• Uninsured Patients No Longer To Be Charged Many Times What Insurers Pay;
  • AB774 (Chan) Will Prevent Many Cases of Medical Bankruptcy
  • California Joins New York in Prohibiting Unfair Hospital Billing and Collections Practices

Tonight, Governor Arnold Schwarzenegger signed into law key consumer protections for self-pay hospital patients, including a ban on the common practice of “hospital overcharging.” California joins New York , which passed a similar law earlier this year, in providing the strongest protections in the nation to prevent abusive hospital billing and collections practices.

AB774(Chan) would ensure that uninsured patients within certain income limits (under 350% of the federal poverty level–$34,300 for a single person, $58,100 for a family of three) would not have to pay more than the Medicare, Medi-Cal or worker’s compensation rate. It would ensure hospital patients get information about the consumer rights and financial options, and place a moratorium on them being sent to collections. Low-income patients will no longer have wage garnishment and liens on primary residences as part of the collections efforts of hospitals.

The Governor’s signing statement is on his website, at:

THE HISTORY: This bill is a big victory, and the culmination of five years of campaigning by consumer and health advocates, working with Assemblywoman Wilma Chan (D-Oakland), chair of the Assembly Health Committee.

Over the last five years, dozens of Californians have testified and spoken out about their personal experiences going to a hospital, getting care, but then getting a life-changing bill–$3,000, $6,000, or $15,000 for a emergency room visit; $32,000 for a one-night appendectomy; over $250,000 for a two week hospital stay. Many of these patients were willing (and even wanted) to pay something, but were not able to pay the given charge, multiple times what insurers and government programs pay.

With these issues raised by health and consumer advocates, the California Hospital Association adopted a set of “voluntary guidelines” in February 2004 on issues of hospital pricing, billing, collections, and financial assistance.

While vetoing an earlier version of this bill, SB379(Ortiz), later that year, Governor Arnold Schwarzenegger stated that “the voluntary guidelines must be given time to be implemented and reviewed.” In his veto message, the Governor appropriately left open the possibility of revisiting legislation if the guidelines were not followed, saying, “Nevertheless, it is my expectation that all hospitals in the state uphold their important commitment to the voluntary guidelines and that they are applied evenly, consistently and without hesitation.”

Studies indicated that the guidelines have not been followed.
In late 2004, Health Access worked with volunteers and community organizations to survey 40 hospitals around the state, and found only one hospital met all the criteria; just half met the modest effort of posting a sign in the emergency room to alert patients to the possibility of financial assistance.
Late 2005, the independent California HealthCare Foundation reported on the result of its broader and more comprehensive “mystery shopper” survey, entitled “Price Check: The Mystery of Hospital Pricing.” Among the findings, over half the hospitals (57%) did not have a sign in the emergency room about financial assistance policies, as described in the hospitals guidelines adopted nearly two years ago. Only 7.3 percent of “mystery shoppers” were offered written information about financial assistance policies.
The results of a 2006 study by the Western Center for Law and Poverty found that fewer than half of 137 hospital sites visited had notices about their discount policies posted in either the administration area or emergency room.

FORCES FOR REFORM: In addition to these studies, the issue of hospital billing and collections has received renewed attention in recent months, with:

  • Passage of a similar law to AB774 in New York state;
  • Congressional hearings and reports on both hospital bills and collections practices and the provision of care to poor patients, by Sen. Charles Grassley (R) and others;
  • IRS scrutiny of nonprofit hospitals’ tax status;
  • Settlement of class-action lawsuits against two California hospital corporations, Catholic Healthcare West and Sutter Health. Both hospital systems were ordered to reimburse patients for hundreds of millions of dollars in refunds or bill adjustments.

After opposing the measure for the last five years, the California Hospital Association did work with author and sponsor of the bill, and dropped their opposition in August, moving to a neutral position.

AB774 (Chan) was supported by a wide range of organizations representing health care consumers, including Consumers Union, Western Center for Law and Poverty, ACORN, Latino Coalition for a Healthy California, CALPIRG, California Alliance for Retired Americans, California Church IMPACT, Latino Issues Forum, California Immigrant Welfare Collaborative and many others.

Health Access California promotes quality, affordable health care for all Californians.
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