400, 127420, 127425, 127450, 127454, and 127455 of the Health and Safety Code, relating to health care billing.

LEGISLATIVE COUNSEL’S DIGEST

SB 1276, as introduced, Hernandez. Health care: fair billing policies.

(1) Existing law requires each hospital, as a condition of licensure, to maintain an understandable written policy regarding discount payments for financially qualified patients as well as a written charity care policy. Existing law requires uninsured patients or patients with high medical costs who are at or below 350% of the federal poverty level to be eligible for charity care or a discount payment policy from a hospital, as specified, and requires that specified patients be eligible for discount payments to an emergency physician. Existing law defines a patient with high medical costs as a person whose family income does not exceed 350% of the federal poverty level and who does not receive a discounted rate from the hospital or physician as a result of his or her 3rd-party coverage.

This bill would change the definition of a person with high medical costs to include those persons who do receive a discounted rate from the hospital as a result of 3rd-party coverage.

(2) Existing law requires a hospital or emergency physician to make a reasonable effort to obtain from the patient, or his or her representative, information about whether private or public health insurance or sponsorship may fully or partially cover the charges for care, including private health insurance, and requires the hospital or emergency physician to provide a patient who has not shown proof of 3rd-party coverage with specified information, including a statement that he or she may be eligible for specified health coverage programs, including Medi-Cal and the California Children’s Services Program, and applications for those programs.

This bill would require the hospital or emergency physician to obtain information as to whether the patient may be eligible for the California Health Benefit Exchange and to include in the information provided to a patient that has not shown proof of 3rd-party coverage a statement that the consumer may be eligible for coverage through the California Health Benefit Exchange or other state- or county-funded health coverage programs. The bill would also specify that, when a patient applies, or has a pending application, for another health coverage program at the same time he or she applies for charity care or a discount payment program, that neither application precludes eligibility for the other program.

(3) Existing law requires a hospital or an emergency physician to have a written policy defining standards and practices for the collection of debt, and a written agreement from any agency that collects debt that it will adhere to the standards and practices.

This bill would require the affiliate, subsidiary, or external collection agency that is collecting hospital or emergency physician receivables to comply with the definition and application of a reasonable payment plan, as defined.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 127400 of the Health and Safety Code
is amended to read:

127400.  

As used in this article, the following terms have the
following meanings:

(a) “Allowance for financially qualified patient” means, with
respect to services rendered to a financially qualified patient, an
allowance that is applied after the hospital’s charges are imposed
on the patient, due to the patient’s determined financial inability
to pay the charges.

(b) “Federal poverty level” means the poverty guidelines updated
periodically in the Federal Register by the United States
Department of Health and Human Services under authority of
subsection (2) of Section 9902 of Title 42 of the United States
Code.

(c) “Financially qualified patient” means a patient who is both
of the following:

(1) A patient who is a self-pay patient, as defined in subdivision
(f) begin insert , end insert or a patient with high medical costs, as defined in subdivision
(g).

(2) A patient who has a family income that does not exceed 350
percent of the federal poverty level.

(d) “Hospital” means a facility that is required to be licensed
under subdivision (a), (b), or (f) of Section 1250, except a facility
operated by the State Department of State Hospitals or the
Department of Corrections and Rehabilitation.

(e) “Office” means the Office of Statewide Health Planning and
Development.

(f) “Self-pay patient” means a patient who does not have
third-party coverage from a health insurer, health care service plan,
Medicare, or Medicaid, and whose injury is not a compensable
injury for purposes of workers’ compensation, automobile
insurance, or other insurance as determined and documented by
the hospital. Self-pay patients may include charity care patients.

(g) “A patient with high medical costs” means a person whose
family income does not exceed 350 percent of the federal poverty
level, as defined in subdivision (b) begin delete , if that individual does not
receive a discounted rate from the hospital as a result of his or her
third-party coverage end delete . For these purposes, “high medical costs”
means any of the following:

(1) Annual out-of-pocket costs incurred by the individual at the
hospital that exceed 10 percent of the patient’s family income in
the prior 12 months.

