BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1276
AUTHOR: Hernandez
INTRODUCED: February 21, 2014
HEARING DATE: April 9, 2014
CONSULTANT: Marchand
SUBJECT : Health care: fair billing policies.
SUMMARY : Revises the hospital and emergency physician charity
care programs by making individuals who meet the income
requirements eligible, even if they have received a discounted
rate from the hospital or emergency physician as a result of
third-party coverage. Defines "reasonable payment plan," for
purposes of these charity care programs, as monthly payments
that do not exceed 5 percent of a patient's family income.
Existing law:
1.Requires hospitals and emergency physicians to maintain an
understandable written policy regarding discount payments for
financially qualified patients, as defined, as well as an
understandable written charity care policy.
2.Defines "financially qualified patient," for purposes of
discount payment and charity care policies, as a patient who
has a family income that does not exceed 350 percent of the
federal poverty level and who is either a self-pay patient or
a patient with high medical costs, which is defined as someone
who does not receive a discounted rate from the hospital as a
result of third-party coverage and whose costs exceed 10
percent of the patient's family income.
3.Requires a hospital to limit expected payment for services it
provides to a qualified patient under its discount payment
policy to the amount of payment the hospital would expect to
receive for providing services from Medicare, Medi-Cal, the
Healthy Families Program, or another government-sponsored
health program of health benefits, whichever is greater.
4.Requires a hospital's discount payment policy to include an
extended payment plan to allow payment of the discounted price
over time, and requires the policy to provide that the
hospital and the patient may negotiate the terms of the
payment plan.
Continued---
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5.Requires hospitals to have a written policy defining the
standards and practices for the collection of debt, and is
required to obtain written agreement from any agency that
collects hospital debt that it will adhere to the hospital's
standards.
6.Prohibits hospitals from sending unpaid bills to a collection
agency 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 payments of a reasonable amount, unless the
collection agency has agreed to comply with the same
provisions of law as are required of the hospitals.
7.Establishes and applies similar requirements to the above
discount and charity care policies to emergency physicians
This bill:
1.Revises the definition of "a patient with high medical costs,"
for purposes of provisions of law requiring hospitals and
emergency physicians to have charity care or discounted
payment programs (charity care programs), to include
individuals who have received a discounted rate from the
hospital or emergency physician as a result of third-party
coverage.
2.Defines "reasonable payment plan," for purposes of hospital
and emergency physician charity care programs, as monthly
payments that are not more than 5 percent of a patient's
family income for a month, excluding deductions for essential
living expenses.
3.Requires that an affiliate, subsidiary, or external collection
agency of a hospital or emergency physician that collects debt
to comply with the hospital's definition and application of a
reasonable payment plan, as defined by this bill.
4.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, and other state- or
county-funded health coverage programs.
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5.Requires hospitals and emergency physicians, in addition to
the existing notice requirements under the charity care
programs, to also provide patients with a referral to a local
consumer assistance center housed at legal services offices.
6.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.
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS :
1.Author's statement. According to the author, this bill would
establish the definition of a "reasonable payment plan" should
a hospital or emergency room physician bill a patient who
qualifies for charity or discount care and would ensure that
the patient not be charged more than 5 percent of their
monthly income, minus essential living expenses, in the
payment plan. This bill would also ensure that patients are
better screened for other health coverage programs that would
be advantageous to them, and would also include patients whose
health coverage still leaves them with high bills.
2.Background. In 2006, after several years of debate between
consumer advocates and hospitals, AB 774 (Chan), Chapter 755,
Statutes of 2006, was signed into law. AB 774 did several
things: It required hospitals to establish charity care and
discount billing policies, and included notices about those
policies; it limited the amount that uninsured patients could
be charged to no more than the hospital could expect to
receive for the same services from Medicare or Medi-Cal or
other government sponsored benefits; it insured that patients
would additionally be screened for government-subsidized
programs for which they may qualify; and, it established
practices for collections on bills, including that a hospital
or collection agent may not take adverse action against a
consumer for at least 150 days after the initial bill.
