BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1276|
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UNFINISHED BUSINESS
Bill No: SB 1276
Author: Hernandez (D)
Amended: 6/26/14
Vote: 21
SENATE HEALTH COMMITTEE : 5-2, 4/9/14
AYES: Hernandez, Beall, DeSaulnier, Evans, Monning
NOES: Anderson, Nielsen
NO VOTE RECORDED: De Le�n, Wolk
SENATE FLOOR : 23-10, 5/27/14
AYES: Beall, Block, Corbett, Correa, De Le�n, DeSaulnier,
Evans, Galgiani, Hancock, Hernandez, Hill, Hueso, Jackson,
Leno, Lieu, Mitchell, Monning, Padilla, Pavley, Roth,
Steinberg, Torres, Wolk
NOES: Anderson, Fuller, Gaines, Huff, Knight, Morrell, Nielsen,
Vidak, Walters, Wyland
NO VOTE RECORDED: Berryhill, Calderon, Cannella, Lara, Liu,
Wright, Yee
ASSEMBLY FLOOR : 54-22, 8/11/14 - See last page for vote
SUBJECT : Health care: fair billing policies
SOURCE : Western Center on Law and Poverty
DIGEST : This bill revises the hospital charity care programs
by making individuals who meet the income requirements eligible,
even if they have received a discounted rate from the hospital
as a result of third-party coverage. Defines "reasonable
CONTINUED
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payment formula," for purposes of these charity care programs,
as monthly payments that do not exceed 10% of a patient's family
income.
Assembly Amendments (1) specify that if the reasonable payment
formula results in a payment of less than $10 a month, the
subsequent extended payment plan shall be $10 per month; (2)
permit the emergency physician at his/her discretion, to accept
self-attestation of family income and essential living expenses
by a patient or a patient's legal representative; (3) permit,
for purposes of determining the reasonable payment formula, the
emergency physician or his/her assignee to rely on the
determination of family income and essential living expenses
made by the hospital at which emergency care was provided; and
(4) make other technical and clarifying changes.
ANALYSIS :
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% of the federal
poverty level (FPL) 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% 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
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hospital and the patient may negotiate the terms of the
payment plan.
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
to have charity care or discounted payment programs (charity
care programs), to include individuals who have received a
discounted rate from the hospital as a result of third-party
coverage.
2. Defines "reasonable payment formula," for purposes of
hospital and emergency physician charity care programs, as
monthly payments that are not more than 10% of a patient's
family income for a month, excluding deductions for essential
living expenses.
3. Defines "essential living expenses" as expenses for any of
the following: rent or house payment and maintenance, food
and household supplies, utilities and telephone, clothing,
medical and dental payments, insurance, school or child care,
child or spousal support, transportation and auto expenses,
including insurance, gas, and repairs, installment payments,
laundry and cleaning, and other extraordinary expenses.
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4. 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 formula, as defined.
5. 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 (Covered California),
and other state- or county-funded health coverage programs.
6. 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.
7. Specifies that if a patient applies, or has a pending
application, for another health coverage program at the same
time that he/she applies for a hospital charity care or
discount payment program, neither application precludes
eligibility for the other program.
8. Requires, rather than permits, the hospital and the patient
to negotiate the terms of the payment plan, and take into
consideration the patient's family income and essential
living expenses.
9. Requires, the hospital or emergency physician, if the
hospital or the emergency physician and the patient cannot
agree on a payment plan, to use the formula established by
this bill to create a payment plan. Specifies that this
provision also applies to a patient who wishes to renegotiate
the terms of a defaulted extended payment plan.
10.Specifies that if the reasonable payment formula results in a
payment of less than $10 a month, the subsequent extended
payment plan shall be $10 per month. Stipulates that if
after having defaulted on an extended payment plan, the
patient has entered into another extended payment plan with
payments in the amount of either the reasonable payment
formula or $10 per month and the patient fails to make all
consecutive payments due during a 90-day period, that
extended payment plan is inoperative.
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11.Permits, for purposes of determining the reasonable payment
formula, the emergency physician or his/her assignee to rely
on the determination of family income and essential living
expenses made by the hospital at which emergency care was
provided. Permits the emergency physician at his/her
discretion, to accept self-attestation of family income and
essential living expenses by a patient or a patient's legal
representative.
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 does several things:
requires hospitals to establish charity care and discount
billing policies, and includes notices about those policies;
limits 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; insures that patients will additionally be screened
for government-subsidized programs for which they may qualify;
and establishes 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), 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.
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% of the 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
(ACA), 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
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insured patients with high out-of-pocket costs.
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 Office of Statewide Health Planning and Development
(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.
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) requires the
submission of hospital charity care and discount-payment
policies to OSHPD.
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 to 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
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hospitals to provide written or electronic copies of their
chargemaster, as specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 5/25/14)
Western Center on Law & Poverty (source)
Bay Area Legal Aid
Consumers Union
Health Access California
Maternal and Child Health Access
National Health Law Program
Project Inform
ARGUMENTS IN SUPPORT : According to the Western Center on Law
and Poverty (WCLP), the sponsor of this bill, advocates from
around the state report that their clients can incur high
charges, 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% 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.
Consumers Union states in support states that this bill provides
valuable protection from the full financial burden of huge and
potentially unexpected medical costs.
ASSEMBLY FLOOR : 54-22, 8/11/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Fox,
Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hall,
Roger Hern�ndez, Holden, Jones-Sawyer, Levine, Lowenthal,
Medina, Mullin, Muratsuchi, Nazarian, Pan, Perea, John A.
P�rez, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon, Rodriguez,
Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams,
Yamada, Atkins
NOES: Allen, Bigelow, Ch�vez, Conway, Dahle, Donnelly, Beth
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Gaines, Grove, Hagman, Harkey, Jones, Linder, Logue,
Maienschein, Mansoor, Melendez, Nestande, Olsen, Patterson,
Wagner, Waldron, Wilk
NO VOTE RECORDED: Achadjian, Gorell, Ridley-Thomas, Vacancy
JL:d 8/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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