(2) Annual out-of-pocket expenses that exceed 10 percent of
the patient’s family income, if the patient provides documentation
of the patient’s medical expenses paid by the patient or the patient’s
family in the prior 12 months.

(3) A lower level determined by the hospital in accordance with
the hospital’s charity care policy.

(h) “Patient’s family” means the following:

(1) For persons 18 years of age and older, spouse, domestic
partner, as defined in Section 297 of the Family Code, and
dependent children under 21 years of age, whether living at home
or not.

(2) For persons under 18 years of age, parent, caretaker relatives,
and other children under 21 years of age of the parent or caretaker
relative.

begin insert

(i) “Reasonable payment plan” means monthly payments that
are not more than 5 percent of a patient’s family income for a
month, excluding deductions for essential living expenses.

end insert

SEC. 2.  

Section 127420 of the Health and Safety Code is
amended to read:

127420.  

(a) Each hospital shall make all reasonable efforts to
obtain from the patient or his or her representative information
about whether private or public health insurance or sponsorship
may fully or partially cover the charges for care rendered by the
hospital to a patient, including, but not limited to, any of the
following:

(1) Private health insurance begin insert , including coverage offered through
the California Health Benefit Exchange end insert .

(2) Medicare.

(3) The Medi-Cal program, the Healthy Families Program, the
California begin delete Childrens’ end delete begin insert Children’s end insert Services Program, or other
state-funded programs designed to provide health coverage.

(b) If a hospital bills a patient who has not provided proof of
coverage by a third party at the time the care is provided or upon
discharge, as a part of that billing, the hospital shall provide the
patient with a clear and conspicuous notice that includes all of the
following:

(1) A statement of charges for services rendered by the hospital.

(2) A request that the patient inform the hospital if the patient
has health insurance coverage, Medicare, Healthy Families,
Medi-Cal, or other coverage.

(3) A statement that begin insert , end insert if the consumer does not have health
insurance coverage, the consumer may be eligible for Medicare,
Healthy Families, Medi-Cal, begin insert coverage offered through the
California Health Benefit Exchange, end insert California begin delete Childrens’ end delete
begin insert Children's end insert Services Program, begin insert other state- or county-funded health
coverage, end insert or charity care.

(4) A statement indicating how patients may obtain applications
for the Medi-Cal program and the Healthy Families Program begin insert ,
coverage offered through the California Health Benefit Exchange,
or other state- or county-funded health coverage programs end insert and
that the hospital will provide these applications. begin insert The hospital shall
also provide patients with a referral to a local consumer assistance
center housed at legal services offices. end insert If the patient does not
indicate coverage by a third-party payer specified in subdivision
(a), or requests a discounted price or charity care then the hospital
shall provide an application for the Medi-Cal program, the Healthy
Families Program or other begin delete governmental program to the patient end delete
begin insert state- or county-funded health coverage programs end insert . This application
shall be provided prior to discharge if the patient has been admitted
or to patients receiving emergency or outpatient care.

(5) Information regarding the financially qualified patient and
charity care application, including the following:

(A) A statement that indicates that if the patient lacks, or has
inadequate, insurance, and meets certain low- and moderate-income
requirements, the patient may qualify for discounted payment or
charity care.

(B) The name and telephone number of a hospital employee or
office from whom or which the patient may obtain information
about the hospital’s discount payment and charity care policies,
and how to apply for that assistance.

begin insert

(C) 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 shall preclude eligibility for the other program.

end insert

SEC. 3.  

Section 127425 of the Health and Safety Code is
amended to read:

127425.  

(a) Each hospital shall have a written policy about
when and under whose authority patient debt is advanced for
collection, whether the collection activity is conducted by the
hospital, an affiliate or subsidiary of the hospital, or by an external
collection agency.

