HEALTH ACCESS UPDATE

Tuesday, August 24, 2004

CA ASSEMBLY VOTES TO PROHIBIT HOSPITAL OVERCHARGING OF UNINSURED

* First-in-Nation Consumer Protections for Self-Pay Patients May Go to Governor

* Other Consumer Protection Bills Also Pass Assembly

On Monday, August 23rd, the California Assembly passed SB379 (Ortiz) to prohibit hospitals from overcharging uninsured patients, and provide other consumer protections. Both SB379, and a similar bill, AB232 (Chan) are expected to be voted on in the Senate and, if successful, be sent to Governor Schwarzenegger’s desk by the end of the week. Both bills would provide first-in-the-nation consumer protections for self-pay hospital patients.

OTHER BILLS: Other important bills of interest to health advocates also passed the Assembly. Key consumer protection bills of note include:

  • Maternity coverage: SB1555 (Speier) to ensure that all health insurance plans include maternity coverage.
  • Drug company marketing: SB1765 (Sher) to limit the gifts that pharmaceutical companies provide doctors and other medical providers.
  • Hospital infections: SB1487 (Speier) to collect data on hospital-acquired infections.

SPECIFIC PROTECTIONS FOR HOSPITAL PATIENTS: The bills that address aggressive hospital billing and collections, SB 379 and AB232, are similar. They address an issue raised by dozens of “uninsured and overcharged” patients that have been sent to collections, court, or bankruptcy for the simple act of seeking needed care. Both bills ensure that self-pay hospital patients:

  • Are informed of their consumer rights and financial options;
  • Have at least 120 days before being sent to collections;
  • If they are under 400% of the federal poverty level (under $60,000 for a family of three), don’t pay more than the Medicare, Medi-Cal or worker’s compensation rate for treatment.

A fact sheet on the bill is available at: http://www.health-access.org/ab232_fact_sheet.htm

The text for AB232 (Chan) is at: http://www.leginfo.ca.gov/pub/bill/asm/ab_0201-0250/ab_232_bill_20040817_amended_sen.html

The text for SB379 (Ortiz) is at:http://www.leginfo.ca.gov/pub/bill/sen/sb_0351-0400/sb_379_bill_20040817_amended_asm.html

ASSEMBLY DEBATE: Assemblywoman Wilma Chan, the author of AB232 (sponsored by Health Access California), served as the floor manager on the debate on SB379, by Senator Deborah Ortiz. She started the discussion by talking about a specific patient who, when her health insurance ran out, was forced to pay four times the amount that her insurance had paid for a similar treatment. Chan made the point that hospital debt is a leading cause of personal bankruptcy.

REPUBLICAN OPPOSITION: Several Republicans rose to argue against the bill, including Assemblymen Tim Leslie, Tom Harman, Dennis Mountjoy, Ray Haynes, and at the end of the discussion, Tony Strickland. Leslie questioned why “Democrats want to attack hospitals, and they are continuing to make hospital operations more difficult.”

Harman made several points in his objections. “Hospitals are businesses. They are run like any other business, whether it is a manufacturing business, a service business, a barber shop, a beauty salon.” He mistakenly stated that, “this bill simply says, well, you’ve got to provide free medical care to certain types of patients… that you can’t use wage garnishment or a collections agency…. Well, how else are they going to collect it if they don’t pay it?” He admitted that “we need to have a plan where everyone can get the necessary medical treatment that they need. I support that in some fashion, I don’t know exactly what it would be.” Finally, he referenced the individual story that Chan cited in her opening: “I’m sorry, but maybe that person should have had better health coverage, maybe that person should have thought about this problem. That’s what we have bankruptcy court for…. Is it any different that a contract debt? How is it different from any other kind of debt? I submit to you that it is not.”

Mountjoy also misrepresented the bill, stating that it said that “if you are a hospital that is serving a patient, and if they are low-income, you gotta give it to them. Well, why don’t we do that for plumbers?… And the electrician, he ought to give you a break, too. Where in the Constitution does it say that we owe folks health care?… We don’t own them health care.” He continued, “why should we put the burden on a business like hospitals?… They are a business not unlike any other. They are there to make a profit, they have a board of directors that looks for that every month.”