In 2010, AB 1503 (Lieu), Chapter 445, Statutes of 2010, was
enacted, using the model of AB 774 to apply very similar
discount and charity care requirements to emergency
physicians who provide emergency medical services in a
hospital.
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Hospitals and emergency physicians are only required to make
their charity care and discount payment policies to patients
with family incomes of up to 350 percent of the federal
poverty level (FPL), and only if they do not have insurance
coverage that has negotiated a discount on the cost of care.
With the enactment of the Affordable Care Act, many of the
previously uninsured will now have insurance, so even if they
meet the income qualifications, they will no longer qualify
for discount payment or charity care policies. However, under
the ACA, the insurance plans with the lowest premiums also
have the highest out-of-pocket costs. For example, someone in
a "bronze plan" in 2014 has an out-of-pocket cap of $6,350 for
an individual, and $12,700 for their family. An unexpected
and costly visit to a hospital can still leave insured
patients with high out-of-pocket costs.
3.Related legislation. AB 1952 (Pan) would require non-profit
hospitals to annually provide charity care amounting to 5
percent of the hospital's net patient revenue. AB 1952 is
currently scheduled to be heard in the Assembly Health
Committee on April 8, 2014.
AB 503 (Wieckowski), which is substantially similar to AB 975
(Wieckowski) of 2013, revises California's non-profit
community benefits requirements to include multispecialty
clinics, and narrows the activities that constitute community
benefits, creates a definition of charity care, and requires
the Office of Statewide Health Planning and Development
(OSHPD) to develop a standardized methodology for calculating
community benefits. AB 503 is pending in Senate Health
Committee.
4.Prior legislation. AB 975 (Wieckowski) of 2013 would have
revised California's non-profit community benefits
requirements to include multispecialty clinics, narrowed the
activities that constitute community benefits, created a
definition of charity care, and required OSHPD to develop a
standardized methodology for calculating community benefits
and to issue civil penalties for noncompliance with filing
requirements. AB 975 failed passage on the Assembly Floor.
AB 1503 (Lieu) required emergency physicians who provide
emergency medical services in a hospital to provide discounts
to uninsured patients, establishes limits on the expected
payment for emergency medical services, as specified, limited
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debt-collection activities, and required hospitals to include
a written description of the hospital discount policy.
SB 2942 (Kuehl) of 2008 would have implemented the Auditor's
2007 recommendation for a standardized format and methodology
to be used when presenting community benefit information,
among other requirements. SB 2942 was held in the Senate
Appropriations Committee.
SB 350 (Runner), Chapter 347, Statutes of 2007, required the
submission of hospital charity care and discount-payment
policies to OSHPD.
AB 774 (Chan) established Hospital Fair Pricing Policies, which
requires every hospital to offer reduced rates to uninsured
and underinsured patients who may have low or moderate income,
and to provide policies that clearly state the qualifications
for free care and discounted payments.
AB 1045 (Frommer), Chapter 532, Statutes of 2005, revised the
Payers' Bill of Rights to require hospitals to provide
information about their financial assistance and charity care
policies, as well as contact information for a hospital
employee or office to obtain additional information.
SB 24 (Ortiz) of 2005 would have established charity care and
reduced payment policies and requirements as a condition for
hospitals to maintain their tax-exempt status. SB 24 was held
on the Senate Appropriations Suspense file.
AB 232 (Chan) of 2004 was substantially similar AB 774 of 2006,
and would have required each hospital to develop a self-pay
policy specifying how the hospital determines prices to be
paid by self-pay patients, as defined, and limits these prices
for patients below specified income levels. AB 232 died on
the Senate Floor.
AB 1627 (Frommer), Chapter 582, Statutes of 2003, established
the Payers' Bill of Rights, which generally requires certain
hospitals to provide written or electronic copies of their
chargemaster, as specified.