(b) Each hospital shall establish a written policy defining
standards and practices for the collection of debt, and shall obtain
a written agreement from any agency that collects hospital
receivables that it will adhere to the hospital’s standards and scope
of practices. begin insert This agreement shall require the affiliate, subsidiary,
or external collection agency of the hospital that collects the debt
to comply with the hospital’s definition and application of a
reasonable payment plan, as defined in subdivision (i) of Section
127400. end insert The policy shall not conflict with other applicable laws
and shall not be construed to create a joint venture between the
hospital and the external entity, or otherwise to allow hospital
governance of an external entity that collects hospital receivables.
In determining the amount of a debt a hospital may seek to recover
from patients who are eligible under the hospital’s charity care
policy or discount payment policy, the hospital may consider only
income and monetary assets as limited by Section 127405.

(c) At time of billing, each hospital shall provide a written
summary consistent with Section 127410, which includes the same
information concerning services and charges provided to all other
patients who receive care at the hospital.

(d) For a patient that lacks coverage, or for a patient that
provides information that he or she may be a patient with high
medical costs, as defined in this article, a hospital, any assignee
of the hospital, or other owner of the patient debt, including a
collection agency, shall not report adverse information to a
consumer credit reporting agency or commence civil action against
the patient for nonpayment at any time prior to 150 days after
initial billing.

(e) If a patient is attempting to qualify for eligibility under the
hospital’s charity care or discount payment policy and is attempting
in good faith to settle an outstanding bill with the hospital by
negotiating a reasonable payment plan or by making regular partial
payments of a reasonable amount, the hospital shall not send the
unpaid bill to any collection agency or other assignee, unless that
entity has agreed to comply with this article.

(f) (1) The hospital or other assignee which is an affiliate or
subsidiary of the hospital shall not, in dealing with patients eligible
under the hospital’s charity care or discount payment policies, use
wage garnishments or liens on primary residences as a means of
collecting unpaid hospital bills.

(2) A collection agency or other assignee that is not a subsidiary
or affiliate of the hospital shall not, in dealing with any patient
under the hospital’s charity care or discount payment policies, use
as a means of collecting unpaid hospital bills, any of the following:

(A) A wage garnishment, except by order of the court upon
noticed motion, supported by a declaration filed by the movant
identifying the basis for which it believes that the patient has the
ability to make payments on the judgment under the wage
garnishment, which the court shall consider in light of the size of
the judgment and additional information provided by the patient
prior to, or at, the hearing concerning the patient’s ability to pay,
including information about probable future medical expenses
based on the current condition of the patient and other obligations
of the patient.

(B) Notice or conduct a sale of the patient’s primary residence
during the life of the patient or his or her spouse, or during the
period a child of the patient is a minor, or a child of the patient
who has attained the age of majority is unable to take care of
himself or herself and resides in the dwelling as his or her primary
residence. In the event a person protected by this paragraph owns
more than one dwelling, the primary residence shall be the dwelling
that is the patient’s current homestead, as defined in Section
704.710 of the Code of Civil Procedure or was the patient’s
homestead at the time of the death of a person other than the patient
who is asserting the protections of this paragraph.

(3) This requirement does not preclude a hospital, collection
agency, or other assignee from pursuing reimbursement and any
enforcement remedy or remedies from third-party liability
settlements, tortfeasors, or other legally responsible parties.

(g)  begin delete Any extended end delete begin insert Extended end insert payment plans offered by a hospital
to assist patients eligible under the hospital’s charity care policy,
discount payment policy, or any other policy adopted by the
hospital for assisting low-income patients with no insurance or
high medical costs in settling outstanding past due hospital bills,
shall be interest free. The hospital extended payment plan may be
declared no longer operative after the patient’s failure to make all
consecutive payments due during a 90-day period. Before declaring
the hospital extended payment plan no longer operative, the
hospital, collection agency, or assignee shall make a reasonable
attempt to contact the patient by phone and, to give notice in
writing, that the extended payment plan may become inoperative,
and of the opportunity to renegotiate the extended payment plan.
Prior to the hospital extended payment plan being declared
inoperative, the hospital, collection agency, or assignee shall
attempt to renegotiate the terms of the defaulted extended payment
plan, if requested by the patient. The hospital, collection agency,
or assignee shall not report adverse information to a consumer
credit reporting agency or commence a civil action against the
patient or responsible party for nonpayment prior to the time the
extended payment plan is declared to be no longer operative. For
purposes of this section, the notice and phone call to the patient
may be made to the last known phone number and address of the
patient.