Haynes decried the “Orwellian state” he was in. “When you order somebody to give stuff away for free, or you order somebody to work for free, that is what is known in the parlance as slavery. We are basically ordering hospitals to be our slaves.” Later, Strickland stated that “part of the reason why costs have gone up in the hospital is that the hospitals are providing a lot of charity care. The uninsured are not paying their hospital bills…. The hospitals are shutting down their emergency rooms because they are providing too much charity care.”

DEMOCRATIC REBUTTALS: Democrats that rebutted these claims include Assemblymembers Lloyd Levine, Hannah-Beth Jackson, and Jackie Goldberg. Levine responded, “more and more people going without health care in California. And frankly, I actually… resent the implication that they should have had thought of this sooner, and gee, they should have had health insurance. The cost of health insurance is continuing to skyrocket…, many families cannot afford health insurance, and to say ‘oh, it is their fault,’ really misses the point…. We need to pass this bill and do everything we can to make sure people have access to health care when they need it.”

Jackson brought the discussion back to the question that the bill addresses: “Is it correct that many hospitals charge uninsured people higher rates than what they charge and are willing to receive from insurance companies and Medicare?” She continued: “This is a bill that tells hospitals that you can’t take advantage of poor people who don’t have insurance… Let’s be fair to the people that are least able to pay by not forcing them to pay more than you and I who have the benefit of having health insurance. It is a sad state of affairs when anybody takes a predatory practice to charge the least able to pay more money for any service because they can… The goal is to give everybody, whether they are rich or poor, a chance to have quality health care at a fair and reasonable price.”

Goldberg also clarified that the bill “asks that the hospitals require nothing more than the higher of Medi-Cal, Medicare, or worker’s comp. So it is not free. And why is this business different than any other business? Well, this business you can’t live without, in some cases.” She also cited statistics that showed that while the uninsured are a small percentage of the patients in many hospital chains, they account for a disproportionate share of the profits. “The only way that could be true is to be gouging those folks as compared to people who have insurance…”

Chan closed by rebutting the arguments: “This does not in any way call for free care. Back in the 80s, I believe, there were strict limits on what a hospital could charge. This does not even go that far… It just says, if you go to the hospital, there should be some ceiling on what you can be charged… Collections agencies can be called in, but this bill gives the person a chance.” She concluded: “We are not talking about something free here, we are talking about basic fairness.”

The bill passed with an unofficial vote of 41-31, along party lines.

BACKGROUND ON ISSUE: Earlier this year, California hospitals adopted “voluntary guidelines” to head off this legislation and public relations troubles, but consumer advocates still maintain that there is a need for statewide uniform and enforceable standards. This issue has attracted national attention:

  • LAWSUITS: Several law firms have filed class action suits against nonprofit hospital chains around the country, including Sutter here in California, all attacking the billing and collections practices of the hospitals. The Sutter lawsuit mentions a report that Health Access co-authored, which you can get at our website, at http://www.health-access.org/.
  • FEDERAL ACTION: Federal leaders have taken an interest in this issue. Earlier this year, U.S. HHS Secretary Tommy Thompson and the Centers for Medicare and Medicaid Services issues guidelines for hospitals, making clear that federal program do not condone or require these billing practices.
  • CONGRESSIONAL HEARINGS: A Republican Congressman from Colorado has introduced H.R.4092, the “Hospital Billing Fairness Act.” The U.S. House Energy and Commerce Committee held an oversight and investigations hearing on “Hospital Billing and Collection Practices” toward the uninsured. Information is posted at: http://energycommerce.house.gov/108/Hearings/06242004hearing1299/hearing.htm
  • MEDIA ATTENTION: In addition to the ongoing coverage that this issue had gotten from the Wall Street Journal and USA Today, ABC’s Nightline did a full show on this issue a month ago, in devastating detail.
  • OTHER STATES: Connecticut passed related legislation last year on hospital collections practices, but it is believed that these California bills are the first state legislation in the nation to pass to limit the actual amount that hospitals can collect from the uninsured. An issue brief summary on this issue, which talks about groundbreaking developments in California and other states, has just been published by the Commonwealth Fund, at:http://www.cmwf.org/programs/insurance/pryor_medicaldebt_749.asp
Health Access California promotes quality, affordable health care for all Californians.
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