5.Support. This bill is sponsored by the Western Center on Law
and Poverty (WCLP). According to WCLP, advocates from around
the state report that their clients can incur high charges,
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particularly for hospital visits, stays, and services
delivered in the emergency room and that patients are unable
to pay or negotiate plans that leave them with enough income
to survive. In 2006, California took the important step to
establish baselines that provided charity or discounted care
for patients earning up to 350 percent of the FPL. These
provisions have meant huge fiscal relief for many low-income
Californians, but there are still circumstances where patients
are left with high bills they simply cannot afford to pay.
WCLP notes that the passage of the Affordable Care Act expands
health coverage to millions of Californians and recent
legislation caps out of pocket costs for consumers buying
coverage through the Health Benefits Exchange. However, it is
foreseeable that even with significantly stronger protections
in place for consumers, there will still be cases where
patients incur high costs and still need reasonable payment
options for their hospital or emergency room bills. Whether an
individual has coverage through Covered California, an
employer, or through the remaining individual market, this
bill would provide some security for the out of pocket costs
lower-income patients incur if the unanticipated happens. This
bill would also significantly help those who remain uninsured
and are unable to qualify for coverage from the ACA.
This bill is supported by Health Access California, which states
that it supports the provision expanding existing law to
consumers with third-party coverage, stating that despite the
protections of the ACA, many consumers will remain
under-insured. Health Access California also states that under
the ACA, 400 percent of the FPL is the threshold at which
consumers are considered to need assistance rather than 350
percent of the FPL, and that while it supports the bill as is,
it would also support an amendment to bring existing law into
alignment with the ACA.
Bay Area Legal Aid (BayLegal) states in support that it
routinely receives requests for assistance from patients and
their families who are being bill for necessary hospital
health care services, and that this bill adds important
protections that will go towards ensuring that uninsured
patients are able to receive assistance with paying these
bills. Project Inform states in support that people with HIV
and hepatitis C and other chronic health conditions face high
costs with their health care, particularly their medications,
and that one hospitalization can be financially crippling on
top of other health care related bills. The National Health
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Law Program states in support that it will significantly help
those who remain uninsured and are unable to qualify for
coverage as a result of the ACA. Consumers Union states in
support that this bill provides valuable protection from the
full financial burden of huge and potentially unexpected
medical costs.
6.Oppose unless amended. The California Chapter of the American
College of Emergency Physicians (California ACEP), states that
while it appreciates and shares concern for whether or not the
high deductible plans being offered in the marketplace will
truly be affordable to patients, it is opposed to the solution
in this bill that singles out emergency physicians as the only
physician group mandated to subsidize patients' costs.
California ACEP states that if the public policy goal is to
lower the out-of-pocket cost of health care, it hardly seems
logical or just that it should be subsidized exclusively by
emergency physicians and no other physician specialty.
California ACEP states that in addition, it is concerned that
this bill will create an incentive for patients with high
deductible plans to seek their care in the emergency
department because it will be the only place they receive a
deeper discount for health care.
7.Letter of concern. The California Hospital Association (CHA)
submitted a letter of concern regarding this bill. CHA notes
that this bill increases the number of people to whom charity
care and discount payment policies apply. This bill also
requires hospitals develop "reasonable payment plans" that are
not more than 5 percent of a patient's income, excluding
deductions for essential living expenses. CHA states that
currently, no one who needs medical care is ever turned away
by a hospital, regardless of his or her ability to pay, and
that hospitals provide $13 billion annually in unreimbursed
care, including charity care, to meet the needs of their
communities. CHA states that it is important for hospitals to
be able to retain flexibility in order to work with patients
on a case by case basis. According to CHA, the ACA provides
far greater flexibility to hospitals in developing their
charity care and discount payment policies than is granted in
current state law, and that the ACA recognizes that hospitals
need the flexibility to design charity care policies that meet
the unique needs of the populations they serve.
SUPPORT AND OPPOSITION :
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Support: Western Center on Law & Poverty (sponsor)
Bay Area Legal Aid
Consumers Union
Health Access California
National Health Law Program
Project Inform
Oppose: California Chapter of the American College of
Emergency Physicians (unless amended)
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