(h) Nothing in this section shall be construed to diminish or
eliminate any protections consumers have under existing federal
and state debt collection laws, or any other consumer protections
available under state or federal law. If the patient fails to make all
consecutive payments for 90 days and fails to renegotiate a
payment plan, this subdivision does not limit or alter the obligation
of the patient to make payments on the obligation owing to the
hospital pursuant to any contract or applicable statute from the
date that the extended payment plan is declared no longer operative,
as set forth in subdivision (g).

SEC. 4.  

Section 127450 of the Health and Safety Code is
amended to read:

127450.  

As used in this article, the following terms have the
following meanings:

(a) “Allowance for financially qualified patient” means, with
respect to emergency care rendered to a financially qualified
patient, an allowance that is applied after the emergency
physician’s charges are imposed on the patient, due to the patient’s
determined financial inability to pay the charges.

(b) “Emergency care” means emergency medical services and
care, as defined in Section 1317.1, that is provided by an
emergency physician in the emergency department of a hospital.

(c) “Emergency physician” means a physician and surgeon
licensed pursuant to Chapter 2 (commencing with Section 2000)
of the Business and Professions Code who is credentialed by a
hospital and either employed or contracted by the hospital to
provide emergency medical services in the emergency department
of the hospital, except that an “emergency physician” shall not
include a physician specialist who is called into the emergency
department of a hospital or who is on staff or has privileges at the
hospital outside of the emergency department.

(d) “Federal poverty level” means the poverty guidelines updated
periodically in the Federal Register by the United States
Department of Health and Human Services under authority of
subsection (2) of Section 9902 of Title 42 of the United States
Code.

(e) “Financially qualified patient” means a patient who is both
of the following:

(1) A patient who is a self-pay patient or a patient with high
medical costs.

(2) A patient who has a family income that does not exceed 350
percent of the federal poverty level.

(f) “Hospital” means a facility that is required to be licensed
under subdivision (a) of Section 1250, except a facility operated
by the State Department of State Hospitals or the Department of
Corrections and Rehabilitation.

(g) “Office” means the Office of Statewide Health Planning and
Development.

(h) “Self-pay patient” means a patient who does not have
third-party coverage from a health insurer, health care service plan,
Medicare, or Medicaid, and whose injury is not a compensable
injury for purposes of workers’ compensation, automobile
insurance, or other insurance as determined and documented by
the emergency physician. Self-pay patients may include charity
care patients.

(i) “A patient with high medical costs” means a person whose
family income does not exceed 350 percent of the federal poverty
level begin delete if that individual does not receive a discounted rate from the
emergency physician as a result of his or her third-party coverage end delete .
For these purposes, “high medical costs” means any of the
following:

(1) Annual out-of-pocket costs incurred by the individual at the
hospital that provided emergency care that exceed 10 percent of
the patient’s family income in the prior 12 months.

(2) Annual out-of-pocket expenses that exceed 10 percent of
the patient’s family income, if the patient provides documentation
of the patient’s medical expenses paid by the patient or the patient’s
family in the prior 12 months. The emergency physician may waive
the request for documentation.

(3) A lower level determined by the emergency physician in
accordance with the emergency physician’s discounted payment
policy.

(j) “Patient’s family” means the following:

(1) For persons 18 years of age and older, spouse, domestic
partner, as defined in Section 297 of the Family Code, and
dependent children under 21 years of age, whether living at home
or not.

(2) For persons under 18 years of age, parent, caretaker relatives,
and other children under 21 years of age of the parent or caretaker
relative.

begin insert

(k) “Reasonable payment plan” means monthly payments that
are not more than 5 percent of a patient’s family income for a
month, excluding deductions for essential living expenses.

end insert

SEC. 5.  

Section 127454 of the Health and Safety Code is
amended to read:

127454.  

(a) Each emergency physician shall make all
reasonable efforts to obtain from the patient, or his or her
representative, information about whether private or public health
insurance or sponsorship may fully or partially cover the charges
for emergency care rendered by the emergency physician to a
patient, including, but not limited to, any of the following:

(1) Private health insurance begin insert , including coverage offered through
the California Health Benefit Exchange end insert .

(2) Medicare.

(3) The Medi-Cal program, the Healthy Families Program, the
California Children’s Services Program, or other begin delete publicly funded end delete
begin insert state- or county-funded end insert programs designed to provide
comprehensive health coverage.

(b) If the emergency physician or his or her representative bills
a patient who has not provided proof of coverage by a third party
at the time the care is provided or upon discharge, as a part of that
billing, the emergency physician shall provide the patient with a
clear and conspicuous notice that includes all of the following:

(1) A statement of charges for services rendered by the
emergency physician.

(2) A request that the patient inform the emergency physician
if the patient has health insurance coverage, Medicare, Healthy
Families, Medi-Cal, or other coverage.

(3) A statement that if the consumer does not have health
insurance coverage, the consumer may be eligible for Medicare,
Healthy Families, Medi-Cal, begin insert coverage through the California
Health Benefit Exchange, end insert California Children’s Services Program,
begin insert other state- or county-funded health coverage, end insert or discounted
payment care.

(4) Information regarding the financially qualified patient and
discounted payment application, including the following:

(A) A statement that indicates that if the patient lacks, or has
inadequate, insurance, and meets certain low-and moderate-income
requirements, the patient may qualify for discounted payment.
begin insert That statement shall also provide patients with a referral to a local
consumer assistance center housed at legal services offices. end insert

(B) The name and telephone number of the emergency
physician’s employee or office from whom or which the patient
may obtain information about the emergency physician’s discount
payment policy, and how to apply for that assistance.

begin insert

(C) 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 shall preclude eligibility for the other program.

end insert

(c) (1) In addition to the statement of the charges, if the
emergency physician’s uses the following notice in any billing,
that emergency physician shall be deemed to have complied with
the notice requirements of this section: “If you are uninsured or
have high medical costs, please contact ____ (name of person
responsible for discount payment policy) at ____ (area code and
phone number) for information on discounts and programs for
which you may be eligible, including the Medi-Cal program. If
you have coverage, please tell us so that we may bill your plan.”

(2) If the emergency physician or the assignee of the emergency
physician lacks the capacity to provide the notice specified in
paragraph (1), the emergency physician or his or her assignee shall
be deemed to have complied with the notice requirements of this
section if the information required under this section is provided
upon request and if the following is printed on the bill in 14-point
bold type: “If uninsured or high medical bill, call re: discount.”

SEC. 6.  

Section 127455 of the Health and Safety Code is
amended to read:

127455.  

(a) Each emergency physician shall have a written
policy about when and under whose authority patient debt is
advanced for collection.

(b) Each emergency physician shall establish a written policy
defining standards and practices for the collection of debt, and
shall obtain a written agreement from any agency that collects
emergency physician receivables that it will adhere to the
emergency physician’s standards and scope of practice. begin insert This
agreement shall require the affiliate, subsidiary, or external
collection agency of the physician that collects the debt to comply
with the physician’s definition and application of a reasonable
payment plan, as defined in subdivision (k) of Section 127450. end insert The
policy shall not conflict with other applicable laws and shall not
be construed to create a joint venture between the emergency
physician and the external entity, or otherwise to allow physician
and surgeon governance of an external entity that collects physician
and surgeon receivables. In determining the amount of a debt the
emergency physician may seek to recover from patients who are
eligible under the emergency physician’s charity care policy or
discount payment policy, the emergency physician may consider
only income and monetary assets as limited by Section 127452.

(c) For a patient that lacks coverage, or for a patient that
provides information that he or she may be a patient with high
medical costs, the emergency physician, begin delete any end delete begin insert an end insert assignee of the
emergency physician, or other owner of the patient debt, including
a collection agency, shall not report adverse information to a
consumer credit reporting agency or commence civil action against
the patient for nonpayment at any time prior to 150 days after
initial billing.

(d) If a patient is attempting to qualify for eligibility under the
emergency physician’s discount payment policy and is attempting
in good faith to settle an outstanding bill with the physician and
surgeon by negotiating a reasonable payment plan or by making
regular partial payments of a reasonable amount, the emergency
physician or his or her assignee, including a collection agency,
shall not report adverse information to a consumer credit agency
or commence a civil action unless that entity has agreed to comply
with this article.

(e) (1) The emergency physician or other assignee shall not, in
dealing with patients eligible under the emergency physician’s
discount payment policies, use wage garnishments or liens on
primary residences as a means of collecting unpaid emergency
physician bills.

(2) A collection agency or other assignee shall not, in dealing
with any patient under the emergency physician’s discount payment
policy, use as a means of collecting unpaid emergency physician
bills, any of the following:

(A) A wage garnishment, except by order of the court upon
noticed motion, supported by a declaration filed by the movant
identifying the basis for its belief that the patient has the ability to
make payments on the judgment under the wage garnishment, that
the court shall consider in light of the size of the judgment and
additional information provided by the patient prior to, or at, the
hearing concerning the patient’s ability to pay, including
information about probable future medical expenses based on the
current condition of the patient and other obligations of the patient.

(B) Notice or conduct a sale of the patient’s primary residence
during the life of the patient or his or her spouse, or during the
period a child of the patient is a minor, or a child of the patient
who has attained the age of majority is unable to take care of
himself or herself and resides in the dwelling as his or her primary
residence. In the event a person protected by this paragraph owns
more than one dwelling, the primary residence shall be the dwelling
that is the patient’s current homestead, as defined in Section
704.710 of the Code of Civil Procedure or was the patient’s
homestead at the time of the death of a person other than the patient
who is asserting the protections of this paragraph.

(3) This requirement does not preclude the emergency physician,
collection agency, or other assignee from pursuing reimbursement
and any enforcement remedy or remedies from third-party liability
settlements, tortfeasors, or other legally responsible parties.

(f)  begin delete Any extended end delete begin insert Extended end insert payment plans offered by an
emergency physician to assist patients eligible under the emergency
physician’s discount payment policy or any other policy adopted
by the emergency physician for assisting low-income patients with
no insurance or high medical costs in settling outstanding past due
emergency physician bills, shall be interest free. The emergency
physician’s extended payment plan may be declared no longer
operative after the patient’s failure to make all consecutive
payments due during a 90-day period. Before declaring the
emergency physician’s extended payment plan no longer operative,
the emergency physician, collection agency, or assignee shall make
a reasonable attempt to contact the patient by telephone, if the
telephone number is known, and to give notice in writing that the
extended payment plan may become inoperative, and of the
opportunity to renegotiate the extended payment plan. Prior to the
emergency physician’s extended payment plan being declared
inoperative, the emergency physician, collection agency, or
assignee shall attempt to renegotiate the terms of the defaulted
extended payment plan, if requested by the patient. The emergency
physician, collection agency, or assignee shall not report adverse
information to a consumer credit reporting agency or commence
a civil action against the patient or responsible party for
nonpayment prior to the time the extended payment plan is declared
to be no longer operative. For purposes of this section, the notice
and telephone call to the patient may be made to the last known
telephone number and address of the patient.

(g) Nothing in this section shall be construed to diminish or
eliminate any protections consumers have under existing federal
and state debt collection laws, or any other consumer protections
available under state or federal law. If the patient fails to make all
consecutive payments for 90 days and fails to renegotiate a
payment plan, this subdivision does not limit or alter the obligation
of the patient to make payments on the obligation owing to the
emergency physician pursuant to any contract or applicable statute
from the date that the extended payment plan is declared no longer
operative, as set forth in subdivision (f).